Category Archives: Web Article Review

“help consumers become more irrational”

This Tedx Talk says the idea of “leading with green” in marketing is dying. If we want to scale up green consumer behavior, it says, we have to appeal to people’s irrational interests, like desire for wealth, status, novelty, and sense of altruism.

I instinctively recoil from the marketing-driven view of human beings as brainless consumer robots. And yet, there is no denying that marketing must exist because it works. It bothers me for few reasons. First is the idea that it is necessarily “irrational” to consider emotions in decision making. What is so irrational about trying to experience more pleasure and less pain? Does the fact that it is mental pleasure or pain make it irrational? I don’t think so – trying to improve status because you think it will lead to pleasurable social ties or avoid shame seems perfectly rational to me, as does helping someone so you can avoid feelings of guilt later on.

Another thing that bothers me is the idea that marketers are appealing to people to make choices based on their sense of right and wrong, while not making choices based on their own sense of right and wrong. Sure, it’s true that corporations are amoral piles of paper, but the people inside them do not have to be. We shouldn’t let a pile of paper trying to make a profit remake us flesh and blood humans in its own image.

Clearly a certain segment of the population will make decisions based on their sense of right and wrong. But in order to make the correct choices about right and wrong, they need to correctly predict the consequences of their actions. And to do that, they need to understand the social, economic, and environmental systems we find ourselves embedded in, and we need to look at these systems not just under a microscope and in the short term, but at a larger scale and over long time frames.

So what we need is an education system that teaches ethics and system thinking effectively. Our education system does not do either right now, so we have a situation where even formally educated people have not been given the mental tools to understand the consequences of their choices. A certain segment of the population is willing the make ethical choices, but their sense of right and wrong is easily manipulated by other segments of the population, who themselves have no sense of right and wrong.

If more children were challenged more often to think about right and wrong, as they were also being educated in system thinking, perhaps we could begin to inoculate the population against this madness that is otherwise going to destroy us. I don’t know what fraction of the population has to be ethical system thinkers before our civilization is successful. I think it is much less than 10% now, and it is not working. I don’t think it has to be 100% though. Maybe we should aim for a majority and go from there.

statistical proof that the United States is not a democracy

Here it is at last – from Princeton and Northwestern Universities, statistical proof that the United States is not a democracy:

Each of four theoretical traditions in the study of American politics – which can be characterized as theories of Majoritarian Electoral Democracy, Economic Elite Domination, and two types of interest group pluralism, Majoritarian Pluralism and Biased Pluralism – offers different predictions about which sets of actors have how much influence over public policy: average citizens; economic elites; and organized interest groups, mass-based or business-oriented. A great deal of empirical research speaks to the policy influence of one or another set of actors, but until recently it has not been possible to test these contrasting theoretical predictions against each other within a single statistical model. This paper reports on an effort to do so, using a unique data set that includes measures of the key variables for 1,779 policy issues. Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.

I admit, I didn’t dig in and try to thoroughly understand all the statistics. They took a large data set where people have stated their preferences on various issues over long periods of time. The data set also has information on the incomes of the people responding, so they can do regressions of what various segments of society prefer. Then they look at actual laws that have been passed and compare the two. The results unfortunately but not too surprisingly, show that the preferences of the elite drive actual policy.

Their definition of “elite” was an income of “only” $146,000 a year. Sure, a lot of us would love to have an income of “only” that much. But the point is that is a household of two white collar professionals, not exactly the corporate jet set. So you could say policy seems to represent the preferences of the moderately affluent, upper middle class, or whatever you want to call it. But certainly not the preferences of the median household, the majority, or any sense of broad consensus. I think there is an important distinction to be made between the latter two – the truest democracy, I think, would not be one where 51% of people get their first choice of policy even if the policy is unacceptable to the other 49%. It would be one where the policies chosen are ones almost everyone can accept, even if they are the preferred by almost no one. So it would be a vision of the ideal democracy as diverse people living together in only mildly pissed off tolerance and harmony.

child mortality down 49% since 1990

Amid the depressing news of thousands of Ebola deaths, NPR has an uplifting story about how worldwide child mortality has dropped dramatically, and not just over the last century but over the last couple decades:

In 2013, 6.3 million children under the age of 5 died. That’s a tragic statistic — yet it represents a 49 percent drop from 1990, according to data released Tuesday by the United Nations…

In many ways, under-5 mortality is a lens of how far we have progressed as a civilization. Newborns, premature babies and children under 5 are the most vulnerable members of our society. They are completely reliant on the values, the care and the love that we as a society are providing to each other.

The reduction in mortality rates is a measure of children’s lives, which are very important. Each life saved is someone else who will contribute to our well-being as a whole. But it’s also a measure of how we are progressing as human beings. If there are still children dying of causes which can be easily prevented, cheaply, and we still aren’t doing that? Then we aren’t really progressing as much as we think we are.

They have an animated map of where the biggest gains have been – Asia and South America. There have been gains in Africa, but Africa still has the highest rates and some of the highest rates in Africa are in the same area where the Ebola epidemic is taking place.

 

oil prices

It’s interesting that oil prices have slipped back below $100 a barrel ($92.92 for West Texas Intermediate, $96.65 for Brent Crude as I write this on September 15). An NPR article blames this mostly on weak demand, but also maybe on unexpectedly higher supply from North America. Some people are predicting this trend will actually continue:

The International Energy Agency made that point last week, when it said a weaker economic outlook in China and Europe is causing a remarkable slowdown in global demand growth. And demand is declining, West says, as global supplies surge due to the energy boom in North America — including shale oil production from North Dakota and Texas.

“There’s another 3 billion barrels a day that’s coming into the market and staying in the market,” he says. “This has really changed the global supply-demand balance very substantially” — and helped bring more stability to the market…

Fadel Gheit, managing partner and head of oil and gas research at Oppenheimer & Co., says oil prices will still spike higher when severe disruptions occur. But he thinks global supply will continue to grow and keep prices in check.

He predicts that will happen as fracking technology improves, reducing the costs of production.

“The break-even point continues to decline. Yes, we needed $80 [per barrel] oil for the North Dakota Bakken oil development to continue,” he says. “Now, it’s about $65. Five years from now, it could be $50, or even $40.”

In the quote above, I skipped over plenty of dissenting voices in this fair and balanced coverage. Nobody really knows why markets do what they do in the short term, and anything can be rationalized. Then when you go back and look at the data later, often the longer-term trend is staring you in the face. Over the past 10 years or so, the longer-term trend is oil hanging out around $100 or so, whereas it used to be $20-40 for decades and decades before that (this is all adjusted for inflation.) So we’ll see, but I’m not ready to pronounce $100+ oil dead yet just because we’ve been at $96 for a few weeks.

Bill Gross on the new normal

In this 2009 essay, after an incomprehensible and irrelevant introduction involving golf, Bill Gross from PIMCO gives us his reasons why we may be in a “new normal” of lower economic growth:

  1. American-style capitalism and the making of paper instead of things. Inherent in the “great moderation” of the past 25 years was the acceptance of a sort of reverse mercantilism. America would consume, then print paper assets and debt in order to pay for it. Developing (and many developed) countries would make things, and accept America’s securities in return. This game is over, and unless developing countries (China, Brazil) step up and generate a consumer ethic of their own, the world will grow at a slower pace.
  2. Private vs. public-driven growth. The invisible hand of free enterprise is being replaced by the visible fist of government, a temporarily necessary, but (if permanent) damnable condition itself in terms of future growth and profits. The once successful “shadow banking system” is being regulated and delevered. Perhaps a fabled “110-pound weakling” may be an exaggeration of where our financial system is headed, but rest assured it will not be looking like Charles Atlas anytime soon. Prepare to have sand kicked in your face, if you believe you are a “child of the bull market!”
  3. Global economic leadership. It’s premature to award the 21st century to the Chinese as opposed to the United States, but if the last six months have been any example, China is sort of lookin’ like Muhammad Ali standing over Sonny Liston in 1964 yelling, “Get up, you big ugly bear!” Not only has China spent three times the amount of money (relative to GDP) to revive its economy, but it has managed to grow at a “near normal” 8% pace vs. our “big R” recessionary numbers. Its equity market, while volatile and lightly regulated, has almost doubled in twelve months, making ours look like that ugly bear instead of a raging bull.
  4. United States housing and employment. Old normal housing models in the U.S. encouraged home ownership, eventually peaking at 69% of households as shown in Chart 1. Subsidized and tax-deductible mortgage interest rates as well as a “see no evil – speak no evil” regulatory response to government Agencies FNMA and FHLMC promoted a long-term housing boom and now a significant housing bust. Housing cannot lead us out of this big R recession no matter what the recent Case-Shiller home price numbers may suggest. The model has been broken if only because homeownership is declining, not rising, sinking to perhaps a New Normal level of 65% as opposed to 69% of American households.

As usual, no acknowledgment that ecological limits could play a role. If they are playing a role, my thought is that the boom times leading up to 2007 could easily have masked a weaker, but more permanent, signal being sent to us by our planet. Then following the bust, that signal could make a recovery harder than it should have been if we were simply reverting to a long-term mean. So during each boom, we forget about the underlying signal, then after each bust it gets harder and harder to recover to the previous trend, and we scratch our heads as to why. If my hypothesis is correct, eventually there will come a bust that we don’t recover from. Maybe this is even it – there is essentially no growth in Europe or Japan, and we are celebrating a very low growth rate in the U.S. It will be difficult to discern the long-term signal from the noise in real time. In hindsight, it may be obvious.

Robert Shiller on the new normal

Here’s Robert Shiller in Project Syndicate talking about the “new normal” of slow economic growth:

There is a name for the despair that has been driving discontent – and not only in Russia and Ukraine – since the financial crisis. That name is the “new normal,” referring to long-term diminished prospects for economic growth, a term popularized by Bill Gross, a founder of bond giant PIMCO.

The despair felt after 1937 led to the emergence of similar new terms then, too. “Secular stagnation,” referring to long-term economic malaise, is one example. The word secular comes from the Latin saeculum, meaning a generation or a century. The word stagnation suggests a swamp, implying a breeding ground for virulent dangers. In the late 1930s, people were also worrying about discontent in Europe, which had already powered the rise of Adolph Hitler and Benito Mussolini.

The other term that suddenly became prominent around 1937 was “underconsumptionism” – the theory that fearful people may want to save too much for difficult times ahead. Moreover, the amount of saving that people desire exceeds the available investment opportunities. As a result, the desire to save will not add to aggregate saving to start new businesses, construct and sell new buildings, and so forth. Though investors may bid up prices of existing capital assets, their attempts to save only slow down the economy.

“Secular stagnation” and “underconsumptionism” are terms that betray an underlying pessimism, which, by discouraging spending, not only reinforces a weak economy, but also generates anger, intolerance, and a potential for violence.

So this is the old “animal spirits” argument. There is almost never commentary from economists or financiers about the possibility of ecological limits having something to do with this. There are two ways ecological limits could manifest themselves. One is by making us gradually poorer through high prices of food, energy, and various raw materials. That could happen slowly and gradually, be obscured by the ups and downs of business/credit cycles and geopolitics, and not be obvious until it is too late. We could theoretically innovate our way out of the problem, but there might be a downward spiral where as we get poorer and poorer, we devote less effort to innovation and more to making ends meet. The second way ecological limits could manifest themselves would be through a sudden, catastrophic tipping point or climate shift. This would be a point where supplies of food, energy, water, and critical raw materials get so tight they cause a catastrophic breakdown of the systems of civilization, rather than just high prices. Of course, if you are poor enough, high prices and system breakdown have roughly the same consequences for you and your family. If you are rich enough, you can withstand the former just fine, but not the latter.

free parking and why good people are misled by the forces of darkness

Here’s a nice quote from a blog called Saporta Report:

Parking causes sprawl. The vast amounts of parking required at locations push businesses and other uses further and further apart. Free parking encourages us to drive to the grocery store, and we insist on having ample amounts of parking.

As the amount and size of our parking lots decreases, our businesses can move closer together. A business that couldn’t previously open in a neighborhood as a corner grocery because of required parking minimums could now open to serve walk-up customers.

This is exactly right. Free parking is an enormous hidden subsidy to unsustainable land use practices and unhealthy lifestyles. It does all of us far more harm than good. If we eliminated these subsidies and let our cherished “free market” set a fair price on parking, the equation would be fundamentally changed.  The problem is that a majority of people still don’t see this. They perceive (correctly in many cases) that the way their community is designed, they would be unable to get around quickly or safely without a car, and they can’t envision their community changing its design, or living in another community with a different design. Even in places where walking and cycling are relatively safe and fast, like in or near Center City Philadelphia (see this Washington Post* article), and many people understand that 100%, the voices of the car culture are still louder and more politically influential at the moment. Here in Philadelphia, I see that being characterized in the media sometimes as an old vs. young, rich vs. poor, black vs. white struggle, which is very unfortunate because that is not what it is about at all. It is about health, safety, sustainability, community, competitiveness, innovation, and joy.

* Note that the Washington Post article above is unfortunately titled “Why cars remain so appealing even in cities with decent public transit”. It goes on to conclude that it can take a long time to get around by public transit, if you live far from your job. Then it concludes that walking and cycling are better than both driving and public transit, if you live near your job. But busy people who only have time to read headlines are likely to miss that point entirely, aren’t they?

how to write a letter to an elected official

I’m a little disenchanted with TED Talks these days, because I think most of them could be reduced to a sentence, if not a phrase, that I could understand in 10 seconds rather than wasting 15 minutes of my life waiting for some Tediot to get to the point. But here is an interesting one about how to write a letter to an elected official. First, it says to use an actual pen. Second, it says that politicians are not rational, moral creatures, and you have to understand their interests and then cater to them. It recommends these steps:

  1. Show appreciation for the politician, if not the person then at least the complexity and difficulty of their job.
  2. Don’t pull punches in stating your position, but avoid personal attacks.
  3. Explain that other people are giving them bad information about the issue. Then give them the good information you think they need.
  4. Offer to provide them with lots of additional good information in the future.
  5. Sign with lots of titles and credentials.
  6. Send the original to the district office and cc the main office (something about the main office might ask the district office for the original and it might get more attention, don’t know if I buy this).

green infrastructure reminder

The American Society of Landscape Architects reminds us that green infrastructure is more than what we used to call stormwater management practices. It’s a network of designed and natural ecosystems linked together to perform critical functions cheaper and better than purely manmade systems could:

Green infrastructure includes park systems, urban forests, wildlife habitat and corridors, and green roofs and green walls. These infrastructure systems protect communities against flooding or excessive heat, or help to improve air and water quality, which underpin human and environmental health…

Here are just some of the many benefits that these systems provide all at once: green infrastructure absorbs and sequesters atmospheric carbon dioxide (C02); filters air and water pollutants; stabilizes soil to prevent or reduce erosion; provides wildlife habitat; decreases solar heat gain; lowers the public cost of stormwater management infrastructure and provides flood control; and reduces energy usage through passive heating and cooling. In contrast, grey infrastructure usually provides just a single benefit.

“All at once” and “single benefit” are key phrases. You have entities like wastewater authorities, transportation authorities, parks and wildlife agencies that are each trying to maximize the single benefit they have been tasked within the limited budget each has given. Each is trying to be efficient, but together they are inefficient, redundant, and even working at cross purposes. There is nothing responsible or ethical about sitting inside your bubble making “cost-effective” decisions that ignore everything happening outside your bubble.

This article drills down to a fantastic wealth of references that we should all take a year off and read.

(By the way, this article also contains some questionable numbers about at least one program I happen to be familiar with. But never mind, the concepts are right even if the numbers are questionable.)