Category Archives: Policy discussion

FAIR_Money (Principles of Fiduciary Asset Investment Restraint)

A concept in development with the
r3-0.org Sustainable Finance Blueprint

The FAIR rules act as an overflow valve, to redirect excess savings of passive financial income (normally used by investors to extract exponentially more) back to the free circulation marketplace of the pond to keep from draining the pond and guide investor self-restraint in extracting profits from the earth.

FAIR_Money sets a UBD, Universal Basic Distribution, a standard % rate at which investors need to distribute their excessive savings from passive income.

Fig 1. Finance adds funds to free circulation commons, but with strings attached for taking out more as ever-growing profits and escalating drain on the common pool, causing punishing inequality when the economy faces natural limits. To restore balance the FAIR rules ask investors to distribute accumulated profits to qualifying non-profits serving long-term societal needs. That would sustain the profitability of an economy seeking balance with the planet and our need for a good home. .

[See also the Medium article on FAIR, “Call it a great act of Love“]

Date                 2020 – 5/25/, 6/30, 7/26

Title                 Principles of Fiduciary Asset Investment Restraint (FAIR), simple rules to restrain the compounding of unearned income to reverse the present worldwide continued overproduction of demands on nature and society, our great tragedy of the commons. Ownership comes with natural responsibilities.

Topic                Compound investment (adding profits to investments) is required to get any enterprise going, but as seen throughout nature is only what starts things, not what makes them sustainabnle. If overextended what it does is globally multiplies the power of the owners of the world over all others, creating the great array of world crises of neglect disrupting global society and nature we see today.

Asking investors to take responsibility for bringing growth to a climax peacefully, tempering their greed for the common good, appears quite necessary for long term peace and prosperity, even if it still seems quite impossible socially. It seems to conflict with the absolute rights of blind ownership. Now lots of owners are beginning to see the grand catastrophy their habits are causing, and that society’s rules should reflect how people would like to live without looming threats in every direction.

Pitch                Flatten the curve of growing environmental and cultural exploitation, to reach a thriving peaceful economic climax.

Image             

50050

Fig 2 The universal pattern of emerging systems that sustain their climax

Draft Simple Excel Model: FAIRtestModel.xlsx

Statement The world financial system has but one value, to use the earth and human societies to maximize the growth rate and concentration of financial wealth. That leaves out concern for the resulting matching degradation and disruption of natural capitals and human society. To secure the wealth of nature and humanity we must then have Fiduciary Asset Investment Restraint to prevent the rapid decline of whole system value, and secure a good home for ourselves.

In all fairness, FAIR is just one appealing, comprehensive, and eminently fair way to rebalance the compounding of profits consistent with the long term interests of the earth and humanity. There are also tax and negative interest rate means of “topping off” excess passive savings to restore global balance. The value of FAIR is its focus on everyone’s shared duty to serve common interests. It would of course be backed up by legal penalties and alternate means of distributing excess financial savings, once people see the real need to change our way of living. Of course, all three means could be combined, perhaps led by FAIR distributions by individuals accepting their natural fiduciary duty to care for the earth.

FAIR rules would also only gradually reduce the financial imbalance caused by compound investing, and adjusted to not stifle individual financial creativity as it limits punishing demands on nature and society. Spending a fixed annual share of accumulated profits from investments in times of severe imbalance like today, torturing nature and tormenting wide sectors of humanity, would give investors global guidance on how to value the gifts of nature and human society. One must also caution against the use of FAIR distributions for just reliving symptoms of the systemic overaccumulation of savings, as simple symptom relief would fail to steer people’s lives onto sustainable paths. For example, food and services should be offered, but take a back seat to strong socially led education and self-organization efforts.

This is actually a strategy first discussed by JM Keynes in Chapter 16 iii & iv of his General Theory. I’ve interpreted it as an “overflow valve” for excess financial savings to relieve unhealthy burdens on the earth system, dialing back unsustainable extractive investment and relieving the whole economy’s pressure on all our cultural and planetary bounds.

The degree of relief from excess demands on the system would be adjusted with on experience, starting at 10% a year of accumulated for argument sake. That rate would most often not increase wealth distribution to undermine the individual life styles, just skimm off the top. The rate would be adjusted to gradually stabilize the economy’s impacts on earth and society at a comfortable level, both for long term profit and to treat a living world with respect.

In the end, finance would stabilize to generate steady flow of profits for personal and priority needs, the economy thriving as a continually innovating cash-cow business enterprise. In Hardin’s Tragedy of the Commons, the equivalent would be for the rich farmer to see the error of killing the commons, and devote his excess cattle to relieve community suffering, hosting periodic feasts to save the commons and bring the community together, seeing their right to become a welcome hero for giving up the role as the devil himself.

Need       Even ignoring the COVID pandemic, the world faces a considerable growing plague of plagues from centuries of growth putting excessive demands on societies and the environment. A sobering list of The Top 100 World Crises Growing with Growth illustrates the problem. While mainstream finance is starting to recognize the need to not just maximize profits at any cost, so far that has largely been only to factoring the risks to ever-growing profits, not harm to our future. Since maximizing the compounding of profits seems to be the real problem, a new way to do it doesn’t really solve the core problem. It also ignores the very numerous other global crises threatening our future, exposing the grand “tragedy of the commons” of global overinvestment for which we are responsible.

Is that partly a matter of the kind of investment we built civilization with? Of course. A tree can’t change its own trunk, roots, and branches though, only slow the new branches to halt destabilizing overgrowth, if it’s not too late. So we should expect a natural Fiduciary Duty for investors and businesses to develop, to the best of their ability, and guided by the progress of the global crisis. That is a way for responsible investing to become universal without expecting investors and businesses making their decisions to understand all the up and downstream impacts on others or the system’s pressures on its whole range of planetary boundaries. In a way, both forgiving and frustrating, the research on global measures of our economic impacts (Henshaw 2011 Systems Energy Assessment) strongly suggests that causation for whole system impacts is so widely distributed it’s generally necessary to consider them as equally distributed per share of the economy, like today’s nominal average CO2 Emissions of 0.26 kg (0.6 lb) attributed to every $ of GDP PPP. Understanding the CO2 has both historically and currently increased in lockstep with the world economy shows the real problem that forces us to remove the growth imperitive as part of responding to climate change.

Fig 3 the history of Atmospheric CO2, with fixed growth rates from 1780 to 1940 and 1960 to the present

The main determinant of success for FAIR distribution of excess savings is not just the relief of pressure on the global commons it would bring. What matters as much is whether the money is well spent, and delivers “good works” of long term value. The expectation is that people with accumulated profits to distribute, with some technical guidance, would have an “eye for value” and see what the world needs to be successful, having demonstrated a comparable “eye for value” to make themselves successful.

Spending to serve the common interest presents the same kind of creative investment problem only looked at in a new way. FAIR spending is an investment decision for serving the system as a whole, that will be returned with profits of other kinds you couldn’t buy. That is the same way a family benefits from spending savings on educating its children. That is saved profits well spent. It’s a question of “feeding” the world something nourishing, not “controlling” it.

Well spent, FAIR distributions would teach both people and institutions about the patterns of growth in nature, and how investment at the limits is returned manyfold.

Because the FAIR spending of assets is something of a new investment field, it would need guidance and support from economic research and modeling. Also needed is a connection with the social networking of practice communities, both to guide to creating lasting value. Initially, it would be a voluntary adherence to a community principle, and then later formalized to be more widely applied. With new proposals for expansive strategies, the devil is generally in the details so serious economic modeling and rulemaking study to explore options. The scientific study of how finance is coupling with its growing planetary impacts, reliable sponsorship, and teamwork in building the global movement are all critical.

The hope is that the principles are practical and clear enough that they could spread naturally and become socially expected. Even connecting idea that growth is responsible for our problems continually racing out ahead of our solutions should be a task for a global IPCC-like scientific network, perhaps called the IFIC (International Fiduciary Investment Council). That would focus work on systemic research, to guide national organizations on rating impact investments for the commons. Someone will need to attempt to “qualify” the likely impacts of different kinds of for-profit and non-profit grants and investments.  Coupled with each investor’s eye for value that could be relied on to steer the economy through its many present crises, including COVID, to a thriving and lasting climax.

Challenge: This proposed “human duty” (to go along with our “human rights”) for investors and business to devote a share of their financial savings to serve the common interest seems simple enough to define and discuss in principle. What’s harder to define is how much time we have to avoid the next wave of crises, as in the past, likely to be as unimaginable to us now as the present ones were before. We should “Build Back Better,” and with an eye to economic, planetary, and environmental justice.

Restoring the economy to maximize its long term growth is the most dangerous course of all, inviting a crippling systemic delayed response like the delayed responses to COVID-19 which caused most of the deaths. If we just restart the growth economy, already severely weakened, you might expect the kind of failure at the limit shown by the light blue upper curve (Fig 4). That choice amounts to no response in the end and leads to system failure. We seem already well beyond the sustainable limit and so only have a last-chance response, to turn toward the sustainable limit like following the purple curve.

Once the world realizes that businesses and investors do really have a natural duty to steer the world economy in the common interest we’ll find more ways to do it. The physics of responding to natural limits (Fig 4) shows that early responses to natural growth limits don’t significantly delay the approach to the limit. It is mainly delayed responses you need to worry about. FAIR principles, perhaps combined with other strategies for topping off excess financial savings, are today likely the only option for making a transition to a thriving climax without major disruption.

Fig 4, The high risk of delay in responding to exponential threats. From Models Learning Change (Henshaw 2010)

Origin of the FAIR Concept: A series of tweets 05/24/20 … and historically, from the work of JM Keynes, 1935 General Theory, Chapter on Sundry Observations on the Nature of Capital” Chapter – 16 III & IV, describing why the natural financial climax of the economy requires financial savings to climax to prevent the very worst effects of capitalism, implying that the wealthy need to learn to spend rather than save their profits to preserve them, by making the system as a whole sustainably profitable.

JLH

Growth Constant Fingerprints of Economically Driven Climate Change

A tour of the evidence, from the 1780 origin of the greenhouse effect through its the major post-WWII acceleration

A preprint of a pending journal article of the same name is here. It’s a fairly short but thorough study, a data story, using the climate science we all know, to trace how humans have long organized our use of the earth to maximize the growth rate of our economic intervention in the climate. That exposes the fatal flaw of nearly all promoted solutions, the boundless plan for doubling our total energy use about every 33 years. Every kind of energy use for replacing fossil fuels would still then need to repeatedly double its disruption of earth systems, overshooting all planetary limits. That was actually the problem with fossil fuels, that if we had stabilized our energy use by about 1960 we would not have exceeded the earth’s long term buffering capacity and there would have been no climate crisis.

In the following figure you can see it quite directly from the long periods of constant compound growth in atmospheric CO2, before WWII and after. The ancient CO2 data comes from from ice-core air samples, until 1958, and the modern data from mountain top air sampling after that. WWII is seen as halting the accumulation of CO2, and the period after when we globally reorganized the economy using advanced science, technology, institutional and government cooperation to maximize the economy’s exponential rate of expansion.

What this implies is that climate change is not really caused by CO2.

Rather the climate crisis is being driven by our constant haste to reorganize the economy again and again to expand its conversion of resources into dollars as fast as possible. That we are not changing that organizational design of the economy would then seem to be the reason we are unsuccessful in getting agreement on how to reduce the quantitative reductions in CO2.

What is needed is to include in the economy’s equation for profits the value of the material, ecological, environmental, and cultural resources of the earth. The trick is to start with what you can measure, make the units “shares of the total,” and work to measure more. That would lead to a fuzzy but holistic and complete map of where we are really going economically. For reference, a model for that was proposed for inclusion in the UN’s SDGs in 2014, called “the World SDG.”

JLH

Good people cooperating for evil*

*A recovered Sept 2013 draft somehow never published
Cooperation makes us feel good socially, whatever else we don’t control may be done with it.

Dwight Eisenhower approached the question from the usual perspective in his 1960 address to the Commonwealth Club of California, quoting the club’s statement of purpose saying:

“California suffers greatly because the best elements of the population fail to cooperate for the common good as effectively as the bad elements cooperate for evil purposes.”

He then goes on to eloquently advocate and express confidence in the higher purposes of American society to heal our troubled world, to bring peace and justice to the world.   But life is not a simple contest of good and evil.  That’s a simple problem to solve, just let people join the side doing good.

What seems mistaken is portraying the evil of the world as being an absence of people doing good.   As with the German holocaust of the 1930s and 40s. It is historically common for people who feel themselves to be doing good to then lose control of their societies, not realizing till much later they were doing great evil.   In authoritarian societies, the leader commonly appears misled by the results of using their power to multiply their power, unaware of how very societally destructive their own behavior will become.   That mechanism also applies to investors and governments now using wealth to multiply wealth, unaware of how destructive to the earth that will become.   For the people in the societies doing the growing harm, like ours, “life seems normal”.

The larger difficulty is a “problem of normality”.

It’s almost too offensive for people to consider that their own good intentions and their own good feelings of cooperation in working together for the common good could be susceptible to evil.   Examples of societies acting in complete contradiction to their own cultural values, and people having their good intentions twisted to evil purposes, seem like they must apply to “someone else”.

The author of the 2006 paper, Emergence and Evil, in the systems science journal E: CO, nicely documents in intimate detail how teams of good scientists, while living very normal academic & professional lives, also devoted their talents to making smallpox more contagious than it naturally is, for use as an efficient weapon. That is a hideously evil thing to do. The Soviet biological weapons program is also well studied from other views, usually addressing it from the simplistic “good v. evil” perspective. The real problem was good AND evil, a true evil that is not so simple, one taking the reader inside what true evil is. You find how very “normal” it is and how “good as evil” is the real problem behind people cooperating socially for evil purposes, like destroying the earth.

Working energetically for what we hate

That your social relations within a society “can feel good” while your labors are “doing evil” is the problem.

There’s some kind of “disconnect” between what makes us feel good about our work,  that fools us about the nature of what our societies are doing as a whole are doing with it. As soon as you realize the nature of the relation, it’s fairly obvious why it’s a problem. It’s that the cells of an organism have a completely different environment from the body, and as cells of the human body, people are rather unobservant.   That seems to be the “disconnect.” The cells of a body have their common genome that helps guide each one to act in the interest of the whole, but for quite a number of reasons, our social lives don’t have that for our societal lives.

Continue reading Good people cooperating for evil*

SDG8 side event: Recoupling

2019 UN HLPF side event scheduled Tuesday July 10 2019 1:15 to 2:45 at the UN Millennium Hilton, 3min statement. Further links to natural growth strategy below. – Jessie Henshaw

Thank you for coming.  
Find more of my statement and links at www.synapse9.com/signals

My name is Jessie Henshaw.  I’m a natural systems scientist who developed a fascination with how living systems transform as they develop, such as how our economy once changed by small accumulating steps that got bigger and bigger.  Those ever-increasing rates and kinds of change are the key reason there are natural limits to growth.  Growth is itself an organizational process that pushes economies and their organizations in the direction of increasingly disruptive limits.  

For example, walking down the street by bigger and bigger steps, making more and more progress at first and would lead to losing control, and a painful fall.   Similarly, in the last 250 years, the world economy doubled its annual expansion about 12 times, so our annual expansions today are about the size of the entire world economy of 1920, truly enormous.  

In part, we experience that as universal pressure, for increased economic performance from all people, all organizations, all societies, and of course, all of nature too.  We are also feel surrounded by systems failing to keep up, and in crisis, crying for help, that we find hard to deliver.  So today the true location of the most “vulnerable people” and most “vulnerable regions,” struggling with unmanageable demands, is now truly the whole earth. (to cut for time)

At first, the economy’s growing demands were not overwhelming, and seemed very rewarding for large sectors, having a negligible impact on the earth as a whole too.  Continually multiplying them changed all that.  Now they disrupt every environment and are breaking through all silos of discussion.  Now we see there was no “economic decoupling,” but just detachment from our responsibility.  Now we look around and see an enormous diversity of crises that were not supposed to materialize, and need to decide what to do.  

We need an “economic recoupling” with our responsibilities for the earth and humankind.   An easy first step is to think of your responsibility for steering the economy as equal to your share of the economy.  It may seem small, but in a global economy where it takes the whole world to deliver every product or service, we are similarly responsible for a share of every harm caused too.  

Nature’s integral: joining the multiplication of parts (red) with the refinement of their designs and uses (blue) to prepare for LIFE (green) as the reward in the end

The path ahead I see, for transforming the economy is to change from compound growth to natural growth,  climaxing growth at a peak of resilience and vitality, ready for a secure, enduring and creative life on earth.

________________________________________________________

The Economic Path to Natural Growth

PDF slides: https://synapse9.com/_SDinteg/PathToNatGrowth.pdf
2019 Jul 2 Talk 30 min: https://www.youtube.com/watch?v=w5Cz7vc0-c4

Finance serving Life

“Finance Serving Life” introduces an updated version of the transformation journey for global capitalism envisioned by J.M. Keynes. He first described it with a biblical fable he called “The widows cruse” (or “Widow’s cup”) based on the 1 Kings 17 story of Elijah asking for food from a poor widow with scarcely any, just a last bowl of flour and flask of oil. To relieve the poor widow of doubt Elijah tells her that if she shares her scarce provisions it will provide generously for both of them, becoming inexhaustible as long as she is in need.

Keynes’ use of the fable was meant illustrate to the wealthy that if growth ever became unprofitable, they could sustain a healthy economy by spending rather than compounding their profits, and have their profits forever be return to them. It illustrates a true natural economic principle of sustainability, that at natural limits to growth spending the profits from investments will become necessary to keep them profitable. That principle is also observed in living systems that repurpose their surpluses at their limits to growth, from being used for multiplying their parts to perfecting their uses and designs in order to thrive at maturity.

Today we can observe that using profits to continue to multiply the parts and demands of the economy on the earth and humanity have become excessive, in total effect impoverishing rather than enriching the both the human and natural world. In principle, though also depending on how it is done, relieving nature and humanity of escalating demands for increased productivity by wisely spending, rather than reinvesting profits would assure that the same level of profits would become everlasting.

Philanthropy and sustainability are among many such good purposes that those with a “good eye for value” might choose at a time such as the present when compounding profits to multiply the parts and scale of the world economy has become increasingly unsustainable. In macro-economic terms, spending the profits of the economy as it approaches the natural limits of healthy development relieves the natural world from endlessly increasing extractive depletion and disruption, while repurposing the use of profits for perfecting the economy’s systems and their relationships with the natural world, potentially bringing endless vitality to the whole.

One of the fine points observers often miss is that a non-growing world economy, using its profits for perfecting its designs for thriving and caring for the planet, would not become a stagnant “cash-cow.” Like a natural ecosystem it could be a thriving and stable system for continual self-reinvention, maintaining as much creative change, i.e. “creative destruction,” as is comfortable. Maintaining that balance of healthy creativity, avoiding both rapacious growth and stagnation, is then the steering job of the transformed economic system.

People are such wonderful designers of systems they put their minds to, and life offers so very many wonderful examples of successful transitions of this kind, from compound extractive growth to long lived creative stability, it is hoped that now that we are faced with the challenge, we could put our minds to it and figure it out.

The current slide set for presenting the concept more fully as a talk or webinar has the same name “Finance serving Life.”

jlh

Only Healthy Cultures make Healthy Economies

Announcing the publication of
6/28/18

Culture, Finance-for-Development & tPPPs

Jessie Henshaw*

A less technical synopsis,
7/12/18

I’ve been observing the UN SDGs as a natural systems scientist since 2013 when I saw with some surprise that the one topic both Country delegates and Civil Society groups could agree on was the wording of the ideals for global development.  Even when the Co-Chairs, Ambassadors Korosi, and Kamu, began persistently asking for the discussion to turn to means and methods it never did.  Ideals are wonderful, but the strains the SDGs are responding to are still growing, as the global disruption of human cultures by the growing intrusions of the economies of the world powers continues.  That’s a problem not yet to be studied and discussed.  Why?  Partly to be “diplomatic” and partly not having a model for human cultures as living social organisms that carry all our shared ways of knowing living.   Still we need a way to discuss the rapidly growing strains on human and ecological cultures caused by accelerating economic growth, a global cultural sickness.

As growth presses the limits of the earth and challenges the world to ever faster rates of change, the damage to nature and human society is more and more lasting.   That’s a conclusion you can reach from many directions I think.  The communities the SDGs aim to help seem mainly deeply rooted old cultures that are now “failing to thrive.”  That is a living systems problem, not a numbers problem, as the SDGs were designed to solve.  Failing to thrive is more like a “lack of meaning in life” dilemma, requiring a different approach.  It’s also a symptom that one can use to map the problem worldwide and begin to look at its real dimensions.

Our accumulated ways of knowing and living  are stored only in our cultures

Failure to thrive seems to hit both indigenous cultures worldwide and communities within economies where “creative destruction” is leaving lasting scars, like rural flight or outsourcing that hollows out a region.  One example is the deeply alienated culture giving support to Donald Trump in the US, distressed by the world changing so much around them.  There are also non-thriving local cultures in North, Central, and South Africa, as well as in the Middle East and North, Central, Southern and Eastern Asia, as well as in Oceana, Australia, North and South America.  It’s not “the same old thing,” but a truly accelerating global plight, seeming to be of all the cultures that didn’t welcome or were disrupted by the intrusive growth of the world powers.

Human cultures are truly the crown jewels of humanity, though, where most of our gifts come from and are on display.  They are the unique individual species of the human ecology.  If you think about it, there is no other place on earth for the safekeeping of all our ancient accumulated ways of knowing and living. Each culture either crafts its separate way of knowing and living or branches off from another.   They are our most important gift, evidently now absorbing a great deal of abuse.

With each culture being its own “knowledge system” it keeps people from making sense of any other culture, or even our own.   If you trace the evidence, it does check out.  We get the large part of our ways of understanding things during early childhood, by what you might call ‘osmosis’.  Some say it’s “too close for us to see,” or that our mental way of seeing is functionally like a camera and its lens, that are never visible in the pictures they take.  Cultures also have a deceptive “cellular design.”  Their ways of knowing and living are internally shared, and not experienced from the outside.   Even with extended immersion, an outsider does not develop a native feeling for another culture’s roots.

The great challenge we face today is that growth is an ever faster process of expansion and change, *doubling* its demands on the earth and humanity every 20-30 years.   That radical rate of increasing demands is what eventually overwhelms the adaptability and resilience of people and the earth.  Living things are being pushed to keep mechanically doubling numerical returns for culture-blind investors, as if the earth was unoccupied.

That’s how the English occupied North America, a hundred years after the first settlements rapid expansion began with importing slave labor then a wave of settlers swept across the rest of the continent, as if it were unoccupied.  Elsewhere the economic powers built systems for globally harvesting resources, placing overseers where needed to manage their access, as if there was no one else there.  Today it continues with how global capitalism still relates to the world, measuring its success in rates of accelerating expansion alone, as if no one is here.  What’s most surprising perhaps, is how very effective our cultural blinders are in hiding our blindness to our own and other cultures from us.  That is, hidden until you have an indicator like the glaring disruptiveness of ever more sudden change.

So what would relieve our fast growing societal distress?    There’s a new business model expressly for responding to it, to use biomimicry for how nature builds thriving ecologies.   If interested there’s a longer discussion article on how healthy cultures are the foundations of healthy economies and the business model for nourishing our cultures, that I refer to as “True Public-Private Partnerships” (tPPPs) discussed more in the essay  Culture, Financing for Development and tPPPs.

The new business model begins like any business, organism, or culture does, with a period of innovating and vigorous growth, making profits to expand its systems.  When the environment responds with increasing resistance or stiffening competition, the new strategy is to choose when and how to switch from maximizing profits for growth to maximizing long-term profitability to pay it forward.  That’s done by refining systems to operate in smooth harmony with each other and their world.  It’s a more gradual process but would produce more integrated development and be more profitable in the end, to combine human ingenuity and natural design.

______________

Do comment if this gives you questions or ideas!

______________

[*] Jessie Henshaw consults as HDS natural systems design science, sy@synapse9.com, offering insight into nature’s processes of negotiating change.  She uses natural systems thinking strategies (NST) with “action research” (AR) and architectural “pattern language” (PL) methods of collaborative developmental design.  The start is from recognizing that organizational processes in nature follow a familiar arc, beginning with bursts of innovation, and then refinement, leading to a final release (IRR).  That is not unlike how we all do home or office projects, in stages of immature then maturing growth then release, also seen in reproduction.  The system produced is first “framed out” with innovations then “filled in” with refinements and “delivered” as the release when ready.  Her current related research article is on how our Systems Thinking co-evolvolves with our Systems Making.

 

JLH

Evidence of Decoupling Still Zero.

The Growing Effort to Decouple GDP from Energy use and CO2,
is having no apparent effect,
raising serious questions about the nature of our plan.

The graph below (Figure 1) shows the 46-year record of world GDP PPP, Energy, and CO2, during which their growth rates have been in constant proportion to each other, called their “coupling.” The things to read are 1) the lack of accumulative departure from the steady trends, and 2) how closely the exponential trend lines (dotted) follow the data.

It shows that the long trend still holds despite both big efforts and bigger promises that accelerating growth using more efficient processes would separate the expanding economy from its impacts.  Focusing so much on the “positive” completely disguised the big picture, though, that in 46 years there has been no accumulative effect at all.  So there’s a lot to explain, yes, but the graphs below show persistent regular behaviors of the economy as a whole resilient system, a problem not yet faced at all.

Figure 1. Coupled Growth Trends of World GDP, Energy & CO2, showing how the three move together at proportional growth rates, as parts of a whole system.

That energy use and CO2 emissions are now still growing at the same rate as 40 years ago is strong evidence that none of the sustainability measures such as exceptional efficiency gains said to decouple the economy from its impacts, have had any effect at all.

The irregularly fluctuating curves below (Figure 2) show the annual rates of coupling if world Energy and CO2 growth rates to World GDP (PPP).  The scale at the left shows their locally averaged growth rates as a fraction of the locally averaged GDP growth rates (to somewhat smooth the curves) going below zero once.  The important thing is to notice is that the fluctuations vary around nearly horizontal trendlines.

It’s as if the economy is guided by an “invisible hand” keeping the fluctuations symmetric to the near constant trend.  It says the fluctuations have been adding up to no effect.  The likely cause of this is how a competitive economy naturally works.  Technology and resources are supposed to be treated as being fungible assets, to be constantly reallocated to maximize profits.  In the data, that functional coupling between the physical and financial systems of the economy is shown working rather smoothly, replacing less with more profitable assets to maximize the growth of profits for the whole.  That stable coupling of managed assets to growth is then an apparent natural emergent property of the system as a whole, as a partnership between human cultures and the financial world’s effort to maximize growing profits.

Figure 2. Regular fluctuations of Energy and CO2 coupling with GDP, have repeatedly been claimed to be evidence of rapid decoupling… ignoring how very regularly the periods of apparent decline were followed promptly by reversals, as if irregular waves of water seeking the average level. 

 How the world community came to say that “sustainable development” would reverse this stable natural relationship between the economy and its resource uses is described in more detail in April 2014 in The Decoupling Puzzle. Small fluctuations do keep causing excitement for both devoted climate deniers and sustainability advocates, though, each picking out brief trends seeming to affirm their hopes, like the five periods of apparent rapid decline in CO2 to GDP coupling shown here.  The real evidence is that the local fluctuations never seem to result in a change in the direction of the whole, like ripples on a pond that always level out.  The latest dip in the CO2 coupling trend has been claimed as a sign of turning the corner by the IEA, clearly unaware of the consistent pattern of that metric repeatedly fluctuating around a near-zero trend.

Added perspective on the global data is gained by plotting the ratio of GDP to Economic Energy energy, the amount of wealth produced with a unit of energy.  We call that variable “Economic Energy Efficiency,” the amount of economic wealth generated per unit of energy.  Having its growth rate = 1/3 the GDP rate implying that improving efficiency contributes 1/3 of the value of energy to the world economy, growing Energy use contributing 2/3 if the value.  That ratio demonstrates a general case of Jevons famous observation that in a growth economy efficiency results in growing rather than declining resource use and impacts.  Any way one reasons it, what is crystal clear is that in the last 46 years strenuous effort to use efficiency for sustainability have had the opposite of the intended effect, recreating the original problem rather than solving it.

Figure 3 The share of GDP growth contributed by Economic Energy Efficiency proves Jevons principle that in a growth economy efficiency multiplies energy use and all its accumulative earth impacts.


So we need to be suspicious of the world policy to maximize growth at any cost.  The costs are rapidly swelling not shrinking.  The other coupled impacts of growth also causing how people live being forced to change ever faster creating major disruptions and dissension all over the world is one of the biggest, though even the NGOs are very slow in recognizing.  In nature, growth is how all kinds of natural systems begin, but those we admire for their perfection turn to refining their designs before they climax rather than, driving their growth to the point of being torn apart of being exhausted.

That’s the trick.  Maximizing growth might seem logical as a way for societies to keep up with social distress and debts, but now it’s accelerating them.  So now we need to balance the attraction of short-term profits and connect them all the unbalanced disruptive changes that now surround us.  We talk lightly about replacing people with robots, for example, overlooking that the robots only work for the banks.  That’ll make people and governments ever more indebted and incapable of responding to climate change, for one problem.  And that chain of consequences goes on and on, that is as long as we keep ignoring how natural growth systems that avoid the problem work.  More disruption is not the solution, only moderation.

There’s an alternative business model that could serve as a general design for growth without disruption, one that switches to paying the profits forward once any debts have been paid back.  Once understood, that is what would achieve truly integrated, thriving and self-limiting development, as biomimicry of ecosystem designs.  It is discussed in more detail in the article linked from my next post, Culture, Finance-for-Development, and tPPPs.

Use biomimicry for how nature uses growth to build thriving and enduring systems.

It would be a way for businesses large or small to begin to experiment with how nature succeeds in creating beautiful, thriving, and purposeful systems.  It’s a fairly simple formula.  It’s also a practice we all know well for how to successfully relate to other people and how to successfully complete business or home projects.  It starts with building up innovations to then select what to refine for making the result resilient and purposeful in its environment.  If we approached every new relation or project by piling on new experiments with no turn toward refining something to last in the end, all the effort would go to waste in the end.

To start you study the similarity between nature’s way of building things to perfection and how we do our own home or office projects! They all take place in “three acts.” The first act is for “innovating, the second for “refining, and the third act the “release” of the finished product into its waiting environment (IRR).  You see the same three acts in the birth cycle, and in the start-up of new businesses too, as well as the formation of new cultures and most every other kind of individual development.  The trick is really to pay attention to the inspiration that starts it off, as something to fulfill.  That lets you anticipate and move smoothly between the stages of emerging development, first adding up more innovations, then refining the ones worth keeping to the end.  It’s what comes most naturally when we can see the whole effect.

_________________

When you can see the whole it’s easy to recognize the point when adding more innovations begins to work against getting something finished, called a “point of diminishing marginal returns.” Of course on a home or office project what tells you it’s time to shift to finishing what you started is just sensing what can you finish while you have time and resources.  For anything measurable, like wealth, the point of diminishing marginal returns is when it becomes more profitable to put efforts into getting things to market rather than try more experiments.  To apply it to the world all you do is ask: “What is our real plan here?” and look around for how to perfect what we started, and at the right time stop taking on more and more that we probably won’t be able to finish.  It’s a matter of shifting to pursuing achievable goals rather than hanging on to thinking ever bigger with no end in sight.  Reaching for the right goal doesn’t necessarily make the work easy, of course, particularly for big personal, community or business projects.  It just makes the work a lot better, and the end something fulfilling and rewarding.

I discuss that as a way to measure truly lasting success for the UN’s 2030 Agenda and its Sustainable Development Goals, instead of just “more, faster” the ways the UN’s goals are like the goals of business-as-usual, discussed in more detail in Culture, Finance-for-Development and PPPs.

JLH


Analysis Notes:

  • The global GDP PPP curves show IEA data from 1971 to 2008 spliced to overlapping World Bank Data from 1990 to 2016.  The curves for global Energy are from BP statistics, and the Global CO2 curves show data from WRI.
  • The Energy and CO2 curves were each scaled to the GDP curves in proportion to their average growth rates for a graphically clear and honest comparison.
  • dy/Y is the ratio of the change in a measure over the total, like an interest rate or growth rate measures.  I get smoother curves by blending a bit, using a center-weighted 5 point bracket.

Data Sources:

  1. The world bank was my source for GDP PPP and for from 1990 to 2016
    https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?end=2016&start=1990
  2. World Meat Production – 1961-2016 Rosner – OurWorldInData: https://ourworldindata.org/meat-and-seafood-production-consumption
  3. World Food Production – 1961-2016 FAO: http://www.fao.org/faostat/en/#data/QI
  4. WRI has a very nice set of data on CO2 “Total GHG Emissions Including Land-Use Change and Forestry – 1990-2014” from the CAIT Climate Data Explorer – http://cait.wri.org/historical.
    – Because the latest economic CO2 emissions data is 2014 not 2016 as for other data, the trend of atmospheric CO2 from CO2.earth was used to project the economic emissions data for the last two missing data points, showing no anomalous direction. https://www.co2.earth/annual-co2
  5. Atmospheric CO2 PPM 1501-2015                    
    OurWorldInData.org:
    https://ourworldindata.org/co2-and-other-greenhouse-gas-emissions
    From Scripps source directly: (Scripps, 1958 to present)(Macfarling Meur 2006)
     http://scrippsco2.ucsd.edu/data/atmospheric_co2/icecore_merged_products
    Record based on ice core data before 1958, and yearly averages of direct observations from Mauna Loa and the South Pole after and including 1958.”
  6. BP offered energy data in MtOe in its “Statistical Review of World Energy – all data 1965-2017”
    https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/downloads.html
  7. The IEA news item statement that CO2 flattened for 2016 and 2017 was used, just to show how little effect it would have if true
    https://www.iea.org/newsroom/energysnapshots/global-carbon-dioxide-emissions-1980-2016.html

the Fiduciary Duty for Business Speech – to Not Be Misleading

We Need Business to Honor Its Fiduciary Duties

Just Talking and Writing About it Would Put it on the Agenda!

A fiduciary represents the interests of others in a way that is NOT MISLEADING.

– Wikipedia/fiduciary

“In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.“

“A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.[1]”

fiduciary duty[2] is the highest standard of care at either equity or law.”

– The wide implications relations based on fiduciary trust – JLH

  1. Professionals making decisions for others have a duty to act in the client’s best interests, to the best of the fiduciary’s ability, as the basis of trusting the fiduciary’s services.
  2. The law doesn’t limit “best interests” of others to short term financial gain, leaving open all other interests everyone has a right to, such as not being misled, living sustainably, respecting due process and receiving justice.
  3. What has changed in the modern world is that we face more threats and know more about them, so now we can hold our professionals responsible, demanding our universal human interests be respected as their fiduciary duty.
  4. Putting this on the human rights agenda would only take talking and writing about it.

– Current Law: The Fiduciary Duty for investors[i]

“Whenever you are dealing with someone to whom you will entrust your money, such as a registered investment adviser or a bank trust department, it is nice to know that, in the United States, they owe you what is known as a fiduciary duty.  This is not to be taken lightly because, under the American legal system, a fiduciary duty is the highest duty owed to another person.  It requires the fiduciary (the person with the obligation) to put the interest of the principal (the person to whom they owe the fiduciary duty) above their own.”

“This requirement to act in their best interest includes disclosing any conflicts of interest that may arise so they can be known ahead of time, leveling the playing field.  Breaching the fiduciary duty can result in draconian punishments, including being barred from employment in certain fields, being banned from working with certain types of securities, being forced to pay significant civil and criminal penalties, the loss of employment, and, in some cases, felony conviction with accompanying jail time.  To put it bluntly, the fiduciary duty has teeth.”      [see source for rest of article]

– What is “Fiduciary Duty”,… “Business Duty”[ii]

“A “fiduciary duty” is required of a person who manages money, investments, or other property on behalf of another person. When the situation involves a board of directors managing a corporation, the fiduciary duty the board has to the corporation’s shareholders and investors is known as a “business duty.” A person who has a fiduciary or business duty is known as a “fiduciary.”

“A fiduciary duty requires more than the ordinary reasonable care that appears in most personal injury and tort cases. Fiduciary duties are generally split into two categories: the duty of loyalty and the duty of care. In some cases, board members may also have a duty to disclose information. They also have a duty to avoid conflicts of interest.”

“The duty of loyalty requires the person who has it to handle money with the best interests of its owner in mind. The fiduciary must put the owner’s interests before his or her own and may not profit from managing the owner’s assets without the owner’s consent.”

“In a business situation, the duty of loyalty requires the board of directors to run the corporation in the best interests of the shareholders. Directors have a duty not to let their personal interests conflict with those of the corporation.”        [see source for rest of article]

 

 Note: there is no limit to what “best interests” a fiduciary needs to serve,

           1. There’s only a limit on their ability to serve them, and

           2. All “best interests” would require not being misleading

 

[i] Joshua Kennon 2016 “The Balance” Fiduciary Duty for Investors

[ii] Rottenstein Law Library 2017 What is Fiduciary Duty…

UN SDG’s and HLPF – the whole-system thinking needed

Setting Our Whole system goal,
Making the Earth our good home.

Much of my effort over the past five years fosuces on working with civil society organizations at the UN on the world sustainable development goals (SDG’s).   This year, needing to take care of other business, I’m sitting out.    It may be ironic, of course, as the challenges of implementing the UN 17 separate goals probably makes:

more and more participants think of how the goals need to all work together,
and can’t individually be achieved without the ‘nexus’ of the whole. 

Ultimately my years at the UN was mostly spent identifying the widespread absence of systems thinking in the SDG’s, watching somewhat painfully as the UN spent all its time creating lists of separate goals, as if unaware of their interlinkage. The interlinkage most neglected of course was that of *MONEY*, our main tool and problem.   So my writing of that time may be a little out of date.   I can tell that much of the systems thinking I found so absent before still is, however.

I have lots of other writings on how “systems thinking” for our world needs to become “systems making”, the next step toward true “homemaking on planet earth”.   Finding how societies can make their good homes on earth is the answer.   Like ecologies of other kinds do, we can invent our way out of the deepening trap we now find our world economy in, using nature as a guide.

I got fairly frequent applause at the UN,  enough to know people are listening, but to my knowledge no one ever followed up on my carefully  reasoned recommendations, and no one ever asked me to be on a panel discussing them either.   So here I’ve collected some of my old lists of observations on the process, and reiterate my offer to help people understand the guiding patterns of natural system design that I’ve spent my life studying.

A Youtube of one of my interventions for last year’s HLPF gets right to the heart of the matter too!

A good Youtube – Impacts Uncounted 2016 UN HLPF S4

 

Notes on how the “UN Development Goals… leave out the Common Needs”(1)

  1. The SDG’s Omit:
    1. how the centers of power can become foundations for a sustainable future
    2. what habits keep people entrapped in the web of ever growing economic inequity.
  2. It also fails to use systems biomimicry to help us design a world that works.
  3. They also ignore the need for a “soft landing” for the whole system, for
    a. creating a stable world commons…
    b. not just to giving competitive edges to the disadvantaged
  4. They don’t aim to “internalizing all externalities” like the “World SDG” offers.
  5. They also generally omit ideals for the earth as a whole, to make it our good home.
  6. and blindly continues to promoting compound global growth
    a. when we are already pressing hard the global natural limits,
    b. not looking to relieve of the strains but add to them.

 

Here are other short posts on the systems thinking to bring into the UN’s discussion to guide us toward the long term goal of making Earth our good home:

  1. https://synapse9.com/signals/2013/07/01/un-devel-goals-omit-common-needs/
  2. https://synapse9.com/signals/2013/04/27/missing-ecological-thinking/
  3. https://synapse9.com/signals/2013/05/05/whole-culture-led-not-tech-driven/
  4. https://synapse9.com/signals/2013/12/05/un-owg5-missing-topics/

 

JLH

Why is an economic tornado always on the road straight ahead?

I also can’t help returning to a central subject of collective organization I’ve studied my whole professional career, the seeming fate of economies to bring periods of high cooperation to an end with total disaster.   The main cause could of course be said that no one in particular is at fault.   But there is science enough to identify who could intervene, and do something about it.

My previous post was on the work of  Ernst Ising, the physicist who solved a range of collective behavior problems, and how pattern language design science might address the question of what kinds of environments are required for emerging local phenomena.   Why economic collapse is always on the road straight ahead for our form of highly cooperative modern  economies is one such subject I’d like find physicists using Ising’s work on with.

One might wonder about what keeps driving our highly cooperative world economy toward escalating conflict.

All of humanity seems driven by a “rat race” toward extremes of destructive competition all the time, unable to escape, with most everyone feeling they are reacting in their own defense.   That’s not a model for a safe and secure world.

Could we possibly trace how the economic forces, like those driving everyone to achieve rapid growth in economic productivity, and so for the earth and humanity, creating circumstances ripe for triggering grand economic collapses.   If we can identify the system doing that we could identify interventions well in advance, to engage a “general protection fault” to avoid the usual mad collective collapse.

Why is an economic cyclone ALWAYS on the road straight ahead

 

I for one think it boils down to demanding people do impossible things, demanding of our society to do impossible things, like continually doubling the speed at which we collect and use energy and expand our control of the earth.   That can only end in tragedy, like it has for economies again and again. Why economies are driven to it, to be ever more productive at ever faster rates, follows unavoidably from their organization for maximizing compound returns from investment, making ever more from ever less.   Like being forced to “make bricks without straw”, the regular investment of profits in escalating to create ever more daunting competition ultimately compels cooperation in cheating.   In the end that unavoidably disrupts the order, as one of the natural outcomes of pointlessly taking the compounding of returns to its natural limit.

We could do something else if we understood the problem…

 

jlh