Sunday, September 30, 2007

Prerequisites for Zero Impact


I'm not sure what the title of this post really means, other than I am recognizing some connections between the prereq materials I studied for my foray into graduate education and the fact that I did not feel like typing "sustainability" for the millionth time. Digression - I will now start using the term "susbiz" for sustainability, at least in the context of sustainable business. All righty then! You'll notice the logo of the Global Reporting Initiative plastered on the top right. One of my first projects for BGI will be an overview and analysis of the GRI as one of the many methodologies used to rate, judge, measure, analyze, meter, and gauge businesses' efforts at susbiz and CSR. Does anyone have any tips? All those susbiz wizards out there that that may know this blog exists, feel free to chime in.

As part of the course work for the first term, I started reading "The Fifth Discipline" by Peter Senge (comments about this later), and a Schumacher Briefing by David Cook called "The Natural Step: Towards a Sustainable Society". I have also been listening to a CD lecture series when I have the time from The Great Courses called Economics. I've only listened to the basic topics, but I find it fascinating, recognizing disconnects between what I perceive to be classical economics and some of the tenets of The Natural Step and other scholarly ideas about sustainability. Listening to the section of Timothy Taylor's lecture on the environment and externalities, I was struck by one small comment in what I thought was a great summary of the problem of pollution and public policy in the modern world. He said something to the effect of (this is a paraphrase) "...saying there will be no pollution is like saying that there will be no humans..." What? There was a time when humanity was a small enough user of the planet's resources that the natural cycle could reabsorb our waste products. It may have been a few hundred or even a few thousand years ago, but it did.

Is it a worthwhile goal to have zero pollution? We can accept where we are now, and know that we are emitting substances that the natural world can not deal with, either now or in some distant or near future, but our goal should be to create systems that mimic and complement the natural world we inhabit, right? After all, as one of my new classmates reminded me a few weeks ago, we are part of the natural world and it is the source of all the wealth we have accumulated as societies.
A passage I read in the Schumacher Briefing by David Cook caught my interest for what it omitted, specifically related to the academic pursuit listed above. This is taken from the section describing the earth as a system closed to matter, and that all we do is transform it from one "thing" to another, adding or releasing energy in the process. In any case, here's what he says,
There is nothing particularly radical in this explanation of the system earth. It is fundamental science that has been known about for a comparatively long time. This is the starting point, the bread and butter, for environmentalists and ecologists.
I find that the omission of economists and engineers (or all professions for that matter!) from the common "starting point" interesting. I learned the basics of a closed system at WPI, but it was not integrated into a systems thinking model of a design process. How can continued growth (as seemingly demonstrated with the steadily rising production potential in economics) mesh with a finite system?

What's becoming clear; I am just starting to understand how much I don't know. No, I don't know what I don't know.

Speaking of production potential, a front page article from today's NYTimes caught my eye as it appears to illustrate what can happen when government regulation combines with poorly planned investment to create a boom and bust cycle. Ethanol Boom Stalling as Glut Depresses Prices; Ethanol foe energy independence? Nope. Ethanol for corn producing states to generate jobs and help someone get reelected. If only they could be combined. Now I see why Warren Buffett avoids industries that depend upon government regulation for their success.

Wouldn't some form of an energy tax be much more effective? Did you say TAX! Dear God man! Don't you know there's an election coming?!

Wednesday, September 26, 2007

AltWheels 2007!



It's hard to believe that AltWheels is here again. I helped organize this eclectic mix of veggie, hybrid, natural gas, bio-diesel, solar, and human powered vehicles when it was still being held at the Larz Anderson Museum in Brookline. Ah, those days when I was the "bike guy" so many years ago in 2003. Many thanks to Alison Sander for keeping her vision moving forward.

— Friday—Saturday 28-29 Sept. 2007 —
( FREE — Fri. 9a-7p / Sat. 10a-6p)


Wide Range of Exciting and Fun Activities
See the full list of Exhibitors/Sponsors
  • Unique one of a kind alternative vehicles from several million
    dollar fuel cell cars to cars that run on used vegetable oil.
  • The Energy Freedom Trail with a chance for each person to
    calculate their personal "Carbon Footprint" and learn 2
    4 ideas and resources or going on a carbon diet/reducing
    their carbon footprint. Includes 150 free Compact Fluorescent
    Light Bulbs to first comers each day.
  • Awards for 20 Green Pioneers Friday 3-4 with Mayor Menino.
  • Awards for 20 Regional Green Heros Saturday 2-3.
  • Watch biodiesel being made.
  • Learn how ordinary hybrid cars can get 70 mpg.
  • Many activities for kids including onsite interactive exhibits from
    the New England Aquarium and The Museum of Science,
    face painting and more.
  • REI Free bike repair tent and bike exhibits.
  • Browse the onsite Borders sustainability bookstore.
  • Two Live Bands: Cocabanana Band and Kevin Connelly.

Sunday, September 23, 2007

Design, Design, and More Design


There are just too many things to read and learn about in this world. Perhaps that is why I feel like I am pulled in 15 different directions at the same time. I felt this exciting, and in some ways frustrating, feeling as I stared at the periodicals rack at the local Barnes & Noble in Burlington, MA. I stopped in to peruse their wide selection of old-fashioned writing journals; I was in need of a new one and have become quite particular about what I like (blank pages, place for a writing utensil, manageable size, etc.) though I have yet to find the perfect one. Perhaps that's why I keep writing, to fill them up over and over again so I can keep looking for the elusive perfectus libri. As usual I digress.

As I said, staring at the periodicals rack at B&N, I was overwhelmed by the sheer number of magazines that offered topics that I am sure I would find interesting; current events (NOT People and that crap...geez!), science & technology, media, design, business, government, knitting, you name it. I found myself drawn to the latest issue of Fast Company, with the cover exhorting me to dive into the Masters of Design. My interest in something holding the promise of insights into great industrial design comes from my engineering education and my quest for knowledge about systems thinking and eco-effective creation. As I first learned when reading Cradle to Cradle a few years ago, many of our environmental challenges are rooted in habitually poor design methodologies. In any case, the article touches on a few "hot" designers and their keys to success when designing a product with the input of the people that will be using it, but not depending upon their "user generated content" to create the products. A brief point that stuck out to me follows, one that sheds some light on my previous comment regarding engineers & systems thinking,
...rosy thinking overlooks the tensions that arise when design gets factored into a big business. "Marketing people are incented to come up with great ideas," says Mitch Pergola, fuseproject's vice president and general manager. "Engineers are incented to drive out costs." To resolve those conflicts, somebody at the top has to make the Solomonic calls. "If you want to be design-driven," BĂ©har says, "the question is, Who's driving?"
Who is driving? Us? Corporations? Governments?

On that note, perhaps there will be even more opportunities for well-designed, green, and natural products since we now know, Consumers Face The New "Fear Factor" of climate change.

Thursday, September 20, 2007

It's All About the Waste


(not that -> Thornton!)
So, I am seated at a table with my boss (ahem, manager), and we start talking about strategies to help speed up the transition of an older product into the dustbin of history while simultaneously spurring the sales of the replacement. "Let's do XXXX." someone says. Sounds like a plan. Then, a switch went off in my head. Given the level of tooth grinding I have been engaged in over the past few months, there was an audible 'click'. The switch got me to thinking of producer take-back and design for reuse. OK, the product that has been out in the market for 13+ years was not originally designed to be disassembled and reused/recycled, but isn't it possible that it has some salvage value? How does a company go about determining the value of an obsolete part?
Well (comments of the unenlightened) :
  1. Given the price increase in raw materials over the past few years, what materials are salvageable from the product?
  2. How much will the salvage cost?
  3. What is the market price of the salvaged material?
  4. How mush effort ($$$) will the customer commit to sending the material back?
  5. Is the end-user concerned about the responsibility for the product's disposal?
  6. How would one quantify the value of removing obsolete products from the market?
  7. From a carbon emissions perspective: (not today!)
  8. Will employees care about - be motivated by - the idea of conservation?
  9. How much will it cost to disassemble (hire local HS kids through Craigslist)?
  10. Is there government $$$ for this (spur aggregate demand)?
That's enough. I am headed to a NetImpact Boston social, perhaps someone there will have an idea for me.

Oh, by the way, Where in the World is Corporate Responsibility?, not Carmen Sandiego.

Looking Back to Look Forward


As the Dean of BGI said at orientation (paraphrase), "Going to grad school can bring out all sorts of unexpected emotions and reactions". I am experiencing them.

I am re-examining my decision-making process that brought me to BGI. Combined with the activities I participated in at Channel Rock last week, recent personal events have turned my attention to where I am, where I would like to go, and what is truly important to me. The consequences of attending a school located on the other side of the country, despite it's sustainable business leadership, is sinking in. Will the network transfer to the Northeast? Will the "brand recognition" carry enough weight here? Am I contributing to more complexity in my life than I can handle?

A comment Gifford Pinchot made when we were discussing entrepreneurship and intrapreneurship as a group addressed the importance of timing; there may be a better time to launch something than "right now". Makes sense. Launching a new home decorating service in a downward trending housing market may not be the best idea. Given that this undertaking is a bit of an entrepreneurial activity (a stretch?) on my part, does the timing make sense? Have I deeply evaluated the effect this decision will have on the other aspects of our lives? Is what I am looking for in my future career dependent upon an advanced degree at all? I love the idea of an academic pursuit, but the right environs could make it easier.

I decided to leaf through some of my old journals a few nights ago. They have been sitting on the shelf on my bedside table for a few years, dating from the start of 2004. It was fascinating to read what I wrote; 1) some of my narrative was quite well-written, and 2) I have been saying the same thing to myself about what I am looking for for at least three years, probably longer.

What have I been saying re: career/life that has kept me in knots for the past 5 years or so?
  1. I'd like to integrate my interest in sustainable business in my work, and share it with others
  2. I have isolated myself from friends and family; this is unhealthy
  3. My social needs (sharing with people of like mind) are not being met
  4. I love exploring and learning about new things (business, social concepts, etc.) and applying them
  5. I want to work/live in the same place
  6. Working passionately instead of working for something else (vacations, "stuff", etc.)
  7. Innovative, holistic, and forward-looking people charge me up!
OK...BGI certainly has these elements. But, are there things in my current situation that I am overlooking that would allow me to integrate these elements? I tend to throw up my hands and say to myself, "That's it! I'm leaving outta here." Does that really make sense? Have some of the drastic changes I've made in the past six years just exacerbated my confusion? I bet they have.

I wonder what it's like to think through a decision rationally and thoroughly, not in hindsight?

By the way, the photo is from a small field of corn near the center of Lincoln, MA. I rode my bike yesterday and snapped it whilst pausing to see who called.

Saturday, September 15, 2007

Writing about What I am Learning


Perhaps this will help some of the Macroeconomic concepts "stick". I thought the graph here (again taken from Krugman & Wells textbook "Economics", published in 2005) was interesting in the breakout of what goes into the CPI. There is certainly a resemblance to Maslow's hierarchy of needs (funny, I keep finding good definitions on Wikipedia?), with food related and shelter related expenditures making up over 50% of a household's total expenditures. Interesting.

The following is taken from Chapter 24, page 6, Section 2 of the Paul Krugman & Robin Wells textbook "Economics" published in 2005. It offers up a bit of a clarification of what economists have been accused of doing; using GDP as the only measure of a national population's quality of life.
Although real GDP per capita can be a useful measure in some circumstances, it has well-known limitations as a measure of a country’s living standards. Every once in a while economists are accused of believing that growth in real GDP per capita is the only thing that matters—of thinking that increasing real GDP per capita is a goal in itself. In fact, economists rarely make that mistake; the idea that economists care only about real GDP per capita is a sort of urban legend. Let’s take a moment to be clear about why a country’s real GDP per capita is not a sufficient measure of human welfare in that country and why growth in real GDP per capita is not an appropriate policy goal in itself.
One way to think about this issue is to say that an increase in real GDP means an expansion in the economy’s production possibility frontier. Because the economy has increased its productive capacity, there are more things that society can achieve. But whether society actually makes good use of that increased potential to improve living standards is another matter. To put it in a slightly different way, your income may be higher this year than last year, but whether you use that higher income to actually improve your quality of life is your choice.

The United Nations produces an annual document, the Human Development Report, that tries to rank countries by measures other than real GDP per capita. These measures include data on infant mortality, life expectancy, and literacy. It compiles these measures into the Human Development Index, which is an effort to determine how well societies are doing, aside from how much they produce. The index suggests that real GDP per capita is one of many important determinants of human welfare — but by no means the only one. Countries with high real GDP per capita — like the United States, European nations, and Japan — also score very well on just about every other indicator of human welfare. But there are some relatively poor countries — like Costa Rica — that have remarkably high literacy and life expectancy along with low infant mortality. And there are some relatively rich countries — especially countries with valuable natural resources — that score quite low on these criteria.
This passage addresses my preconceptions about the study of economics, voiced in the preceding post. I suppose it's not what the economists care about (unless they are being paid by whatever industry they may be analyzing), but what government policy wonks and industrial leaders decide to do with the information. It's up to US to hold them accountable.

Back in "Reality", or at Least a Different Reality


Back to the reality I am currently experiencing, where school, work, and family will clash over the next few months and I will be charged with managing their peaceful combination. (Image from Orion Online)

It's Saturday, it's raining, and I am settling down to an exhilarating problem set in macroeconomics. In fact, I had difficulty getting to sleep yesterday evening, more than likely the effect of the transcontinental flight Wednesday night, and decided to spend the hours after midnight reading my economics text. I find some of the content interesting, and I believe that developing my fundamental understanding of classical economics will help me understand why we make the policies we make and how people make small decisions.

On the one hand, these basic tenets of economics help explain the rules we have been following for the past hundred years or so, on the other hand, I find myself thinking behind the text to who developed the study of economics and what was their motive? Has the profession of economics become a place for people interested in advancing the "growth at all costs" mentality, simply reinforcing the unsustainable economies we currently have? Are the Ivory Tower theorists working on things that may help explain where we need to go in a way that will never be applied to the "real world"?

I am just scratching the surface of this topic, and no doubt my comments are made with whole-hearted ignorance of the field of study called "economics".

I found myself reflecting on comments made by one of my new friends at BGI, comments about being sick of the guilt associated with living in a rich country and doing whatever it is we do. He was right. I find myself occasionally paralyzed with guilt, or at least thinking far too much about the repercussions of my actions. Certainly I am not proposing that we throw up our hands and blithely run ahead willy-nilly with little regard for the environmental consequences of our actions, but there is something to be said for accepting where we are and who we are and working from there. There is no perfect solution, and there are no sustainable businesses yet in existence in the USA (small sample size), therefore there are many opportunities for improvement.

A recent article in Orion Magazine reminded me of our need to continue to be conscientious and attentive to our behavior. It's written by Janisse Ray and entitled, Altar Call for true Believers. The author challenges "environmentalists" (whatever that is) to think more deeply about their actions taken in the name of environmentalism. It's an interesting take, and one that takes one view of what it means to be an "environmentalist".

Wednesday, September 12, 2007

Leaving BGI Orientation


My mind is both rationally and emotionally exhausted. My body's pretty tired as well. The five days I spent with a portion of the people that make up my Cohort of BGIers was an amazing, energizing, and draining experience. I explored some aspects of myself that yielded some surprises, or at least revealed some deeply hidden emotions that have been successfully ignored for quite some time. As our dean explained, grad school can sometimes reveal some issues that have been simmering for quite some time; perhaps it is happening to me.

I snapped this photo as we all gathered along the water to witness the sun's disappearance behind the mountains of Vancouver Island across the Strait of Georgia. Like the silhouettes here, the people that share my interest in business' role in creating a sustainable future do not fill a type. I had my own preconception of what I would find at Channel Rock, and as with most preconceptions, they were wrong.

We spent five days getting to know each other and creating a safe space amongst ourselves for sharing our hopes, dreams, and desires for our BGI education. It became clear to me as the days melted into each other that my cynical judgement of my fellow human beings was nothing but a detriment to my deep desire to connect with people of like mind. How would it be possible for me to engage people in discussions about sustainability if I am closed to their ideas and have already written them off as another uncaring western consumer?

Our activities ranged from quiet time in the woods to reflect upon our commitment to a sustainable business education, to group improvisational work, to small group discussion, to skit creation and production. It became a safe place to exchange ideas and talk freely and frankly about where we have been and where we would like to go. In fact, at the wrap up party on Wednesday night, I found myself dancing about with a carefree happiness that I have not felt since I was coaching for Team in Training. It was a good feeling. Now, if only I can bottle a little of it up to keep with me on the east coast?

Don't I have some accounting and economics to study? Debit, Credit, Balance Sheet, Income Statement, Retained Earnings = Net Income - Dividends, Supply, Demand Elasticity, Profit = (P-ATC) x Q...whoopee!

By the way, I am already thinking of myself as a bit of an entrepreneur, or maybe an investor; I am investing in myself through an education with a start-up organization. How cool is that?

Saturday, September 08, 2007

At Channel Rock...


I am "lost" in the wilderness of Cortes Island, in the archipelago of British Columbia, between Victoria Island and the mainland of Canada. Channel Rock is an interesting place, perched on a hill overlooking the crystal clear water of the Inland Waterway. There is a slightly fairytale feeling to the place, with squat buildings built into the surroundings on various elevations with various whimsical and functional appearances. It must be the pop culture influence of the wildly successful Lord of the Rings that make me expect a hobbit or perhaps a dwarf to amble out of the woods or one of the buildings and ask me to join them on a quest for something.

This place is quite a marvel. There are structures of all varieties, cobb constructed, stackwall constructed, canvas constructed (tee pees and yurts) and traditional wood framed building. The goal was (and is) to use as much material sourced locally as possible. We learned about the difficulty in achieving this (or the advantage) when told the story of cement used in the construction of the sauna. Lots of labor and energy used there, transporting the requisite sand to make the concrete and within the cement. The composting toilets are quite nice, from my perspective, and seem to accomplish their jobs admirably. I learned that urine is what causes odor problems in these facilities, not the big stuff. There is a solar heated shower that can supply 15 hot showers/day, assuming people shut off the water when they are soaping, which we all should be doing anyway (this gets into true cost accounting an the fact that city water is too inexpensive for people to care). I've often wondered why shower heads do not come with the small shut off valve pre-installed.

There is a garden, well kept and in full bloom with an assortment of fruits and vegetables to feed us well. In fact, dinner last night was a Mediterranean inspired feast with fresh tomatoes, greens of all sorts, yogurt, and hummus (I am unsure if the hummus and yogurt were sourced locally). There was no meat, and I know I did not care. Soon after my arrival, I noticed an apple tree laden with fruit. It reminded me of my time growing up in Granville, when my mother and I lived in an apartment in front of Jensen's Orchard. I used to ride my bike through the orchards, marveling at the trees with limbs bent down, seemingly reaching for the ground, but doing so under the influence of the apples' weight not by their own volition.
Everyone I have met is interesting, and has some connection with sustainable business or social responsibility. There are many backgrounds, from non profit managers and entrepreneurs to mid-career business professionals with little direct involvement with sustainability. The age range is quite broad as well, I am estimating from mid twenties to mid fifties. This should make for a good mix of opinions and view points, maybe event arguments...good.

The challenge I still face is opening myself the the experience; that there are indeed people that think about sustainability challenges and would like to do something about it. I have a tremendously difficult time wholeheartedly believing that our high-minded discussions about changing the world will lead anywhere, despite our best efforts. I suppose my cynicism runs deep, and will require additional good vibes and conversations to reduce it to what it was ten years ago.

Thursday, September 06, 2007

How to Gain A Climate Consensus


By George P. Shultz

Taken directly from the Washington post, 9/5/07 (note bullet number 4)

We in the United States -- and we as global citizens -- live in what is, in many respects, a golden moment. Economic growth is globally strong, and, if security threats can be contained, this expansion, with some ups and downs, can be sustained.

Strong growth means increased use of energy at a pace that can strain the capacity to supply what is needed at a reasonable price. This highlights two urgent questions: how to use energy without producing excess greenhouse gases that create disruptive conditions on a global scale; and how to reduce the threat to national security from excess dependence on oil.

The greenhouse gas problem is more broadly recognized today than it was during the Kyoto Protocol negotiations. Moreover, the protocol is running its course, so a new treaty is needed. That treaty should have a different structure -- one that ultimately achieves universality.

During the Reagan administration, we faced the problem of depletion of the ozone layer, and negotiations resulted in the Montreal Protocol. To be sure, the problem then was less complex than that of today. However, there are parallels, and lessons from the Montreal Protocol can be useful.

The reductions called for in ozone-depleting substances were aggressive but realistic in that they could be undertaken without severe economic damage, in part because demand triggered the development by private industry of needed chemicals and appliances.

Because we in the United States were ready to take action, we could ask others to act as well.

The protocol also recognized the importance of a little wiggle room, so provision was made for the possibility of special arrangements among countries.

The countries with low per capita incomes were integral to the process and were given special treatment in terms of trading rules and the establishment of a fund that could help them meet their obligations.

What can we learn from this? Here are some guiding principles:

  • The process benefited greatly from strong U.S. leadership. We were the science leader, the moral leader and the diplomatic leader. Yes, those of us working for an agreement, notably John Negroponte, now deputy secretary of state, faced internal opposition; there were doubts about the reality of the problem and that reasonable solutions could be identified and implemented. But at all the crunch points, Ronald Reagan was there for us. The president cleared the way, and in the end he called the result a "monumental achievement." The Senate readily gave its consent to ratification.
  • Universality of coverage is a necessary goal. The world must be represented at the table. Interests and capabilities vary widely. Patience and flexibility are key. We must focus on the countries that matter most and explore shared interests, identify respective vulnerabilities and adaptive options, and share views on scientific and technological advances. We could explore the possibility of industry-specific solutions within such groups as air transport, automotive, steel and electric utilities. One caution: Holdouts must not be allowed to get special treatment.
  • The negotiating structure must involve constituencies because, in the end, they will bear the weight of necessary actions. At all costs, we must avoid what happened at Kyoto, where we signed the protocol after the Senate, by unanimous vote, advised President Bill Clinton not to conclude a treaty that lacked commitments by developing countries. In other words, our negotiator had lost touch with his constituency.
  • The use of economic incentives (caps and trading rights, and carbon taxes) is essential to avoid disastrously high costs of control. The cap-and-trade system has been highly successful in reducing sulfur dioxide emissions by electricity utilities in the United States. That system relies on a scientifically valid and accepted emission-measurement system used by a clearly identified and homogeneous set of utilities. Fortunately, such a careful system of measurement exists for a viable greenhouse gas regimen. The product of collaboration between the World Resources Institute and the World Business Council for Sustainable Development, these standards for accounting and reporting greenhouse gases should be duly understood and adopted. Even with clear units of account, however, large problems arise as the coverage and heterogeneity of the system grow. And for trading across borders, the system needs to be accepted among the trading partners. Scams are easy to imagine. No nation should be allowed to trade without a verifiable, transparent system of measuring and monitoring of reductions, and holding emitters accountable. In many respects, a straight-out carbon tax is simpler and likelier to produce the desired result. If the tax were offset by cuts elsewhere to make it revenue-neutral, acceptability would be enhanced.
  • Do not expect China, India and other developing countries to accept what amounts to a cap on economic growth. They will not -- and cannot -- do that. We must create market incentives for them to cut emissions while continuing to grow and find actions that are economically feasible in a relatively low-income environment. We may also need to give them extra time, even allowing some short-term emissions growth, before requiring them to reduce their emissions. This is similar to the way we accommodated developing countries under the Montreal Protocol.
  • Another imperative, a derivative of the previous point, is the need to deal effectively with issues of intellectual property. The obligation to reward innovators must be reconciled with the needs of low-income societies.
  • The negotiations should not conclude until important first steps are identified and agreed upon so that everyone takes some action.
As we consider a new treaty, we must recognize that one size will not fit the world, even though some technologies may have wide, even universal, application. The Montreal Protocol, as a successful environmental treaty, provides a model for establishing a process with wide agreement to take important action.
The writer, a distinguished fellow at the Hoover Institution, was secretary of state from 1982 to 1989.

Industrial Profitability



As I am preparing for my entrance into BGI’s sustainable MBA program, we are studying basic economics and accounting. I attended my first online class last night, and though I am suspect of the quality of online learning, I found the format and experience better than I thought. It’s interesting to have disjointed voices coming through my headphones and text and graphics appearing on the screen in front of me. All we need now is web video; then we can challenge our auditory, tactile, and optical faculties at the same time. I found value listening to the instructor’s comments to reinforce my reading and problem set work and my fellow student’s commentary, questions, and discussion. I wonder what CO2 emissions savings can be squeezed out of technologies like this? Of course, this assumes that the CO2 that went into the manufacture of the headphones, servers, routers, and computers is less than what would otherwise be emitted in face-to-face meetings.

We talked about industry “normal” and “economic” profits, and the tendency for an industry to achieve normal profits. There is a constant downward pressure on profits from the entry of firms into markets that are exhibiting higher than normal profits. Investors’ search for the lowest opportunity costs, hence placing some of their capital in an industry exhibiting higher profit potential. Additional competitors shift the supply curve to the right, increasing the quantity sold at any given price and therefore reducing profitability (assuming the long run costs to the industry participants are constant). One can see the imperative for companies to decrease costs to remain profitable in the face of profit pressure, especially in capital intensive industries. This also helps explain the “race to the bottom” associated with reducing costs by searching for the absolute lowest cost factors of production.

I suppose this is a good example of the first mover advantage; the one getting into a lucrative market first has the ability to set prices and serve the market unilaterally. This can only last for so long. If companies are not attentive, competitors entering the market aggressively can take share at such a rate as to drive the initial market leader out of the industry. Am I correct in assuming that this is what happened to IBM, resulting in the eventual sale of their PC business to Lenovo? The same downward pressure was illustrated graphically in flat panel televisions, driving many initial leaders out of the industry.

Is the same thing happening in wind and solar? I am wagering that these industries are not experiencing record profitability as they are dependent upon subsidies and compete with established lower cost producers, but could they?

What happens to these classical economic assumptions when we start to integrate the externalities that many of us interested in preserving natural capital would like to be internalized?

One final note, would the ad revenue of local Boston radio station WZLX increase or decrease if another local station decided September would be “Zeptember”? Thank goodness the demand for Led Zeppelin is STRONG!

Wednesday, September 05, 2007

Camping "Green"


My wife and I decided to camp out in a tent for the first time together this weekend. It is easy to see how dependent we are on "stuff". For two people "roughing it", we had piles of stuff; tent, sleeping bags, pillow, food, wood, clothes, water bottles, toiletries, etc., etc. To top it all off, we were at a site with 30-something other groups, each with multiple cars and way more stuff than we had. As I mentioned to my wife as we drove out route 2, at no time in our decision making process for the trip did we account for fuel price...it was just there. With a carbon tax, it may have been a different story. Image from www.anthonyzierhut.com

No Impact Man, what an idea!

I just had an online class for my BGI economics review. You know, it's pretty amazing what we can do with technology. Eight people were virtually connected over a web of electrons travelling along conductors of various ilk, metallic and otherwise. I wonder what the life-cycle analysis of a bundle of information traveling along a phone wire, or wirelessly through the ether, really is. Would you account for the percentage of the bandwidth that packet took up on that conductor and what kind of conductor it was and what technology allowed the bundle to be that bundle and the energy that went into the message sending device, the transmitting device and the receiving device? Whew!

It may very well be less than sending a message via sail boat and paper...at the very least it's faster. Of course getting the information their quickly does not mean it's necessary.