Sustainability and Wealth

Check out my latest BlogTalkRadio interview with Dick Wagner.  We spent an hour talking about the nature of wealth, our money system, and how all of these impact both social and environmental sustainability.  Here are some highlights.

Dick has been a thought leader in the financial planning world for twenty-five years, including a stint as President of the Institute of Certified Financial Planners.  He is currently the editor of insidemoney.org, an online journal that addresses our personal and collective relationships with money.  Dick is also a regular columnist for Financial Advisor Magazine, and writes articles about money and what he terms “money forces” for various other publications.

He is something of an agent provocateur within the financial planning profession.  The conventional advice one gets from most financial planners is to save now for a comfortable retirement.  While this is undeniably good advice, it is based on an underlying assumption that money = security.  It evokes a paranoid mood, eg, “if you don’t save money now, you’ll be eating dog food in your old age”  The problem with the current financial meltdown is that you may have played by the rules, saved for a rainy day, and now your securities aren’t worth what you thought they were – so where’s the security? Money is not security. Money is one metric, along with happiness, health, and safety, in a larger idea of what “wealth” is.

So what does money have to do with sustainability?

When I was in school, we were presented with this concept of the “time value of money” as if it were an objective law of nature, equivalent to the law of gravity – ie decreed by God at the dawn of creation.  But money is actually a human invention.  And a very clever one at that.

Dick points out many positive, evolutionary aspects of money.  Money enables us to feed a high percentage of the 6.5 Billion people on the planet – not enough, to be sure, but astounding when you think about it. We have laws and rules about money that enable enemies to do business with each other.  Cross border ownership of resources, denominated with money, reduces the motivation for war.

So here’s the connection with sustainability:  Our debt-based money system inherently requires expansion and growth. Capital seeks the highest rate of return, at an acceptable level of risk.  That return derives from expansion of production and consumption. Economically, it’s a problem if we stay the same.  If we don’t get bigger all the time, we lose ground.

And, one of the results of our economic progress is that we actually become isolated from each other.  The elderly pay money to reside in an assisted living home.  Parents pay a third party to provide “child care” while they work, to earn money.

So debt has enabled a huge material benefit to many humans.  And, taken too far, it becomes an addiction. Financiers develop ever more sophisticated instruments to manage risk and squeeze out more returns – and sometimes it crashes, like recently.

I keep coming back to this theme about addiction – as a culture we are addicted to debt, to cheap oil, to novelty.  There’s a lot of good stuff there, but we have become immoderate, like a glutton who just can’t stop eating.

So how do we create an economic and monetary system that doesn’t demand endless increases in consumption?

I wish somebody would tell us the answer to that question right now.  But, just realizing that we created this system is a tremendous step in the right direction.  If we made it up, we can change it.

Optimism, Pessimism, Leadership

As I described in my last post, I have been challenged to see how I “hold the future” in my mind. My habit is to be a green-techno-optimist.

And, that could be completely wrong.

I’ve been through several apocalyptic mood swings ever since I read The Limits to Growth in the run-up to the first Earth Day, back when I was in high school. Then, there were the two oil shocks of the seventies. Then the Harmonic Convergence. Then Global Warming. Now Peak Oil, taking us right up to 2012. The world hasn’t ended yet, and on the other hand, it’s a big assumption to believe that the past is a good predictor of the future.

So how am I holding the future now? The Buddha used the analogy of tuning a stringed instrument. He was talking about how to hold one’s mind. Not too tight, not too loose.

Too tight might be taking the worst-case scenario at face value. This attitude leads to paralyzing fear.

Too loose might be thinking everything will somehow work itself out and life will go on. After all, it has every time before, hasn’t it?

What does this analogy say about leadership, about the kind of leadership we all need to embody these days? One of the most important things leaders do is to create a mood.

Is it possible to act from a confident mood, without falling prey to either lame optimism or fearful pessimism? Can we be confident even while acknowledging great difficulty?

One of the biggest limitations of logical thinking is that it tends to be black and white. That’s why some of the smartest people I know are the most depressed. But are they right?

The quality I’ve observed in some of the best business and political leaders is the ability to embody paradox. Seen differently, paradox is a form of creative tension, the gap between the real challenges of our time, and a vision of what sustainable life might look like. And to act in that gap.

Transition, Localization, and – gulp – Energy Descent

I’ve always tended to be a fan of globalization – maybe as much in a spiritual sense as an economic one. As a high school student, I loved reading Teilhard de Chardin’s idea of the emerging “noosphere”, a growing field of global consciousness. I was a huge fan of Arthur C. Clarke’s book, Childhood’s End, in which a new generation of children are born with extranormal powers, communicate with each other telepathically, and ultimately reshape themselves and the earth into a self-aware mega-organism, one of many in an infinite universe.

When the internet came along, I saw that as evidence that, at least on a crude level of text, pictures, music, etc, an infosphere was emerging. It opened communication, created a forum for dissenting voices, and made all kinds of products and ideas available. The internet is a miracle of innovation, and has made possible a whole new class of entrepreneurial, home based professionals, including myself. It’s not global consciousness, but it’s a step in the right direction.

When NAFTA came in, I was living in Halifax, Nova Scotia, Canada. After having lived in the US all my life, I found that products in Halifax were overpriced, of low quality, and limited selection. That was the late 1980’s. As NAFTA took effect, I had as much choice as I’d had in the States, at lower prices. I thought that was a good thing. And, it created opportunities for people in that somewhat out-of-the-way, but very creative, place to find new export markets for software, music, film, and other knowledge products.

There are lots of problems with globalization – but I’ve tended to think many of these could ultimately be fixed with sufficient attention to labor and environmental standards as part of international agreements.

Two years ago I met Michael Brownlee. Michael was the head of Boulder Going Local, now known as Transition Boulder County. The premise of Transition is that, with peak oil, the cost of transportating goods and people will become so high that we will have to create more economic and social value at the community level – the way humans have lived for most of our history.

I have to admit I was skeptical at first. Boulder County, Colorado is not a place that has supported a subsistence economy since the days of the Arapahoe. When my industrial age European-descended forebears arrived here after the Civil War, Colorado was already a commodity economy. The railroad transported immigrants and capital west, and gold, wheat and sugar beets east. Civil engineers like my great-grandfather Alpheus McNitt built irrigation ditches to bring water from the mountains into what had been called the Great American Desert.

So, isn’t re-localization just wishful thinking? Seems not. Last week Michael and partner Lynette-Marie Hanthorne held a workshop outlining the ideas of David Holmgren, one of the Australian founders of the Permaculture movement. Holmgren makes the argument that we are still living in the post-Enlightenment culture, based on a fundamental belief in human brilliance. The whole modern worldview, with its belief in progress and innovation, is based on this assumption.

But what if all the marvels of 21^st century life as we know it, are in fact more the product of cheap oil than of human brilliance? I resist this idea. It sounds Marxist, the idea that our consciousness is determined by our material circumstances. I believe that thought generates our world. I’m not new agey about this. I recognize there are limits – the inevitable cycle of birth, old age, and death we all live through. The influence of parents, schools and other cultural institutions on the stories we tell ourselves, stories about who we are and what we are capable of.  Nonetheless, we create the world we live in.

But the evidence for peak oil, as a constraint that we’re colliding with at 90 miles an hour, is compelling. Holmgren makes the connection between cheap oil and social breakdown. Our ability to drive many miles to our private home with our automatic garage door opener, where we don’t talk to our neighbors. Each in his/her own unit, with its own toaster. Our isolation, our addictive behaviors, which are epidemic. The fear we have of each other. Maybe life’s not so good with cheap oil after all?

Holmgren lays out four possible future scenarios of post-peak oil “Energy Descent”:

Techno-Explosion: In which we discover a new source of limitless energy and blast off into a science fiction future of no material limits. Given the dystopian view of social breakdown he lays out, it also sounds like a recipe for Timothy Leary – inspired psychosis. Perhaps we could colonize space, and humans will multiply infinitely through the galaxy and beyond. Hopefully the pharmaceutical industry will keep up and they’ll get that Holodeck invented after all.

Green-Tech Stability: After a little bumpy period, we learn to replace fossil fuels with renewable energy sources. We don’t continue our Evel Knievel – like jump into space, but settle down into a stable, slow/no growth pattern, in which we relax into an abundant, but less frenetic lifestyle. This is the point of view advocated by many of us who believe in innovative, capitalist solutions, eg Al Gore.

Creative Descent / Earth Stewardship: Using permaculture principles, we descend gently but steadily into a localized, subsistence economy that features greater value in community and ecological harmony. Population subsides from the current level to something that respects the earth’s carrying capacity – maybe 1 billion or so?

Collapse: Think end of the Empire, Dark Ages, warlords, barbarian hordes, moats, only with automatic weapons. Not a pretty prospect.

Michael challenged us, not to believe one idea or the other necessarily, but to take a hard look at what idea we were holding of the future. And to examine the basis for that view.

I come down in the Green-Tech Stability camp. But, I wonder, can we recognize the challenge and change the system and our own worldview fast enough? And what kind of hard-facts slap in the face will we need to get moving?

Lean and Green

Last month I had the good fortune to help my colleague Susan Skjei facilitate the Lean and Green Summit in Boulder, Colorado.  The big message for me was how much the field of “lean thinking” offers for companies thinking about sustainability.  One of the nagging issues with sustainability is defining what it actually would look like in your organization.  There are all kinds of competing and/or overlapping “green” standards out there, some of which are well founded, and some of which may be based on PR more than measurable facts.

Lean thinking offers a powerful combination of “hard” and “soft” management techniques that have been proven by Toyota and many other organizations.  The answer to the question “what would green look like?” is a specific set of metrics, against which current performance and future goals can be benchmarked.  The metrics are the reference point for all conversations about continuous improvement.  The (so called) “soft” side is the level of collaboration, trust, and honesty in the culture that allows those conversations to be effective. Combining the two, there can be a realistic assessment of what is,  creative imagination of what could be,  collaborative prototyping of new tools and practices, and ongoing performance improvement.

Included in a well designed performance measurement framework, such as a Balanced Scorecard, sustainability initiatives can be linked to impacts on costs, revenues, and profits.  More and more companies, like Dell Computer are actually saving money by reducing their carbon footprint.  With the right metrics, sustainability efforts are going beyond idealism and becoming just good business practice.