Everything Must Go: sustainability

Who Gets the Blame for the BP Disaster?

a look at consumption, tacit encouragement, and societal acceptance of systemic risk

Posted 2010-05-20 22:07 in business, culture, environment, ethics, human nature, sustainability

The BP oil disaster in the Gulf of Mexico is set to be one of, if not the biggest, environmental disasters in history. There’s been a lot of talk about about BP’s negligence and how their abject greed and lack of concern for safety precautions led to this problem. While I agree that BP probably did neglect their duties in some ways (evidence does seem to suggest this), and in a lot of ways should be held responsible for their failures, I also think that blaming BP is a very myopic way of looking at the problem and in preventing future disasters.

It’s a longstanding theme— a trope, if you will— within the progressive cultural narrative to blame corporations for all our global and national problems, or at least to finger them as the root cause of all unwanted consumption-related externalities. This view also conveniently avoids having to take serious looks at our own behaviors as individuals and as a society, and how these continually place our country and our environment at risk. When I say this, my point is not to absolve companies of responsibility and to place blame elsewhere. I advocate a holistic view of the entire system— being contemplative about our own roles in the functioning of our society and our complicity in creating it.

Fact: there are serious risks endemic to our energy policy. An error can definitely be blamed on an oil company’s negligence, but simply blaming them does little to stem the damage the disaster creates. As a country, we seem unable or unwilling to face this. Stated another way: there are systemic risks that are inherent in the way our society has chosen to build its infrastructure, and the energy chain we now rely on to achieve the basic functionality of our society.

Blaming BP is a little like going skydiving and having your parachute fail to deploy. Yes, maybe you are right to curse, during your last 30 seconds of life, the skydiving company for their failure to properly prepare the parachute. But as you can quickly see with this example, when you’re falling 120mph towards the hard, cold earth, it’s a bit too late for finger pointing to be productive. What would have been useful to know beforehand was that there is serious risk involved in skydiving to begin with. There will eventually be an accident. No matter what. The statistics might change, but there will at some point be an accident that someone will pay dearly for. And you might be the one affected by that accident. Maybe you should think about that before you go skydiving.

Inadvertent environmental damage. Inadvertent pollution. Inadvertent destruction of natural habitats. Inadvertent damage to ecosystems. Inadvertent killing of important portions of the food chain. These are but a few of the risks we assume with our energy policy. And I would describe this as systemic risk because damage to any one of these spheres could have serious ripple effects in other spheres. A failure of one off-shore oil drilling platform could potentially kill off a vast amount of ocean life. We do not know what degree of damage this might end up being once the effects of this echo throughout the chain. The interplay of factors is complex enough that it’s difficult to predict what kind of collapse we might trigger through one disaster stemming from energy procurement. Realistically, we must come to grips with the idea that things will go wrong from time to time. But to only criticize the companies behind such environmental disasters is to look askance at our own roles in creating the conditions for things like this to happen.

Like it or not, these companies sustain us and our way of life, which is why they are drilling out there in the first place. Unless we are willing to make compromises or wholesale shifts in our consumption as a society, then we’ll continue to have periodic disasters from things like off-shore drilling because things inevitably go wrong every now and then. There is no avoiding this; it’s the nature of a complex system for periodic failures to occur. It’s naive to think that companies simply don’t care about disasters like this; for BP, it’s not only bad PR, but they’re losing billions in profit from all this spilled oil.

Yet, regardless of what happens to the companies, we all suffer for these errors, and maybe in ways we haven’t even thought of yet. One error can be devastating to the entire human race and all life on earth. Yet, we allow companies to engage in activities that expose us to these risks. Why? Because it enables our lifestyle. We could easily prevent them from doing it if we as a society (through our elected officials) agreed that this was not something that was worth risking. But we don’t. We have comfortable lives that we receive as a benefit of allowing the behavior to continue (at least until the inevitable disaster); politicians feel pressure to support risky activities because as a society, we don’t appreciate the level of risk we’re investing ourselves in until it’s too late. Yet, it’s clear that the fewer risky behaviors we encourage or allow as a society, the less number of disasters we’ll have as a whole.

Currently the cap for all damages is $75 million, to be paid by BP. This, as you might imagine, is far lower than either the estimated dollar value of the damages or the amount of money it will take to clean up the spill. Some outraged people think that we should raise that cap into the tens of billions. This sounds good, until you realize that some things are just unfixable. This oil spill (more like a geyser) is pretty much unfixable at any cost. It’s just too late.

It’s for that reason, I think we shouldn’t increase the cap. If anything, I think we should lower it. Why? Having a huge cap will offer us psychological relief that we can keep allowing industries to do things that impose great risks to our society and planet. The larger this cap is, the more we feel like we will have someone to blame and someone who is “responsible” for fixing the problem. But like I said earlier, some things simply are not fixable. A money-back guarantee from a skydiving company isn’t going to do you much good when when you’re falling out of an airplane without a functioning parachute.

If we believe this disaster to be an exemplar of the kind of risk we are not willing to accept as a byproduct of off-shore oil drilling, then we should never have allowed this kind of drilling to be authorized in the first place. If we have low caps on similarly risky pursuits in the future, we’ll probably think a lot harder about what we allow to go on. Getting someone to fork over money for cleanup is the easy part. Actually undoing damage that a disaster on this scale causes is another, largely intractable problem that we’ll suffer the consequences for for a good long time. Lowering the cap forces us, from the very beginning, to think about what we’re doing when we authorize something. That’s what having no insurance policy forces you to do; you have to evaluate things based on an uncolored view of the risks because you are the one who is going to suffer the consequences. This is a realistic proposition because in the case of environmental disaster, we are all affected; a closed system like planet Earth is at jeopardy in its entirety when just one of the checks in a network of environmental checks and balances is threatened. It’s just easy to forget it when you can bill someone else for the problems.

If we think from the beginning about the costs we all have to deal with instead of the costs “some company” has to deal with, we’ll be a lot more careful in the future. If there is a future.

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Is Recognition of Human Empathy the Solution to our Environmental Problems?

according to Jeremy Rifkin, we’re on the verge of a massive revolution

Posted 2010-02-19 11:36 in biology, consumerism, culture, economics, environment, human nature, improvements, marketing, politics, sustainability

There’s a fascinating interview with writer Jeremy Rifkin over at the New Scientist website. In it, he lays out why he thinks there is going to a be a massive shift in human consciousness as a result of new forms of information accessibility combining with the human ability for expressing empathy. This revolution, in his estimation, will solve the energy and environmental problems our world is facing. Borrowing from evolutionary biology, philosophy, marketing, and many other fields, Rifkin sees hope in the current turmoil where others don’t.

Incidentally, Rifkin’s vision of changing human behavior runs completely contrary to that of Steven Levitt (of Superfreakanomics fame), who as I stated in a previous entry is stuck in neutral with his “solve problems created by technology with more technology” rut.

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Corporate Social Responsibility Can't Happen By Itself

emphasis on short-term profitability stunts CSR’s ability to thrive in the market

Posted 2009-10-01 22:40 in business, business models, culture, economics, ethics, finance, improvements, marketing, sustainability, unfinished thoughts

Regulation is a pretty hot topic. And when I say “hot,” I mean that it has an uncanny ability to divide a crowd. Progressives seem to generally favor regulations as a means of limiting the damage caused by corporate recklessness, and they have been quite vocal in pushing for greater government oversight in what companies can do, and how much they can do it before incurring serious penalties. Meanwhile, proponents of the free market maintain that the only fair and effective way to handle regulation is to allow the market to do the work; they believe in an efficient economic system that automatically controls problems that really matter (i.e. the problems most people care about). I personally can sympathize to some degree with both sides of this debate, but am not convinced that either can be implemented as solutions to the problems we currently face. What follows is my logic.

Before we can go on though, we have to face facts: it’s been obvious to those paying attention that market forces have not been effective in curbing devastating environmental damage caused by companies who have ignored the social costs of their operations. It’s not limited to environmental damages, either. The recent financial meltdown almost certainly would have been prevented with more oversight.

The traditional progressive (read: “liberal”) line about all this is that these corporations are just greedy and soulless, and don’t care about anything but profit. But this views corporate activity within a vacuum, and denies the economic realities underlying their behavior. In the absence of proper incentives, no company will behave in a manner consistent with diffuse, idealized social goals. Companies by their very nature act in ways that are most beneficial to themselves in the marketplace; even companies that try to do social good still have financial and publicity incentives underlying their behavior. Why? Because if they don’t, they effectively get punished by Wall Street and the market; remember that when we’re talking about the stock market, the bottom line is that public companies (i.e. the biggest organizations on the planet, who control the most money) pretty much need to post higher-than-expected profits consistently— or else. On Wall Street, nobody gives a hoot about how socially responsible you are— unless you’re making money from it. And tragically, our system is structured in such a way that companies really cannot afford to piss off Wall Street, for a number of reasons that go beyond the scope of this commentary.

Nevertheless, that is an economic reality; to condemn a company for being socially irresponsible overlooks the conditions that encourage the sort of reckless behavior that we hear so much about. In my opinion, it’s more of an indictment of our social and financial structure than it is of a company to say that they act irresponsibly. Like I’ve said before, we should think of corporations like organisms. They do what it takes to survive now. They typically can’t afford to think too far in the future, because Wall Street does not reward thinking far into the future; Wall Street rewards thinking about next quarter. Whose fault is that? I’d argue that it’s all of our faults. In an environment of high competition and high risk of market punishment, it’s unfair to blame companies for playing the game by the rules we ourselves constructed. Of course, it doesn’t make what they do ethically right, but like in any evolutionary context, the concept of justice doesn’t play a large role in behavioral decision-making; surviving does.

So yes, public companies do operate by almost strictly by financial motives, just like many progressives indignantly charge. But I would argue that this financial motivation should not at all detract from the actions of, say, Wal-Mart, who has done more than almost any other company in the world to enact serious green initiatives. True, they’ve done it for themselves, their own bottom line, and Wall Street— but still, they’ve done it. And if that’s the motivation they need to do it, then perhaps we should encourage that. Besides, if they were supposed to adopt a sudden conscience about their activities and rectify them, whose social goals are they supposed to strive for, anyway? Lots of different social factions have lots of different goals, and many of them have incompatible or actively contradictory goals.

For this reason, it seems fair to place the decision-making process in the hands of the public, through market forces. That allows a sort of collective decision-making process that is free from being regulated by “some guys on a board,” and allows for us to ostensibly have a shared voice in determining the direction that we take as a planet. Unfortunately, however, there are some problems that such market forces don’t resolve. For example, the economically well-endowed have a disproportionately large voice and thus the ability to unilaterally have a strong negative impact with their choices. And there’s still no guarantee that the aforementioned group will pay attention to social well-being if they’re still being held hostage by Wall Street demands. Free market economics as a means of regulation is dependent on not only market efficiency, but ethical, rational, and well-informed decision-making on the part of consumers— many of which are corporate entities.

But as consumers we are neither rational nor omniscient. We are sometimes ethical. But we can’t know everything about all the downstream effects of all our purchases at the time of purchase. This makes it pretty hard to argue the point that the market will be able to curb environmentally damaging business practices through selective consumption.

That may seem like a slam dunk for regulation, and many on the political left would love to see this happen. But it’s not that easy. The problem of regulation is complex, and it is difficult to enact regulation in a way that appears fair to everyone. Here’s the main problem: if there are regulations, who gets to call the shots?

Some might argue that we should use science to guide our regulatory policy, at least with regards to environmental concerns. But what science? Even science can have an agenda. The more you look into scientific research, the more you see how there is a chain of funding. Funding is a political process. People conducting research are subject to biases. No matter what the science says, or the preponderance of evidence suggesting one thing or another, when it comes down to drafting law, there will almost always be some arbitrary component about implementation (e.g. exactly how many tons of CO2 a company can release per year; exactly what chemicals a company can and can’t produce). And those people whose economic interests are being impinged will no more welcome the validity of the science or the arbitrary lines being drawn than a liberal would welcome Sarah Palin’s views if she was placed in charge of preserving endangered wildlife. Ultimately, any laws will be seen as political tools with embedded agendas.

Though it is debatable how much this might change corporate attitudes towards CSR, I think part of the fix is to change the nature of Wall Street. It does not serve companies or society to have such a heavy focus on short-term profitability. This structure denies companies the opportunity to act in ways that favor their own long-term efficiency, the public’s best interest, and the well-being of the planet. If companies didn’t have to keep impressing Wall Street, they could better take actions that could, over the long term, make their operations more efficient, streamlined, and less wasteful. That would be good for their bottom line and for environmental concerns. But that takes time, and it might require a few consecutive quarters of what may appear to be subpar financial performance. Right now, this is a highly risky strategy that most companies wouldn’t consider because they will not be rewarded for it.

Weirdly, even amidst all the talk about reform in the financial industry, I have not heard any talk about this. Admittedly, I’m not sure if anyone has worked out the details about how a “new and improved” stock market system would work, or if anyone has suggested a better set of economic incentives for waste reduction, but perhaps it’s time we started a national dialogue about it. It seems rather important.

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The Trader Joe's Paradox Revisited

how the most progressive grocery store came in last for sustainability

Posted 2009-09-22 21:18 in consumerism, environment, experiences, marketing, sustainability

Trader Joe’s, the much celebrated “progressive” grocery store is a favorite of those consumers who favor such adjectives as “green” and “eco-friendly.” Unfortunately, as I described in a previous article, the reality is that Trader Joe’s is nothing of the sort. Amazingly, they manage to maintain that undeserved image without promoting it or even living up to the standards that these values would suggest. Case in point: this article in the New York Times places Trader Joe’s dead last in a national survey of grocery store seafood sustainability. It really takes some doing to lose out to guys like Safeway and Kroger. But then, Trader Joe’s never claimed to be eco-friendly and green in the first place, so maybe it’s not that surprising.

As I mentioned in my previous article about TJ’s (see the update at bottom), I talked to a Trader Joe’s manager about this very issue about their fish last November when I noticed that almost all the fish they sell there were on the “AVOID” column of the Monterrey Bay Aquarium guide to sustainable fish). The manager told me that Trader Joe’s is a “democracy” and they stock things that people buy, and well, the people like unsustainable fish. I suppose he seemed somewhat apologetic about it, but at the same time he was able to take umbrage under this lofty ideology of populism.

Of course, by the same token we can view this democracy as a means by which we are able to use our buying power to promote our ideals through selective purchasing; that is, if we don’t believe a company is representing our values, we can avoid buying there. Being concerned about the state of our collapsing oceans, I did exactly that and stopped buying fish there. I also tried to share this information with friends, colleagues, and anyone who would listen. What I discovered about this is that it’s quite hard to gain credence with others regarding something when your statements directly contradict what others think they know; nearly everyone I told this to seemed to doubt my claims because of Trader Joe’s pervasive “progressive” reputation.

Earlier this year, I decided to write to Trader Joe’s headquarters about it. In my letter, I expressed that while I appreciated their apparent democratic ideals, Trader Joe’s could implement a “high road” approach on this, given the scientifically-validated reality that overfishing is destroying the world’s oceans. I attached a copy of the Monterrey Bay Aquarium guide to sustainable fish. Much to my surprise, soon after I sent it, they updated their website to add something about how they are now sourcing their fish based on the Monterrey Bay Aquarium guide. I’m not sure if it was my letter that elicited this, but the timing was pretty remarkable, and I was pleased that maybe one customer’s opinion did matter!

Well, it’s been several months or so since that update on their website. Since then, I’ve gone back numerous times and have not seen any change in their inventory of fish. I’m disappointed, especially since so many people are convinced that they are a company with “principles” and “ideals” relating to environmentalism, and thus do all their shopping there with the implicit understanding that their shopping list has already been filtered for eco-friendliness. Of course, to be fair, TJ’s never claimed that they serve this function.

But boy, they’ve shown that they can really cash in on this misconception.

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"What Do I Buy?" vs. "Do I Buy?"

making sense of the ‘environmentalism-through-consumption’ movement

Posted 2009-04-23 15:25 in consumerism, economics, environment, sustainability

Continuing on the Earth Day themes I’ve been thinking about for the past few days, I’d like to talk about one of the latest environmental trends I’ve seen lately: commercial reuse. Before I start, let me say that I’m all for reuse in the sense that I support the idea of using resources we already have rather than producing new ones. Clearly, reuse can be a good way of avoiding all sorts of needless waste. Why buy a new lamp when you can, as I found out, get a perfectly good used one free on Freecycle?*

That said, yesterday, I saw a program on the National Geographic Channel called Garbage Moguls that managed to perturb me despite its focus on reuse. The premise of this particular episode, according to the show’s webpage:

Recycling gets a makeover with a quirky group of young “eco-capitalists” at TerraCycle, Inc. Using only materials found in the trash, the team will transform cereal boxes into notebooks, newspaper into pencils and cookie wrappers into kites.

An interview with the company’s founder at the opening of the show had him making the following statement (paraphrased): “I want to prove to people that you can save the world and make a boatload of money doing it.”

In and of themselves, I have no problem with either the description of the company or the founder’s statement. However, what I am finding increasingly disturbing is the environmental movement’s seeming exclusionary focus on the What Do I Buy? piece of the retail value chain, and the total lack of acknowledgment of the preceding Do I Buy? piece. I understand that reuse is a valuable contribution to the environmental movement, but it is increasingly worrisome to me that companies like this simply market and sell the ideas of “environmentalism-through-consumption,” which is at best a tacit approach to a problem that requires active solutions. Note, for example, that the quote from the founder explicitly likens buying TerraCycle’s products to saving the world.

Again, I don’t disagree that buying a recycled notebook is better than buying a new one; it is almost definitely better (provided that the energy costs of producing the recycled notebook more than offsets the environmental and energy costs of making a new one). But it’s not so much Terracycle’s products themselves that are offputting to me so much as the ideological by-products, which reinforce myths like “recycling = environmentalism.” I am concerned this attitude may be almost as harmful as a lack of environmental awareness.

Why? Because when this attitude is promoted, it leads people to believe that along with recycling, buying Terracycle’s products (and products like them) is tantamount to saving the planet, and therefore a complete strategy to offset environmental damage. But this isn’t exactly true. What it does is alleviate some of the damages caused by consumption. The only way to avoid causing damage in the first place is to cease consumption entirely; this is because ceasing consumption causes manufacturers to stop producing. But I should reiterate that my argument is not that we shouldn’t buy at all; instead, I would argue that along with reusing and recycling, more emphasis needs to be placed on the Do I Buy? decision (in the purple “consumer” section of the above diagram). Exercising this discretion could make all the difference.

^{*I’ve used, and continue to use, Freecycle, a website that connects you with people who want to get rid of perfectly good stuff (and often less than perfect stuff as well) and lets you take that stuff for free, and that will also connect you with people who will take your weird, useless knick-knacks lying in your closet that are only taking up space. I think it’s a cool service that has great potential to save you money and clean up your house, while enjoying some positive social impacts. I strongly recommend it.}

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The Mystery of Coffee Refills

barriers to behavioral change are not always obvious

Posted 2009-04-21 00:30 in business, economics, environment, human nature, marketing, sustainability, unanswered questions

There is a Peet’s Coffee stand in the cafeteria of the building where I spend my days. They have a deal where you can bring in any size container and get a refill for $1.50. The cheapest size of coffee you can buy without getting a refill is $1.65, for a small size. I’m not a big coffee drinker, but as the semester rolls to a close, I find myself going there somewhat frequently. I always bring my old cup so I can get the refill. It saves me a few cents, and besides, I don’t like throwing away coffee cups. It’s not just the cup that bothers me, it’s the heat-insulating jacket and the plastic lid as well. It seems like a lot of stuff to be throwing out, especially if you buy coffee every day, or multiple times a day.

What I find very strange is that I’m surrounded by people who drink a lot of coffee— like 3-4 cups a day— and yet I feel like I’m the lone soul who brings in his used cup to refill. This seems particularly odd because a lot of the people around me are other students who, like me, are living their lives dangerously close to the poverty line and could probably use every cent that they might save.

Unsure about this incongruity, I asked the cashier one day if many people refill their cups. “Hardly anyone,” she replied, “but there are some people who refill huge containers.” She motioned with her hands to show how big the containers were. They were rather large.

Peet’s is apparently okay with this abuse of their refill policy, but the cashier seemed to think it was crazy. The reason Peet’s is okay with it probably has something to do with the facts that 1) they want to promote some kind of environmentalism, 2) refills save money on cups, lids, and insulators which are somewhat expensive, 3) it serves to reduce their waste disposal costs, and 4) hardly anyone gets refills.

But I find the fact that few people get refills curious. Of the people who frequent this coffee shop, many of them are graduate students, staff, and professors, who have offices within the building. Many of the undergraduates have storage lockers in the building as well. Yet the incentive structure is apparently not appealing enough for many of these people to get refills.

For a number of reasons, it is very interesting to observe the lack of consumer response to this initiative. First, it’s not very difficult for anyone to take advantage of it; that is, it doesn’t really create much inconvenience (especially for the customers who have offices or lockers within the building). Second, it demands very little change to habitualized behavior to get the refill (people just have to remember to take the cup with them to the coffee shop). Third, people— particularly those who drink a lot of coffee and multiple coffees per day— stand to save a good amount of money (if you buy a large coffee, you can save some 60 cents per drink, which can add up very quickly). Fourth, it demonstrates how inured we are to our disposable culture; the thought of refilling probably doesn’t occur to most people because they’ve simply never lived their lives in this manner.

As a person interested in understanding how to make behavioral change more appealing in social marketing contexts (this being of environmental concern to me), I note this: despite the bevy of benefits (reduced costs to the consumer, access to virtually infinite quantities of coffee, significant reduction of environmental waste) and the relatively minor drawbacks (you have to keep the cup and remember to bring it when you visit the store), this effort to promote refilling has generally failed. So I ask: what kinds of changes need to happen to make the reuse of coffee cups appealing for the customers of this particular store?

Post your thoughts or comments below, particularly if you are a regular customer of this or any coffee shop!

^{[Note: I realize that if you read the previous entry on this blog, it may seem to conflict with my attitude here. I should explain: this entry is about encouraging behavioral change that promotes certain ideals; the previous entry was expressing frustration with the repeated insinuations from industry that behavioral change is unnecessary if you just buy the right products. That said, I do not mean to discount the importance of careful and well-considered consumption, and its role in making social impacts; I simply reject it as a singular strategy.]}

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Rethinking Green

easy approaches to being ‘green’ are en vogue, but do they shoulder the environmental burden?

Posted 2009-04-18 11:56 in environment, human nature, improvements, sustainability

Note: This article is a response to this “eco-business”, which sells standard cleaning products in reused containers.

I don’t mean to engage in the perfect solution fallacy here, but a business selling Windex in reused bottles encapsulates a lot of the things that I think are misguided about the green movement. I do believe that reusing materials is a very good thing, but I am concerned that ‘green marketing’ efforts like this hoodwink well-intentioned people into thinking that minor and convenient consumption changes can offset the huge environmental problems we create by not making serious inquiries to our overall lifestyle choices.

In my mind, efforts like this have the worrying effect of diverting attention away from the real problems (overconsumption), and instead breeding attitudes founded on ease and ignorance (e.g. “well, as long as I recycle, I’m doing my part”) and reliance on consumer goods to promote ideas that really require behavioral changes. I understand that recycling is generally a good thing, but I’ve met countless people who think that just recycling is equivalent to being environmentally conscious. And it’s not; it is simply one expression of it. Buying Windex in recycled bottles and recycling aluminum cans is not, as many people will likely see it, absolution for our collective extravagance. If you read up on the economics of recycling you might see why this is the case (to put it shortly, recycling takes a lot of energy, uses a lot of resources, and has a huge carbon footprint of its own).

The conversation about environmentalism has been so dumbed-down and reduced to quick-fix solutions that it has started to promote the problem by making consumers feel like the only role in the consumption process (with regards to social impact) is the last stage— recycling the empty bottles, cans, and cardboard boxes of the stuff they buy. And while this one way to make a contribution, it’s not even close to being the most effective way to transform concern for the environment into action; it’s just the easiest way— and that’s a big difference.

The reality is that if we really care about the environment, we will need to consume less overall. We will likely need to make major sacrifices to our comfort levels. If we really care, we may need to accept some major inconveniences in our lives. We cannot get something for nothing.

Buying a reused plastic bottle is indeed a small step towards a massive goal, but we should not be tricked into thinking that answers can be bought so easily and shipped to our houses. As I mentioned before, with true commitment comes sacrifice.

We like quick solutions, but it is time to start thinking harder about our roles in creating the problems, instead of trying to consume our way out, which is the way we got in in the first place. But unfortunately, modern culture hinges so much on consumption and consumer products being the solutions to our problems that it is our instinctual response to look for our solutions there— externally— instead of within ourselves and our behavior. Unfortunately, that is precisely the wrong place to look.

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Business, Social Justice, and the Problems of Fairness

Posted 2009-03-28 11:03 in biology, business, business models, economics, human nature, politics, sustainability

If you observe traffic in India long enough, you’ll arrive at the conclusion that there are no road rules in India. But this is not true. There is one rule that dictates driving behavior: Might is right. To Westerners, this is a discomforting thought, because it bypasses the systems of social justice that we are used to in the West. Shouldn’t you, as a small car, have the same rights on the road as a mammoth SUV? Shouldn’t you, as a pedestrian, be able to cross a crosswalk without fear of being flattened by a speeding vehicle?

Most Westerners probably think so. Fairness and equality is ingrained in our outlook on the world. We look for courts and governments to level playing fields for us. If someone smashes our car in an accident, we use the law to restore ourselves to the situation we were in before the accident. We call that justice.

The ideals of social justice, fairness, and equality are lofty; it’s hard not to get upset when you hear stories of unfairness (persons being wrongly convicted of crimes, people losing all their money in elaborate frauds, etc.), and it’s even harder not to demand justice when something like this happens to you. Yet, I have recently begun to understand the sorts of costs that this has had on our society, both in an economic sense, but also in a psychological sense. I fear that despite the high-minded ideals of social justice, it does not always serve us well as a society to rectify every injustice leveled against us.

I wonder about how the concept of justice fits into an evolutionary context. Does it fit in it at all? Evolution would suggest that some individuals (organizations) are better suited for prevailing conditions than others. The weak and frail will be consumed by the environment, and the strong will soldier on, and grow. Evolution is the law of nature for all beings, and it is a law that is the supposed lifeblood of capitalism. Despite this, our system (at least in the U.S.) continually ensures that those who cannot compete— fairly or not— can be sustained artificially by a system that will nurse them regardless of their strength or potential to compete effectively in the future. This is not true for all firms, but it’s true for many. Think of GM and Ford, think of AIG, think of the ridiculous amount of subsidies given to industrial farms.

You might be wondering where I am going with this. What does bailing out companies have to do with social justice? Remember why the government is currently bailing companies out; it has very little to do with the companies themselves. It has everything to do with the idea that some people unfairly lost their life savings in them, and hundreds of thousands of people will unfairly lose their jobs, and the resulting economic meltdown will unfairly ripple throughout society and affect people who had nothing to do with it. So what is the solution? A lot of people feel that ‘investing’ billions of dollars into these organizations will re-establish justice to not the auto company, but people who might have been impacted by their problems. All those hapless investors won’t lose their hard-earned money. All those dedicated auto-workers who labored at GM for 35 years won’t lose their jobs. And all those bystanders won’t be leveled in the narrowly-averted nuclear winter.

I can’t help but anthropomorphize this situation a bit by comparing it to the way a parent welcomes back the proverbial prodigal son with open arms despite the kid’s waywardness. At least to some degree, we expect this from good parents. Madonna’s song “Papa Don’t Preach” has the narrator begging her religious father for support instead of judgment despite what in his eyes is her grievous sin of becoming pregnant as an unwed teenager. But we’re talking about supporting wayward organizations here, which will have broad social impacts. Welcoming back companies that recklessly screwed over investors and their own employees should not necessarily be supported in return, though it’s tempting to do it because of the other parties that might be affected by a failure to do so. So let’s start with why it may not be a good idea to bail out these companies, and then move on to why it’s even bad for the related parties.

There’s a good chance that Madonna learned her lesson and won’t get pregnant again, but the guys at GM are more akin to heroin addicts than teenagers who made some bad decisions. They’ve been supported by government money so long, are so far from market-orientation, and so incapable of the sorts of organizational change that are necessary for detoxification that it seems impossible to give them any sort of support without tacitly feeding their addictions. Sure, you can give GM money to go rehab, but there’s absolutely no indication that they’re interested in rehab. They want to stave off the looming disaster on the horizon for one more day. If perhaps they showed the least bit of interest in market orientation and willingness to be innovative, it might be different. But that’s not the case at all. They simply expect to be saved because they always have been, and the government plays into their hands largely out of habit.

Despite this, no amount of money given to the company is going to restore the lives of the victims of corporate irresponsibility, and no amount of money alone will prevent the threats of insolvency from being constant and recurring events. Of course, we are often victims of the sunk-cost fallacy, which suggests that because we’ve already wasted so much money on these companies and they’ve already created so much chaos, that we should escalate our commitments to them to hoist them from the tarpit from which they’ve carelessly driven into (again)— which is precisely the wrong tack in this situation. The best thing to do is to walk away and never look back, despite their anguished screams.

I know that many people would be affected negatively by this course of action. I realize that many retirements will be ruined, many workers will hit the skids, and their kids may never be able to attend college. I understand and empathize with this hardship. But what worries me is that trying to correct these unfairnesses actually set us up to create exponentially more of them, and make us more susceptible to future crises of the same or greater magnitude— and it has nothing to do with the actual transfer of money, and everything to do with economic incentives.

Put bluntly, these organizations are drains on the system, and further feeding them and the people who they have hurt is an even bigger drain on the system. That said, I understand that we live in a society, and we can’t always think about things in these terms. I don’t advocate, for example, that we stop all social services, which many perceive as drains. But it’s damaging to the business environment and ultimately consumers to support businesses just because we always have. It not only encourages organizations to be reckless about their management habits, but it encourages those who work for them and invest in them to behave carelessly and greedily. Aggregated over a nation and over decades, it’s primes us perfectly for future disasters of equal or greater magnitude.

Put the right incentives in place, and you can avoid this sort of thing. If you knew that no one was going to bail you out, your company would probably act in a much more controlled manner. If you were investing your life or your live savings in that company, you might spend a bit more time scrutinizing the management practices of that company. Which is what these organizations and people are supposed to be doing in the first place.

Consider this: a herd of antelope will never try to nurse or save an injured antelope, regardless of whether it was maimed by a predator or by another antelope. To do so would jeopardize the future of the rest of the herd. Standing around and attending to the injured puts them all at risk. And indeed, some antelope will need to serve as fuel for the predators. These predators probably aren’t viewed positively by the antelope (if they have such a capacity), but in a way, they are actually protecting the antelope society as a whole because they enable a systematic checks-and-balances that promotes a balanced ecologic sphere that keeps the antelope’s environment stable. Without this, the antelope would overpopulate and eat themselves to famine. Then all of a sudden, the seeming prosperity would reveal itself to just be an elaborate illusion, and they’d see that actually there wouldn’t be enough food or resources to go around. Does this sound at all familiar?

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The Space Between Us

The developed world is balanced precariously on a bed of dependency

Posted 2008-09-17 12:03 in consumerism, environment, human nature, human resources, sustainability

The growth of the number of linkages that our society depends on has been staggering over the past century. If you look back at books that detail the lifestyles of pioneer families in the American West, or farmers in rural India, or peasants in England during medieval times, you’ll notice that there the organizational distance that took any given commodity from its point of growth or manufacture to the end user was quite small, and typically involved only a few parties. Nowadays, there are countless organizational linkages that are involved in any given product we might own.

Take this computer I’m typing on right now, for example. There were probably 100+ manufacturers involved in the creation of this computer if you include all the components and parts, and many of those manufacturers purchased parts from other manufacturers, and so on. When it comes down to it, maybe 50,000 people were involved in building this computer in some way. And while computers might be an extreme case, by no means is it atypical of the amount of organizational growth in the economy.

The number of middlemen and organizations that separate manufacturers from end users has increased dramatically. There are the people that source materials, people who manufacture them, people who store them, people who distribute them, and people who sell them. Compare that to the maybe 25-50 people that were probably involved in the creation and sale of everyday items in simpler times, where blacksmiths bought iron ore from some organization, forged tools from the iron, and sold the tools directly to end users.

Even if you held the number of items constant in a comparison of items in your home to that of a medieval person’s home, the number of people involved in the process of furnishing your home would dwarf the number of people involved in the processing of the home from a distant time ago. Consider even the house itself: your wood, nails, and tiles come from far away, and involve many transporters, salesmen, manufacturers, etc. A peasant’s hut in the middle ages was made from wood from a local forest that didn’t need to be transported far, and essentially crafted from scratch (that is, without many pre-manufactured parts) by locals.

In other words, the number of people who are working for you now is much, much higher that it was for people in the past. This is important for several reasons.

Firstly, this means that there is an interconnectedness in the current economy that was never experienced to this degree in the past. This is what Thomas Friedman describes as the “flattening” of the world (of course, as Matt Taibbi points out, this choice of phrase defies the significance of the word “flat,” since it was actually the roundness of the earth that made us realize the interconnectedness more than previously thought!).

Secondly, it means that there are many, many more things that can go wrong in the functioning of our society. If you are more dependent on more people to get you your daily food and water, it also suggests that there are more places where problems can develop, and many more ways in which the chain can fail. Any such failures in the chain will affect more people, which is bad not only because of the potential magnitude of the inconvenience (or perhaps crisis), but also because the ever extending length of this chain has divorced people from having basic knowledge how they can get what they might need in the absence of the middlemen.

Think about what would happen if there was a crisis in the supply chain that prevented food from getting to all the grocery stores in your area, and you can start to imagine the severity of this problem. Not only are people completely dependent on grocery stores to get them their food, but in the event that the stores are unable to provide, people have no idea how to get the food they need. They might figure out that they need to grow vegetables themselves, but would they know how to do that? Would they have space to do it?

People in third world countries are used to dealing with breakages in the chain. They don’t rely on electricity. They don’t depend on getting water delivered directly to their houses. For that reason, they have organically developed street smarts about how to get what they need whenever they need it, and they are never overreliant, or even confident, that the system will be able to deliver it to them.

While many in developed countries might look down on the apparent primitiveness of this situation, in many ways, it is the Westerners who are at a long-term disadvantage in a survivalist sense. They are the ones who can be easily brought down by something like a terrorist plot, an oil crisis, a natural disaster, or a transportation strike.

A friend of mine described how the recent onset of Hurricane Gustav took out power in her hometown in Indiana last week. As of yesterday— several days later— the power was still out. How well do you think the people were adapting to this? Certainly not as well as my relatives in my parents’ hometown in India would, since, for reasons that have never fully been explained, they don’t have power every Tuesday of the week.

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