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Archive for April, 2010

The oil spill is big news. A gamut of “drill-baby-drill” advocates have oil on their faces.

Its real. The standards for offshore shelf drilling will increase dramatically throughout the globe, and particularly in the US.

To the extent that standards and costs then increase globally, including affects on drilling in on-shore but environmentally sensitive areas, the long-term supply for oil supply will change.

The existing fields will become more prominent, some more difficult to drill/recover land based fields will become more prominent.

But, most importantly, the need for conservation, especially in capital projects, will increase as the long-term cost of fossil fuels is likely to increase.

We won’t see it today or tomorrow. But anyone that is thinking of any building improvements or new construction can expect an additional 5% cost of oil from their estimates last week.

How come its not in the press? Its good that the New York Times is talking about the environmental impact, but why is it not suggesting the need for radical conservation efforts in building and transportation use for example?

There are three multiplying effects of consumption/enterprise/policy decisions:

1. Technology applied – Buildings that means air-sealing, insulation and if you get really tight – subsequent venting of toxins, water vapor, and heat exchange. For transportation that means the cheap availability of high mileage vehicles.

2. Utilization – Buildings – Energy usage increases with surface area. Stand-alone ranches are the worst. Any utilization of shared walls, or any strategy that reduces exposed surface area saves energy. Big city apartments consume less energy per square foot, than rural hip quaint stand alone homes.

Transportation – Ride sharing, mass transit, that yeild 2.5 average riders per trip, consume 1/2 of the energy as those that put 1.25 riders per trip (current average).

3. Settlement patterns – Not much affect on buildings, except noted as utilization savings. For transportation, regional economy and designing villages/towns/cities for full employment and regional sourcing of materials and labor, result in less transportation done to accomplish the same productive activities. If the distance of the average commute reduced from 18 to 9 miles, that would save an additional 50%.

The affects multiply. If average mileage descreases by 1/2, and average passengers per trip decrease by 1/2, and if average distance per trip increases by 2, then we will consume 8 times as much energy on transportation as currently.

On the other hand, if average mileage doubles, and average passengers per trip doubles, and if average distance per trip halves, we’ll consume 1/8 of current.

And, with our decisions and polices, we could see that 64 fold swing, literally that huge.

We’ve got to learn, not ignore.

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If we were really interested in some indication of whether a product or service complied with a definition of “sustainable”, what would that include?

When people speak of sustainable currently, most people think of something comprehensive, more than one characteristic.

So what characteristics would that entail? How important is each characteristic to consumers and to an assessment of “objective” sustainability? How could that be measured, disclosed, audited and how would stakeholders (suppliers, distributors, retailers, etc.) come to consent?

I like using food as an example because I am familiar with the industry, its supply chain paths, some of the key institutions (at least in natural foods), the demands of consumers. Most importantly we put food into our own bodies, and are more concerned about food than about something that is less intimate. (Not enough of us.)

Once a diclosure is mandated by law, it is usually complied with. There are severe and expensive penalties and other means of accountability for violations. (Mandatory recalls, fines). The discretionary disclosures are more contreversial and actively contested.

The characteristics that I care about for food are:

1. Bio-dynamic/Organic/natural/conventional (There are objective designations only of organic and conventional, and the organic guidelines took 15 years to get defined and approved.)

2. Nutritional components, ingredients (FDA mandated)

3. Whether the production, handling, distribution, retailing was done in a quality and hygenic manner. (Assumption that if it reaches stores that it complies with health and safety laws. There are varying quality standards however, and many manufacturers have custom and industry certifications.)

4. Recyclable packaging – Life cycle (No law on compliance, nor disclosure definitions.)

5. Where it was made – Locus (No law on disclosure of manufacturing location or average location of value addition – Locus)

6. Whether living wage was paid throughout the supply chain (No law or convention on disclosure. Assumption is that throughout the supply chain, providers abided by applicable federal and local employment law, ie minimum wage, etc.)

7. How much energy was consumed to make, package, deliver the product (No law or convention)

8. What toxins were generated in the process of manufacture, transportation, distribution (No law or convention, some implication of absence of toxins in some processes by organic certification)

Well, even though only a small portion of the information that I would regard as important for a citizen’s consideration is currently required by law or convention, there is no current mass movement for more complete disclosure.

What gets in the way?

Certainly there are some data collection obstacles and inconveniences. More importantly, there are institutional objections particularly made by larger, global institutions. In natural foods, as in all food supply, large institutions dominate the business.

Retailing – Whole Foods Market (publicly traded),  Trader Joes (European privately held) , large grocery chains, even coops are often large businesses now

Wholesaling – United Natural Foods (publicly traded, almost a monopoly)

Manufacture – More small businesses, but institutionalized into serving the global/continental supply chain.

Trader Joe’s, Whole Foods Market don’t want LOCUS disclosure. United Natural Foods don’t want LOCUS disclosure, unless pressed by an actual regional foods, regional economy movement.

LOCUS disclosures disadvantage mass production, mass distribution, mass retailing.

When the Sustainability metric is proposed (in addition to organic and kosher designations), there will be a fight about regionalism vs globalism. Globalism will likely win, sadly.

Please support regional economy though. It is optimal in a sustainable society, affording optimal mix of economies of scale with accountability and minimization of transportation requirements.

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Currently there is no product or supplier designation for compliance with comprehensive sustainability definitions.

Its hard to know if that is because the definition of sustainability is difficult to articulate and/or difficult to define a consented universal definition.

There are ISO type certifications of suppliers, manufacturers, distributors, retailers, etc, and those aren’t used as widely or disclosed widely on products or even on shareholder communications.

Aside from product disclosures and direct stakeholder relations, companies don’t generally communicate much with the public, or are asked to. We see product packaging, job ads, financial reports and only on publicly traded companies, maybe some other marketing oriented educational programs. Those are very limited communications.

And, on product packaging, there are limited disclosures. I am most familiar with food packaging. I’m looking at an organic multi-grain bread from Trader Joe’s (probably manufactured by Vermont Bread – a perishable that requires local distribution by an organic certified manufacturer).

On the package is “Trader Joe’s”, “Multigrain Bread” “No artificial colors or flavors, no artificial preservatives”. Net wt 20 oz, a barcode, USDA required nutritional information, USDA Organic certification, and identification of the certifying agency – QAI, and a kosher certification logo.

No indication of where the product was made or where the ingredients to the product was made, or where the product complies with 100-mile and 500-mile sourcing (LOCUS). No indication of fair trade authorization, living wage compliance, ISO 9000 series (quality) certification of the manufacturer and supply chain, ISO 14000 (environmental) certification of the manufacturer and supply chain,  life cycle handling requirements of product and packaging.

Consumers don’t ask for it, the federal government doesn’t require it, retailers don’t require it.

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Most measurements of social welfare, including my adopted model of Maslow’s heirarchy of needs measure only one side of the coin of optimal social welfare.

The two sides of the coin are:

1. The ability to function at a high level of contribution and of ease while contributing  (Maslow’s theory of motivation)

2. The ability to enjoy, short and long term

A person exhibiting high functionality and high capacity for enjoyment contributes to others experience, and realizes his/her own optimal experience.

In the dollar economy, where enjoyment is a commodity purchased (music, film, art, architecture, design) only the affluent are said to enjoy. In a free or public economy in which people make their own art and entertainment, individually and/or collaboratively, in some ways only the affluent are excluded.

Society needs more emphasis on functioning effectiveness (the ability to contribute) than enjoyment emphasis in order to actually function confidently.

But, all work and no play makes Jack a dull boy, except for the few that their work is also their play.

People that merely enjoy, say not even performing for others, add value to the economy. Those people are in the economy, and their ability to enjoy a piece of music (at/from the free public library) is a world in which there is more fulfillment. There is more realized value in the world.

People that derive a high level enjoyment from natural, community and other free goods, actually create a higher level of realized value in the world per social cost.

Sing together, play music together, read to each other, walk in nature together, meditate together, eat together.

And work hard, intelligently, collaboratively, design, making sure to approach work from a new perspective frequently.

Keep getting educated, keep networking, keep innovating.

Stay in control, learn the business virtues of managing what is finite.

Let yourself go, learn the virtues of dancing with what is infinite.

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What is a successful economy?

One that delivers the optimal mix of social welfare. Any other measure is just a secondary indicator.

An example of the Nasruddin story:

Nasruddin (a Sufi holy fool) was seen scrambling about in the gutter obviously desparately looking for something. When asked by a friend “Nasruddin, what are you looking for?”, he replied, “I’m looking for my father’s ring that he gave to me when I turned 13.”

“Where did you lose it, I’ll help you find it”

“I lost it in that building”.

“If you lost it in there, why are you looking out here?”

“The light is better out here.”

So, we measure some of the right things and some things that are totally irrelevant to any assessment of social welfare. And, we attribute authority to some of the measures that are just barely indicators.

The primary example is gross domestic product, a strictly quantitative measure that ignores the efficiency of the economy to allocate resources to those that create experienced value (present and future), in contrast to more arbitrary measures of value or wealth.

GDP is used as a primary measure for social progress for two key reasons (functionally, even if no serious economist will admit to being that one-dimensional).

1. It assumes that the invisible hand of the marketplace allocating dollar votes, realizes the informed best allocation of resources, applying that individuals are themselves responsible to act rationally for their personal welfare optimization.

That assumes of course, that dollar votes are distributed relatively equally or at least equitably, realizing persons’ optimal allocation of resources, rather than “dollars'” optimal allocation of resources.

2. A quantitative metric is comparable between entities, over time, and between options. (I agree. We need to be able to compare in some meaningful way, to know if we are making progress, making good personal and public policy decisions.)

Does that equate? Purchasing power is NOT relatively equally distributed throughout any economy, as appealing as the concept of universal liberty is in theory. (The market economy theory also ignores posterity, commons and wilds, each having no votes in the marketplace.)

I read of a conference on “Gross National Happiness” that a few friends are attending, applying a methodology that the King of Bhutan applied to measure and then apply to the economy that he was responsible for.

I love the effort, and the spirit of the King of Bhutan is a model of a caring, responsible leader.

I don’t find the specific analysis to be applicable in a modern technological society. A step in the right direction, a work in progress. A Copernican effort (articulating perfect circular orbits of planets around the sun), when we need a Keplerian (articulating ovular orbits), or a Galilean or Newtonian elaboration.

I propose a quantitative measure of human welfare that adopts Maslow’s heirarchy of needs, that does regard “higher” functions of motivation and fulfillment as more valuable than simply equality in survival, and is customized to individuals, communities, cultures.

It is not difficult to construct, and I’ve been experimenting with a couple mathematical models to distill out an informative and reliable metric.

The criticism of the methodology, any one that would apply a single format of satisfaction, is that it is a subjective judgement of what is important, that different people will naturally value different things. There is defintely truth in that assertion, but the next question is what is the optimal methodology.

If you know that the one that is used yeilds very misleading information and judgement, and the one that is proposed yeilds somewhat misleading or subjective information that might not apply to everyone equally appropriately, what is best.

In accounting practice, I’m often asked to prepare budgets, forecasts, plans and/or predictions of future events. It is literally impossible to predict the future. Any number that I propose will inevitably be off to some material extent. So, I’ve heard executives dismiss forecasts or budgets as “guesses”.

In contrast I believe that in order of accuracy:

1. Prophecy (there is none)

2. Estimates

3. Dartboard guesses

4. Ignore the questions

An estimate is the best, the most practically accurate, and the most useful. That applies in this case as well. It is more accurate to estimate, to apply a methodology that might need reform, than to conduct a dartboard guess, or to just ignore the question entirely.

In the case of “social welfare”, to ignore the question entirely, is to ignore leaders’ primary responsibility, no matter what scale or scope a leaders’ responsibility entails, or how collaborative that responsibility is. (Citizenship).

One advantage of the Maslowian assessments, is that they are scalable (meaning that they can be assessed at every social scale: individual, family, community, micro-region, macro-region, planet). As a quantitative measure, they are comparable over time and between communities.

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A thought occurred to me during my morning walk on the contrast between a growth economy and a maintenance economy.

The concept came up in thinking about isolated countries like Cuba, and in the context of Israel/Palestine discussions, Gaza.

Cuba has been isolated from much of international trade for 50 years now, a long time.

Economies function through a combination of intra-regional trade and inter-regional trade. In an undifferentiated global marketplace, the definition of a region (boundary) is indistinct. For example, although some that live in New England think of themselves as “New Englanders”, there is no distinct boundary or even identifier. The closest that I’ve heard anyone come up with is whether one is a Boston Red Sox fan or a New York team fan. (It sounds silly, but it actually does describe some sympathies). In Boston, identity is obvious. In Maine its obvious. In New Hampshire, where I worked for the last three months (near Canada, far from Boston), they were still Red Sox fans. In Greenfield, MA where I live, they are Red Sox fans. In Connecticut, the loyalty starts to dissolve a bit. In Hartford, its 60-40 Red Sox. In New Haven, 50-50. In Stamford, probably 80-20 for New York.

The point is about the frontier, the gradual shifting of identity, not a distinct boundary. In northern New Hampshire everyone on this side of the boundary is American, and everyone on that side is Canadian, no exceptions.

In the global economy, there are nationalities, but can one say that a Brazilian subsidiary of Exxon-Mobil is an American company? Trading is conducted in few and transferable currencies (dollars or Euros largely).

In a bound setting (US or Canada) it is possible to say that an export has occurred, an inter-regional transaction. Between Hartford and Stamford, its not possible to say that, even if they root for different baseball teams.

In Cuba and in Gaza, you can define trade as primarily intra-regional. There are few imports and few exports, barely enough to supply the import of needed materials, that are embargoed as well. Those economies have been forced into a maintenance mode, more than a growth mode.

They suffer for it. Neither economy is functioning, even residually, at level of confident sustenance. They need growth, and as growth comes primarily from inter-regional trade which exists withina  competitive marketplace, they need sophistication and the whole support network of an aspiring and motivated middle class, and access to capital at risk, to achieve growth. They don’t need a lot of growth theoretically to bridge the gap between what they manage to maintain and what they need to confidently survive, but because of the competitiveness of the market economy and their absence from it over extended periods, they are stuck.

Cuba in particular has been forced to get very adept at maintenance economy. They measure their success at economy by social experience metrics not by quantitative GDP metrics. (They use GDP, but it is a secondary data contributor, not the primary.) Cuba has the most complete recycling program of any “industrial” nation. They had to. They can’t buy much raw materials to be imported. They don’t have the currency to do so.

In 19th century Marxist thought, they perceived that they could abandon the motivation for growth and dominance, because they reasoned that industry had multiplied the ability to create value so much, that it was feasible to manage to transition to a maintenance economy. They thought that the reasoning was so compelling that all countries would adopt it, and the lagging techological development curve would be irrelevant, that they would not suffer competitively.

Russia failed at it, partially because of their incompetence, but also partially because the technology employed was a physically toxic model, similar to the rust belts of the Michigan, Indiana, Ohio, Bridgeport, Worcester, etc. They drove their technology into an ecological cul-de-sac.

Europe sought to “land” from their growth economies, in the wave of incremental socialist efforts post-world war 2, that still continue residually. They also had the rust phenomena and had not yet realized a level of technological development that is actually “enough”. Growth was still needed. Some European countries have however succeeded at proceeding to a managed primarily maintenance economy.

China is an unusual exception to the socialist trend. China used the institutions of socialism, now for the purpose of growth, combining elements of capitalist institutions, but only elements, and within a socialist norm.

Sustainable economy is primarily a maintenance economy, NOT a growth economy. Ironically, we now have more to learn from Cuba, than we do from our rugged entrepreneurial past. I don’t propose that the US adopt neo-marxism, but that the US emulate Cuba’s materials recycling, public institutions as a large component of its economy, and emphasis on relative equality and commonwealth.

A sustainable economy would require 80% of the applicable workforce to engage in maintenance productive activity, and a minority of effort in ambitious. The United States economy currently conflicts with that emphasis, and is unsustainable, not only from debt, but from irrelevant goals and poor judgement.

A sophisticated sustainable economy (in contrast to Cuba’s, not particularly complex) requires the ability to recycle close to 100% of its materials and energy. It must be designed to require a minimal amount of materials inputs. Prior to recently, that was impossible technologically, as well as  institutionally. With the implementation of near universal cradle-to-grave product design, it could be possible.

Socially, a maintenance economy, a sophisticated and efficient one, does not require full employment to realize. It takes maybe 70% of the current workforce to maintain our society, implying a maximum unemployment rate of 30% without self-cannibalization. That is a high level of unemployment as a potential norm. Obviously, growth and waste, do not make up that 30% now.

The predictions of Jeremy Rifkin in “The End of Work” are coming to pass. We need less work to sustain our economy. There are also less growth opportunities as we have really come close to the level of material amenities that are needed in the society. It used to be made up by cultural contributions, but the cultural institutions in the country have also been cannibalized (thankfully in ways, the entertainment business is a corrupt one).

So, according to Rifkin, there is less need for work, but society is increasingly reluctant to provide for public goods and services, less forgiving less charitable (whether by government or individually). So, how do we avoid a permanent downward spiral to a large and depraved underclass?

Its an open question at this point, but it is inevitably a question inherent in the shift from a growth to a sustainable economy, an in the shift from a growth to a maintenance economy.

Governance is dependant on growth. There is no social security payouts possible for example without growth, no sophisticated health care system, no healthy municipalities without increase in property values.

It is not a simple question to realize a landing (the shift from temporary growth to permanent sustainability) institutionally. I believe that we have accomplished close to all of the technological drivers that we need frankly, so that growth is not that necessary, as it is also now not that possible.

Those companies that will realize revenues (used to be growth) and profits, will do so by recycling, reformulating service options, much moreso than by creating and building more.

Its time we led in that, no? That is our growth.

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There have been many important efforts at nurturing sustainable economy/society in Franklin County and in the Pioneer Valley (Northampton, Greenfield, Amherst area). Projects that I’ve been involved in (there are many more) include Valley Dollars and Valley Trade Connection in the 90’s, Bioregional Study Groups in the late 90’s, Five Rivers Council in the early aughts, Greening Greenfield (not actively involved) currently.

Many wonderful people and organizations are located here. Northeast Sustainable Energy Association, Coop Power, Organic Trade Association, Franklin Community Development Corporation, Traprock Peace Center, many others. There are healthy and responsive local banks. We all work at different projects, with different scopes and community/geographic scales of reference. Most of us respect others in related fields and collaborate and help when we can.

There is a critical mass of vision and tangible skill that can be brought to realize practically, a sustainable community and region in all the relevant meanings of the term (financial stability, community, environment, social services, arts/culture, spirituality, governance).

Objectively, we’re not there yet. The town is strapped financially (governance). There are inadequate job opportunities to support the minimum necessities at any stable standard of living (financial stability). Land for potential agricultural and industrial use is scarce and not well designed (environment). We still rely too heavily on single user cars for primary transportation. Most housing is still inadequately insulated. People are still more isolated than one would expect in a small town (community). There are too few doctors locally to provide broad competent health care.

Economically, investment capital leaves the region. Those with wealth invest elsewhere, in the global marketplace primarily. Housing costs are very high.

We anticipate that the future will entail some significant change. I/we expect energy costs to increase significantly if not radically over the next decade. We expect that the national and global economy will experience some instability. And, as the nation relies increasingly on very processed foods based on mono-crops/mono-species, we expect the price of food to rise. Further, as additional formerly free items (fresh water) become economic goods with a price, that will add additional financial stresses.

Our ability to meet our personal and financial obligations will strain, even further than currently.

So, the purpose of Sustainable 013 is to anticipate and prepare for the future, short and long-term. We seek to understand our context (geography, history, economy, social institutions), identify our individual and community needs, identify options for improving our conditions by starting and helping not-for-profit organizations and businesses, and encouraging participation in governance, all within the context of the long term, remembering that our children, posterity, and wilds  need a viable  and healthy home place.

As a task, we need to make sure that there are viable and sustainable paths for residents to work, to eat healthily and inexpensively, to shelter inexpensively while consuming minimum energy and emissions, to transport while consuming minimum energy and emissions, to educate for competence and enjoyment, to culture richly, to tax minimally (but up to the task of functional and efffective public institutions and governance).

So, we propose starting with three initial projects:

1. Development of a “venture” support fund/bank/assistance organization for specifically sustainable business. Likely starting with a venture to acquire and deep retrofit rental housing.

2. $5.00 gasoline project – In which participants commit to pay a stable price of $5.00/gallon for gasoline and fuel oil, the difference between the market price and $5.00 invested in individuals’ accounts in the sustainable venture fund above.

3. Food rota facilitation and “matchmaking”  (rotating informal dinner club groups of 4 – 8 people, either pot luck or prepared)

Not yet world shaking, but hopefully evolving a model of community development and citizenship in a loving home region.

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