Second Symposium : Rethinking City Economics: How Green Infrastructure and Deconstruction can provide green jobs, revitalize communities, and encourage local self-reliance.
Organized by Samuel Sage, President of the Atlantic States Legal Foundation. Panelists included Neil Seldman, President of the Institute for Local Self-reliance, Jean Kessner, Counselor at large, Onondaga County, NY, and Alexander Shisler, Green Infrastructure Coordinator at the Atlantic States Legal Foundation. This talk was more about urban planning and the panelists and audience seemed much more academic and activist. There were a number of educators and journalists. However, the panel was kind of hard on academics and actual urban planners.
Seldman gave a presentation first about "deconstruction," which is "the highest form of recycling" where the dismantling of building is planned and materials are reused. This is good for job creation, and it also empowers the workers because they gain skills that allow them to sell things in their own neighborhoods legally. Many can start their own small businesses. Since this work is always local and needed in every community, it's conducive to small businesses.
Neighborhood Stabilization Money is money from the Federal government to various cities to remove broken or empty houses that are dragging down the value of a neighborhood. It is money for dismantling excess houses. Instead of just demolishing the houses, the government should have a demolition contract stating that materials should be recycled, making more money than putting the rubble in landfills. Sometimes Health and Human Services has resources for deconstruction and training people to do deconstruction. The panelists also mention strip-outs. This is sometimes done by hotels and businesses who want to change the interior decorating of a building. Those materials can be deconstructed as well.
Building Materials Reuse Association, Second Chance in Baltimore
"Growing Power" - a book on building green houses.
Next, Shisler gave a presentation about green infrastructure. He is a civil engineer who works for the Atlantic States Foundation. Examples of green infrastructure for storm-water management include cisterns, green roofs, urban forestry, bio-retention, and permeable paving. This is an alternative to conventional sewage systems that need to have a pretty big waste-water management plant so that the water runoff doesn't pollute the groundwater and streams. If there is permeable paving or these grass gutters instead, the water gets filtered in the gravel or grass. It seems like you would have smelly grass, though. At any rate, benefits include, pollution reduction, habitat creation, energy saving, community spaces, water conservation, cost/benefit ratio, job creation, and crime reduction.
Jean Kessner gave a presentation on municipal level activities. She was first a journalist and then a city counselor. She advocated for green infrastructure like porous pavement in her town, but budgets for different agencies cause different priorities for the whole system. Some places that pay for storm water disposal and would need state legislation.
They mentioned Youngstown, Ohio, though, as a place that has done good zoning and management. Also Tree People in LA have done good things. Someone in the audience was working with or working for UNESCO, a clearinghouse for solutions and things that work and don't work. Rust belt cities in PA have changed taxes on land vs taxes on buildings. Someone in the audience worked for Just Economics that looked at these tax code issues. EmPower DC is trying to prevent selling of public land to developers. Sometimes building codes don't allow for using deconstructed materials.
Closing Discussion : Progress of the Obama Administration in Moving Toward a Green Economy
Moderated by David Golston of the NRDC (Natural Resources Defense Council), and with panelists Davon Silvers, AFL-CIO, Jessy Tolkan, Energy Action Coalition and Green For All, Gary Hirschberg, Stonyfield Farm CEO, and Cecelia Rouse, Council of Economic Advisors.
The market alone won't bring about a clean economy. We need the right supply chains for a low carbon economy. (? not sure what they were really saying).
They talked about how people don't think the Obama administration has made much progress.
They talked about structural problems for commercial building retrofitting.
- people under water
- unregulated derivatives markets and volatility in energy markets
A financial reform package would really help.
One problem is that there are no large scale program for commercial rehab to spark private investment.
Private industry is very responsive, though, to government incentives.
Hirschberg talked about how he really liked the $13.5 billion allocated for broadband for rural areas. It's important to have communications infrastructure for the agriculture industry. He also said how there is rampant farm decline right now.
Tolkan mentioned something that community volunteers were doing DC, going door to door signing people up for retrofitting. They would also work with local unions and contractors so that the extra business would bring more jobs. This was a way to create demand for green jobs.
This talk sometimes turned into more of a rally, especially since Tolkan is an organizer. They talked about how it's important that a popular movement is created instead of the Tea Party movement. Everyone needs to get involved on the grass roots level and to educate our peers on these issues to empower the leaders to lead. They were being aggressive and insistent to counter the feeling of despair after the Supreme Court ruling.
The Steady State Economy people asked Rouse what she thought about zero-net growth, and she really had no idea what they were talking about. That was kind of interesting since she is an economist, and she had never heard of an alternative to this cycle of growth that our economy is based on.
Friday, January 29, 2010
State of the Union
On Wednesday, Smark and I went to a watch party in Somerville with some strangers. It was cool, haha.
Thursday, January 28, 2010
Dai Dance
I started dancing again to exercise. I think I'll try to learn this. This girl is ripped, though.
This is another good dance, but the sound is bad.
Wednesday, January 27, 2010
NCSE Conference : Friday : Morning
On Friday, the day started with the heavy news that the US Supreme Court ruled that corporations have no spending limits in campaigns. Up until then, the general mood was that bringing about a new green economy would be an uphill battle, but that with hard work and determination, we can make steady gains. With this ruling, though, it was clear that the mood sank. There was a sense of alarm, a little bit of despair, but also more aggressive energy. The speeches got more motivational rather than educational. At times it was like a political rally or demonstration. When people start feeling like underdogs they get more spiritual, too. You need your leaders more than when you are doing well. Kind of like how Native Americans and black churches seem so spiritual as opposed to prim and proper WASPS, or at least that's my perspective on things. I don't think anyone would describe me as spiritual, though.
The first event of the day was a Moderated Roundtable on the New Green Economy: Moving from Theory to Action.
It was moderated by Mark Bernstein, the Energy Institute at the University of Southern California, and there were 4 speakers. Len Peters, Cabinet Secretary of Energy and Environment of Kentucky, Seth Dunn, Director of Renewable Energy Policy of GE Energy, Gary Guzy, White House Council on Environmental Quality, and Jacques Beaudry-Losique, DOE Office of Energy Efficiency and Renewable Energy.
It was really an amazing discussion, but there were a few interesting parts. Peters was pretty focused on energy efficiency and "low hanging fruit." He mentioned that MA is the only other state with an Energy and Environment cabinet secretary. Most states separate energy and the environment. He said that 90% of electricity is coal, and 2/3 of the coal they mine is exported to other states. I would think that he should look more into renewable energy or at least something else for all those coal miners to do. They mentioned that Obama had $80 billion for clean energy in the stimulus plan.
Dunn talked about programs within the company like ecomagination, where people within the company does treasure hunts for energy savings. That was an interesting concept and is a solution to the fact that sometimes it's hard for companies to reduce waste because it's not any one person's responsibility to maximize efficient energy usage. GE has been reducing the energy intensity of the business, and he talked about how they have been doing a lot of R&D and that their renewable and environmental products are moving to the core of the business. We'll see about that.
For comparison, someone mentioned that China has committed to installing 150GW of windpower by 2020. The panel started discussing how oil and coal are heavily subsidized, and it would be helpful to have the prices be more accurate so that renewable power could be more competitive. Cap-and-trade legislation would also help with this because externalities would begin to get incorporated in the price. Beaudry-Losique pointed out, though, that shale gas, which is touted as a low carbon-emitting source of energy, is also subsidized because water is free, and processing the natural gas uses a lot of water.
Dunn mentioned that at GE, they do job tracking. They keep an account of jobs created and jobs disappeared and jobs shipped overseas due to new products. This is a very important concept, and I think it's really necessary for full employment without material growth.
Next I went to a symposium on Renewable Energy: How can we get there.
It was organized by Mark Bernstein, and some people made presentations: Marc L. Ulrich, South California Edison, Jigar Shah, the Carbon War Room, David E. Rogers, DOE, and Bobi Garrett, National Renewable Energy Lab, DOE.
Ulrich gave a presentation about Edison power and their obstacles with providing solar power. He talked about how state's RPS (renewable energy portfolio standards) can help create demand for solar power. I'm not exactly sure how it works, but somehow this is one of the more effective tools that governments have to support renewable energy. RPS goals can choose to favor "bundled" or "unbundled" energy "products". It's good to target broad markets for lower prices, and RPS goals for compliance should be flexible. This is important for jobs. State programs also need to have cost containment measures and identify competitive pricing alternatives to compliance. All load serving entities need to abide by equal rules. States playing favorites amongst companies can be very bad for the taxpayers and businesses.
So steps for states RPS programs:
1. create demand - through legislation and regulatory tools
2. incentivize supply - with tax rebates and loans
3. procurement
4. track the progress
He posted a graph of the biggest obstacles to installing wind power at his company, and number one was transmission, then finance, developer, permitting, and technology.
He talked about something called feed-in tariffs, but I didn't really know what he was saying.
Next Jigar Shah gave a presentation about business models and utility companies. This talk was the most interesting to me.
He first described the current business model of a utility company. They were allowed to be monopolies by the government in return for covering everyone in their area. Utility companies are rate-based so they divide the costs of operation amongst consumers. This means that when something goes over-budget, they just increase the prices for all their customers. Integrated Resource Planning process requires them to have to sell a certain amount of kW/hr. This business model makes utility companies kind of like banks so when people cut down on their energy usage, it is like a bunch of people are running on the bank. I thought that was an interesting analogy. One alternative business model to create an incentive for utilities to move to clean energy is to decouple profit from operations. One problem with that is that then there is no way for companies to grow, so you include an incentive payment. Then the problem is that it may eventually lead to 50% profits so in the long term, it's not a fair business model. Shah states that we need utilities 2.0, and he is convinced that it will be based on distributed power. However, he does not know all the specifics.
The other talks were things that I'm more familiar with so I didn't bother to take notes, actually. I took some notes from the Q&A section, though.
They talked about the need for reduced carbon intensity, which is carbon emissions/$ in order to reduce green house gases.
It's not good for goals set in legislation to be detailed.
They mentioned the company Sun Edison.
They also mentioned value propositions.
Most agreed that cap&trade legislation would help but not enough. They varied in how much they thought it would help. Shah did not think they would help very much. He and Ulrich agreed that incentives are more important. Even large oil and gas companies need incentives to try new things so in some cases, including environmental costs can be prohibitive.
Something that Shah thought was a problem was that environmentalists do not like distributed power, but there will not be a way to have centralized clean energy because it is impossible to allow people to run new transmission lines through their land for a variety of reasons.
The first event of the day was a Moderated Roundtable on the New Green Economy: Moving from Theory to Action.
It was moderated by Mark Bernstein, the Energy Institute at the University of Southern California, and there were 4 speakers. Len Peters, Cabinet Secretary of Energy and Environment of Kentucky, Seth Dunn, Director of Renewable Energy Policy of GE Energy, Gary Guzy, White House Council on Environmental Quality, and Jacques Beaudry-Losique, DOE Office of Energy Efficiency and Renewable Energy.
It was really an amazing discussion, but there were a few interesting parts. Peters was pretty focused on energy efficiency and "low hanging fruit." He mentioned that MA is the only other state with an Energy and Environment cabinet secretary. Most states separate energy and the environment. He said that 90% of electricity is coal, and 2/3 of the coal they mine is exported to other states. I would think that he should look more into renewable energy or at least something else for all those coal miners to do. They mentioned that Obama had $80 billion for clean energy in the stimulus plan.
Dunn talked about programs within the company like ecomagination, where people within the company does treasure hunts for energy savings. That was an interesting concept and is a solution to the fact that sometimes it's hard for companies to reduce waste because it's not any one person's responsibility to maximize efficient energy usage. GE has been reducing the energy intensity of the business, and he talked about how they have been doing a lot of R&D and that their renewable and environmental products are moving to the core of the business. We'll see about that.
For comparison, someone mentioned that China has committed to installing 150GW of windpower by 2020. The panel started discussing how oil and coal are heavily subsidized, and it would be helpful to have the prices be more accurate so that renewable power could be more competitive. Cap-and-trade legislation would also help with this because externalities would begin to get incorporated in the price. Beaudry-Losique pointed out, though, that shale gas, which is touted as a low carbon-emitting source of energy, is also subsidized because water is free, and processing the natural gas uses a lot of water.
Dunn mentioned that at GE, they do job tracking. They keep an account of jobs created and jobs disappeared and jobs shipped overseas due to new products. This is a very important concept, and I think it's really necessary for full employment without material growth.
Next I went to a symposium on Renewable Energy: How can we get there.
It was organized by Mark Bernstein, and some people made presentations: Marc L. Ulrich, South California Edison, Jigar Shah, the Carbon War Room, David E. Rogers, DOE, and Bobi Garrett, National Renewable Energy Lab, DOE.
Ulrich gave a presentation about Edison power and their obstacles with providing solar power. He talked about how state's RPS (renewable energy portfolio standards) can help create demand for solar power. I'm not exactly sure how it works, but somehow this is one of the more effective tools that governments have to support renewable energy. RPS goals can choose to favor "bundled" or "unbundled" energy "products". It's good to target broad markets for lower prices, and RPS goals for compliance should be flexible. This is important for jobs. State programs also need to have cost containment measures and identify competitive pricing alternatives to compliance. All load serving entities need to abide by equal rules. States playing favorites amongst companies can be very bad for the taxpayers and businesses.
So steps for states RPS programs:
1. create demand - through legislation and regulatory tools
2. incentivize supply - with tax rebates and loans
3. procurement
4. track the progress
He posted a graph of the biggest obstacles to installing wind power at his company, and number one was transmission, then finance, developer, permitting, and technology.
He talked about something called feed-in tariffs, but I didn't really know what he was saying.
Next Jigar Shah gave a presentation about business models and utility companies. This talk was the most interesting to me.
He first described the current business model of a utility company. They were allowed to be monopolies by the government in return for covering everyone in their area. Utility companies are rate-based so they divide the costs of operation amongst consumers. This means that when something goes over-budget, they just increase the prices for all their customers. Integrated Resource Planning process requires them to have to sell a certain amount of kW/hr. This business model makes utility companies kind of like banks so when people cut down on their energy usage, it is like a bunch of people are running on the bank. I thought that was an interesting analogy. One alternative business model to create an incentive for utilities to move to clean energy is to decouple profit from operations. One problem with that is that then there is no way for companies to grow, so you include an incentive payment. Then the problem is that it may eventually lead to 50% profits so in the long term, it's not a fair business model. Shah states that we need utilities 2.0, and he is convinced that it will be based on distributed power. However, he does not know all the specifics.
The other talks were things that I'm more familiar with so I didn't bother to take notes, actually. I took some notes from the Q&A section, though.
They talked about the need for reduced carbon intensity, which is carbon emissions/$ in order to reduce green house gases.
It's not good for goals set in legislation to be detailed.
They mentioned the company Sun Edison.
They also mentioned value propositions.
Most agreed that cap&trade legislation would help but not enough. They varied in how much they thought it would help. Shah did not think they would help very much. He and Ulrich agreed that incentives are more important. Even large oil and gas companies need incentives to try new things so in some cases, including environmental costs can be prohibitive.
Something that Shah thought was a problem was that environmentalists do not like distributed power, but there will not be a way to have centralized clean energy because it is impossible to allow people to run new transmission lines through their land for a variety of reasons.
Tuesday, January 26, 2010
Into Cooking
I'm feeling a wave of desire to cook. I found some good recipes online. I want to be a little adventurous since part of the reason why I started cooking a little less was that I felt uninspired to cook the same dishes. Then again, even when I was "cooking less" I was still spending a lot of time cooking.
Cumin lamb!
Pork dish!!
Last night I bought some liverwurst so I've been looking up ways to eat it. Liverwurst sandwich
I made some potatoes with rosemary last night. That turned out really well.
I want to make a soup with anchovies to flavor the broth.
Cumin lamb!
Pork dish!!
Last night I bought some liverwurst so I've been looking up ways to eat it. Liverwurst sandwich
I made some potatoes with rosemary last night. That turned out really well.
I want to make a soup with anchovies to flavor the broth.
Monday, January 25, 2010
NCSE Conference : Thursday : Breakout Session and Speeches
Thursday afternoon I attended a breakout session on Bridging the Green Gap between Sustainable Product Research and Commercialization
Moderated by Susan Jenkins of Berkeley and CEREL. Other panelists include Bill Roper, Senior Advisor at Dawson and Associates, Katta Jayaram Reddy, University of Wyoming and CEREL, David Rigby, President of Waste Water Management Inc, and Alfonso Blanco, Program Manager of the EPA, Office of Waste Water Management.
All the panelists were small business and university researchers so it was really about small businesses, entrepreneurs, and inventors going through the patent process and getting start-up capital. The goal was to come up with suggestions for action to be presented in a report with suggestions from the other breakout sessions.
Not all universities have friendly technology transfer offices that assist researchers in patenting their ideas and developing them into commercial products. There are a lot of legal hurdles. Panelists wanted more incubators, a "one-stop shop" where inventors can work and also get help from lawyers. They say current incubators are too small and don't have permanent staff. Congress can give loans for IBO's.
Grand Canyon Problem is where do you get the capital. They talked about venture capitalist firms, but one guy insisted that angel investors are the way to go.
Third party certification programs or government certification programs can generate demand. Industry standards, LEED, EnergyStar, etc.
They were also in favor of clean technology competitions. They thought that was an efficient way to use money the way markets are efficient.
Some panelists expressed their view that inventors should be more concerned with publicity than with guarding their ideas from copiers. Being first to implement it and speed in getting ideas to commercialization is more important.
They mentioned an EPA program Smart Way.
Panelists agreed it would be great if there was a national database of projects, competitions, and businesses. A website they mentioned that sort of serve this purpose are input.com.
After the breakout session, the Lifetime Achievement Award was presented to Herman Daly, the granddaddy of ecological economics. I realized when he was talking that he was missing his right arm.
Then Gus Speth gave the Chafee Memorial Lecture. He founded the NRDC (Natural Resources Defense Council) and a number of other environmental organizations. A few notable things are that he mentioned the establishment of the New Economics Institute and the book, "Managing Without Growth."
Moderated by Susan Jenkins of Berkeley and CEREL. Other panelists include Bill Roper, Senior Advisor at Dawson and Associates, Katta Jayaram Reddy, University of Wyoming and CEREL, David Rigby, President of Waste Water Management Inc, and Alfonso Blanco, Program Manager of the EPA, Office of Waste Water Management.
All the panelists were small business and university researchers so it was really about small businesses, entrepreneurs, and inventors going through the patent process and getting start-up capital. The goal was to come up with suggestions for action to be presented in a report with suggestions from the other breakout sessions.
Not all universities have friendly technology transfer offices that assist researchers in patenting their ideas and developing them into commercial products. There are a lot of legal hurdles. Panelists wanted more incubators, a "one-stop shop" where inventors can work and also get help from lawyers. They say current incubators are too small and don't have permanent staff. Congress can give loans for IBO's.
Grand Canyon Problem is where do you get the capital. They talked about venture capitalist firms, but one guy insisted that angel investors are the way to go.
Third party certification programs or government certification programs can generate demand. Industry standards, LEED, EnergyStar, etc.
They were also in favor of clean technology competitions. They thought that was an efficient way to use money the way markets are efficient.
Some panelists expressed their view that inventors should be more concerned with publicity than with guarding their ideas from copiers. Being first to implement it and speed in getting ideas to commercialization is more important.
They mentioned an EPA program Smart Way.
Panelists agreed it would be great if there was a national database of projects, competitions, and businesses. A website they mentioned that sort of serve this purpose are input.com.
After the breakout session, the Lifetime Achievement Award was presented to Herman Daly, the granddaddy of ecological economics. I realized when he was talking that he was missing his right arm.
Then Gus Speth gave the Chafee Memorial Lecture. He founded the NRDC (Natural Resources Defense Council) and a number of other environmental organizations. A few notable things are that he mentioned the establishment of the New Economics Institute and the book, "Managing Without Growth."
Bill Gates as a Public Figure
This past year was Gates' first year working full time on the Gates' Foundation. He put out an annual letter and has been going on the morning circuit with his views on various policy issues.
ABC News article and video with George Stephanopolous
article at PCWorld
Breakthough Institute blog
He has come out in support of bank fees and tax increases. At the same time, he seeks to moderate people's expectations in the government's ability to make a full recovery, saying that the government is limited in what it can really do. According to Gates, the best thing the government can do for the economy and for social equity is invest in education. The government needs to focus on long term goals. I think changing people's expectations would help a lot or else Scott Browns are going to get elected everywhere.
His main interest is in health services. He talked about the need for innovation in health and the need for more pills. What about preventative measures and things like diet, though? He also notes that we need a lot more investment in clean energy and he downplays the effectiveness of energy efficiency measures. He is right about the lack of funding of clean energy in the US, but I wonder what he would think about the concept of a steady state economy, less work hours, and less material throughput.
He even had a diplomatic analysis of the Google v. China free speech issue.
He has an interesting blog http://www.gatesnotes.com.
It's interesting how billionaires like Gates and Warren Buffet have much more credibility than any actual politicians. On the one hand, it makes sense because they are proven to be successful people. On the other hand, it's a little sad because I don't think there are any politicians that people really trust.
ABC News article and video with George Stephanopolous
article at PCWorld
Breakthough Institute blog
He has come out in support of bank fees and tax increases. At the same time, he seeks to moderate people's expectations in the government's ability to make a full recovery, saying that the government is limited in what it can really do. According to Gates, the best thing the government can do for the economy and for social equity is invest in education. The government needs to focus on long term goals. I think changing people's expectations would help a lot or else Scott Browns are going to get elected everywhere.
His main interest is in health services. He talked about the need for innovation in health and the need for more pills. What about preventative measures and things like diet, though? He also notes that we need a lot more investment in clean energy and he downplays the effectiveness of energy efficiency measures. He is right about the lack of funding of clean energy in the US, but I wonder what he would think about the concept of a steady state economy, less work hours, and less material throughput.
He even had a diplomatic analysis of the Google v. China free speech issue.
He has an interesting blog http://www.gatesnotes.com.
It's interesting how billionaires like Gates and Warren Buffet have much more credibility than any actual politicians. On the one hand, it makes sense because they are proven to be successful people. On the other hand, it's a little sad because I don't think there are any politicians that people really trust.
Sunday, January 24, 2010
NCSE Conference : Thursday : Plenary Roundtable
The first plenary roundtable was on Growing the Green Economy or Greening the Grown Economy? Actually, I think the title is kind of stupid, but they didn't really talk about this topic, and so the discussion was quite good.
It was moderated by Bob Costanza - ecological economist at the University of Vermont.
Panelists include Mindy Lubber (president of CERES), Van Jones (author of Green Collar Economy), Tim Jackson (Economics Commissioner of the UK Sustainable Development Commission), and David Orr (economist at the University of Vermont).
Bob Costanza promoted his new "Solutions" Magazine. It looks pretty good. The first issue included a classic article by Donella Meadows on system dynamics and system thinking. It also had an article by Michael Pollan and another article coauthored by Bill McKibbon.
Question: Is growth sustainable and is it desirable?
Tim Jackson started out answering that resource-based GDP growth is not sustainable. Value-based GDP growth could be sustainable but we're not measuring that. In October of 2008, Greenspan said that he found some flaws...This was a major event, and it signals the inability for neoclassical economics to explain the downturn as well as paths to recovery.
We are generating "ecological debt" for future generations. Even before the recession hit, though, we were never as rich as we thought in terms of life satisfaction.
Van Jones talked about being inspired by Bobby Kennedy who talked about how negative expenditures (such as sickness and war) contribute to growing GDP. It's important to note that for other billions of the poorest people, growth is a good thing. It does pull people out of poverty and meet their material and health needs. It also increases a person's access to education and life fulfillment.
Orr talked about how major growth was achieved from the military economy. The way we grew was from sprawl, and people eventually moved out of the cities such as the Rust Belt cities into suburbia. It sounds like Orr is talking about urban decay.
Lubber said that people in power support growth. She is referring to the financial world and the political world.
Van Jones pointed out that there are three crises right now. 1. recession 2. structural (jobs not coming back) 3. ecological
They mention "Managing Without Growth," a book by Peter Victor.
We need ecological investment and ecological enterprise. We need honest accounting and innovation in service business models. The major amendment to neoclassical economics is that there is now less nature and more people. Neoclassical economics itself was born during a time where natural resources seemed limitless.
In order to bring about a new world of ecological enterprise, we need ecopopulism. We need to spread the word and make a mass movement to demand this change.
How do we get there?
Currently, the structure of the economy is addicted to growth. At Oberlin, they are building models of sustainability.
Second plenary roundtable was on the Role of Science, Technology and Education in Greening the New Economy moderated by David Gergen (political analyst and Harvard University faculty), and the speakers were Michael Crow (President of the Arizona State University), Richard Freeman (professor of economics at Harvard), Martha Kanter (Under Secretary of the US Department of Education), Rush Holt (D-NJ), and Kyang-Ah Park (Veep of the Environmental Markets Group at Goldman Sachs).
It was not a great discussion, but it's also not really my main interest.
They said that the government had to invest $150 billion dollars to create 2 million jobs, which comes out to $75,000/person for 1 year.
Kanter talked about how people are dropping out of school so they're losing economic and social competitiveness. It's hard, though, because they're walking away from programs that already exist so the government is in this parental role of convincing people to look out for their own interests.
Crow had an interesting analysis that the National Defense Education Act left behind 80% of students, telling them that they didn't need a science education. This not only has to be reversed, but people need to be trained in systems thinking and education needs to be more interdisciplinary.
Park said something that was revealing when asked about whether Goldman Sachs and other corporations can take risks. She said that businesses "do take risk" but can't/won't invest in basic sciences and R&D because it's too risky, so government has to step into that role. Businesses can only fund development for technologies that are close to commercialization.
It was moderated by Bob Costanza - ecological economist at the University of Vermont.
Panelists include Mindy Lubber (president of CERES), Van Jones (author of Green Collar Economy), Tim Jackson (Economics Commissioner of the UK Sustainable Development Commission), and David Orr (economist at the University of Vermont).
Bob Costanza promoted his new "Solutions" Magazine. It looks pretty good. The first issue included a classic article by Donella Meadows on system dynamics and system thinking. It also had an article by Michael Pollan and another article coauthored by Bill McKibbon.
Question: Is growth sustainable and is it desirable?
Tim Jackson started out answering that resource-based GDP growth is not sustainable. Value-based GDP growth could be sustainable but we're not measuring that. In October of 2008, Greenspan said that he found some flaws...This was a major event, and it signals the inability for neoclassical economics to explain the downturn as well as paths to recovery.
We are generating "ecological debt" for future generations. Even before the recession hit, though, we were never as rich as we thought in terms of life satisfaction.
Van Jones talked about being inspired by Bobby Kennedy who talked about how negative expenditures (such as sickness and war) contribute to growing GDP. It's important to note that for other billions of the poorest people, growth is a good thing. It does pull people out of poverty and meet their material and health needs. It also increases a person's access to education and life fulfillment.
Orr talked about how major growth was achieved from the military economy. The way we grew was from sprawl, and people eventually moved out of the cities such as the Rust Belt cities into suburbia. It sounds like Orr is talking about urban decay.
Lubber said that people in power support growth. She is referring to the financial world and the political world.
Van Jones pointed out that there are three crises right now. 1. recession 2. structural (jobs not coming back) 3. ecological
They mention "Managing Without Growth," a book by Peter Victor.
We need ecological investment and ecological enterprise. We need honest accounting and innovation in service business models. The major amendment to neoclassical economics is that there is now less nature and more people. Neoclassical economics itself was born during a time where natural resources seemed limitless.
In order to bring about a new world of ecological enterprise, we need ecopopulism. We need to spread the word and make a mass movement to demand this change.
How do we get there?
Currently, the structure of the economy is addicted to growth. At Oberlin, they are building models of sustainability.
Second plenary roundtable was on the Role of Science, Technology and Education in Greening the New Economy moderated by David Gergen (political analyst and Harvard University faculty), and the speakers were Michael Crow (President of the Arizona State University), Richard Freeman (professor of economics at Harvard), Martha Kanter (Under Secretary of the US Department of Education), Rush Holt (D-NJ), and Kyang-Ah Park (Veep of the Environmental Markets Group at Goldman Sachs).
It was not a great discussion, but it's also not really my main interest.
They said that the government had to invest $150 billion dollars to create 2 million jobs, which comes out to $75,000/person for 1 year.
Kanter talked about how people are dropping out of school so they're losing economic and social competitiveness. It's hard, though, because they're walking away from programs that already exist so the government is in this parental role of convincing people to look out for their own interests.
Crow had an interesting analysis that the National Defense Education Act left behind 80% of students, telling them that they didn't need a science education. This not only has to be reversed, but people need to be trained in systems thinking and education needs to be more interdisciplinary.
Park said something that was revealing when asked about whether Goldman Sachs and other corporations can take risks. She said that businesses "do take risk" but can't/won't invest in basic sciences and R&D because it's too risky, so government has to step into that role. Businesses can only fund development for technologies that are close to commercialization.
NCSE Conference : Thursday : Keynotes
The NCSE president Ambassador Richard Benedick gave an introduction. He "played a major role in global environmental affairs as chief U.S. negotiator and a principal architect of the historic Montreal Protocol on protection of the ozone layer." He's a career diplomat, which is apparently rare nowadays, and he has worked under many administrations, taking a lot of heat during the Reagan administration. He seemed like a pretty cool guy.
Following the introduction were some keynote addresses on "How Can We Get There From Here?"
Chad Holliday, chairman and CEO emeritus of DuPont, was a pretty good speaker and good at fielding questions from the audience. He coauthors the book, "Walking the Talk: The Business Case for Sustainable Development".
Navigation - Direction, Pace, Path
Prudence - Efficiency, Behavior, Electrification
DuPont held energy use flat while increasing production. He also recommended Nudge, the book, for creating demand.
At DuPont, they actually keep an internal measurement of value added/lb (I'm not sure if it's per pound of output or input).
He also recommended the book "Free Fall: America, Free Markets, and the Sinking of the Global Economy" by Joe Stiglitz, economist and Nobel Prize recipient.
Holliday gave an alternative business model for utility companies to make the transition to solar power where utilities have the option to add capacity by retrofitting houses or installing solar panels instead of adding a coal plant.
He mentions the US Citizen's Network for Sustainable Development, and I noted that he sounds like a crazy person.
The book "Sustainability By Design" was brought up during the questions.
The Second Nature program is also brought up, and it's a program where colleges commit to being carbon neutral.
DuPont does not exactly support cap and trade, but it does believe in more accurate accounting of externalities. They would, however, prefer certainty over cap and trade.
The next speaker was Bill Spriggs, the Assistant Secretary to the US Department of Labor. He was not a great speaker, but he mentioned some programs such as $700 for Labor to design programs for green jobs, and they recently finished contracting all that money. Work Force Investment Act, State-based energy programs, local businesses and unions. A bigger problem is structural unemployment, which are jobs that are not coming back.
The last speech was given by Lisa Johnson, secretary of the EPA. It was noted that she is a career EPA employee. She talked about how science needs to be more important than politics so that the EPA can regain some credibility.
1. a green economy is a strong economy
2. the moment compels us
3. clean energy is the next big industry
4. we need positive externalities to our economic activity
In 2001, the US had a plan for increasing domestic energy supply (oil) to lower energy prices, but it did not work. We need to remember this.
Her speech was mainly an invigorating one.
Following the introduction were some keynote addresses on "How Can We Get There From Here?"
Chad Holliday, chairman and CEO emeritus of DuPont, was a pretty good speaker and good at fielding questions from the audience. He coauthors the book, "Walking the Talk: The Business Case for Sustainable Development".
Navigation - Direction, Pace, Path
Prudence - Efficiency, Behavior, Electrification
DuPont held energy use flat while increasing production. He also recommended Nudge, the book, for creating demand.
At DuPont, they actually keep an internal measurement of value added/lb (I'm not sure if it's per pound of output or input).
He also recommended the book "Free Fall: America, Free Markets, and the Sinking of the Global Economy" by Joe Stiglitz, economist and Nobel Prize recipient.
Holliday gave an alternative business model for utility companies to make the transition to solar power where utilities have the option to add capacity by retrofitting houses or installing solar panels instead of adding a coal plant.
He mentions the US Citizen's Network for Sustainable Development, and I noted that he sounds like a crazy person.
The book "Sustainability By Design" was brought up during the questions.
The Second Nature program is also brought up, and it's a program where colleges commit to being carbon neutral.
DuPont does not exactly support cap and trade, but it does believe in more accurate accounting of externalities. They would, however, prefer certainty over cap and trade.
The next speaker was Bill Spriggs, the Assistant Secretary to the US Department of Labor. He was not a great speaker, but he mentioned some programs such as $700 for Labor to design programs for green jobs, and they recently finished contracting all that money. Work Force Investment Act, State-based energy programs, local businesses and unions. A bigger problem is structural unemployment, which are jobs that are not coming back.
The last speech was given by Lisa Johnson, secretary of the EPA. It was noted that she is a career EPA employee. She talked about how science needs to be more important than politics so that the EPA can regain some credibility.
1. a green economy is a strong economy
2. the moment compels us
3. clean energy is the next big industry
4. we need positive externalities to our economic activity
In 2001, the US had a plan for increasing domestic energy supply (oil) to lower energy prices, but it did not work. We need to remember this.
Her speech was mainly an invigorating one.
NCSE Conference : Wednesday
On Wednesday, I went to an all-day workshop at the Potomac Institute for Policy Studies on Alternatives to Neoclassical Economics. It was pretty interesting, but it wasn't as rigorous about the economics as I hoped.
The Potomac Institute for Policy Studies (PIPS) is a science and technology think tank. They work for a variety of people including defense. They just started a new research group called the Center for Environmental Economics and Ethics headed by James Tate. The workshop was hosted by Jim Giordano, who is the head of all the Academic Programs at PIPS. He introduced the speakers and also summarized their points pretty well although he has a pretty erudite way of speaking that was sometimes hard to follow. But he did tend to be precise in what he said.
I. James Tate give an introductory talk on the New Green Economy, kind of a historical overview.
CP Snow - thinker who talked about the cultural dichotomy of science and the humanities. -> there is currently a dichotomy between neoclassical economics and "value economics."
In Wealth of Nations, Adam Smith took laws of physics and applied them to economics, focusing on markets and pricing. However, constraints on renewable and nonrenewable resources are not taken into account. At that time, when resources were much more abundant, the assumption was that there would always be much more resources to accommodate human activity.
James W. Boyd wrote about how non-commodity resources are not factored into the GDP.
Robin O'Malley, a scientist at the Heintz Center wrote the 2008 Heinz State of the Nation's Ecosystems Report. He tried to implement some metrics, but it's hard to establish any monitoring system in the US politically.
Two growing fields are 1. Conservation biology and 2. behavioral economics to explain market inefficiencies.
Herman Daly is the grandfather of ecological economics.
In order to transition to ecological economics
1. teach critical thinking and scientific method
2. understand mankind is subject to laws of nature
3. spread the word and facts
4. fund research into natural sciences
5. manage population levels of organisms, especially humans
6. develop and implement sustainable strategies for agriculture, energy use, and natural resource management
Giordano mentions the concept of "tripping points." I'm not exactly clear on what he's talking about, actually.
II. Dr. Richard Margrave, Global Economics for Growth and Survival
Dr. Margrave is a British consultant in policy, politics, and media. He actually gave a talk through Skype. He talked about G20 and how they had declared commitment to sustainable development at some point. They said they were interested in a "resilient, sustainable, green recovery." He says that financial institutions are shaken right now, although they seem to be doing better than many other sectors right now.
He offered 12 steps to sustainable development
1. develop macroeconomic capability (I'm not that sure about that wording).
2. invest in public access and infrastructure
3. increase financial and fiscal prudence, increase public control of investment, outlaw short selling
4. reform macroeconomic accounting, less emphasis on consumption
5. sharing work and work-life balance, reduce working hours, don't discriminate against part time work
6. tackling systemic inequality because income inequality drives consumption (question: is high pay for GM workers consistent with this policy)
7. measuring capabilities, include health and social indicators
8. protect public things such as museums, public broadcasting
9. reverse culture of consumerism, regulate commercial media, fair trade
10. respect ecological limits, emission caps, declining caps on throughput, limits for per capita waste and emissions
11. fiscal reform for sustainability, green taxation - shift from income tax like Denmark and Germany
12. support technology transfer, set up global technology fund
These suggestions were put forth in a Report by the Sustainability Commission in the UK. richard -at- margrave -dot- co -dot- uk
He mentioned "Our Common Future," which is also known as the Brundland Report put out by the UN World Commission on Environment and Development
However, Iceland recently voted down reining in the banks, which is a setback.
III. Warren Flint on A Systems Approach to Sustainable Development.
He's a consultant in Seattle at 5E's Unlimited. He mentioned McDonough's "Fractal Triangle of Sustainability." His systems approach is not the same as system dynamics, though. It's more about the triple bottom line and community development.
He talks about how governments are attempting to increase liquidity to get out of the recession and he showed a graph of the credit market debt as a percentage of GDP. There was a spike in the 30's and it has been ramping up recently. Getting goods needs to depend on availability of resources not money, which depends on the continuance of economic growth.
Borrowed man and the Tildian Iteration (sp?).
IV. Jim Giordano and A Green Economy, Practical and Ethical Issues
This talk was more about framing the issues.
Business as Human Enterprise - technologic imperative "if I build it, they will come," but do we want them to come
ecology and security of "goods"
1. biopower - use/misuse of ecological resources to control, manipulate and/or manifest vulnerability of others or systems
2. biopolitics - socio-political activities of biopower of groups and/or nations
ethics : human ecology - care, sustainability, and stewardship
risk and ethical management paradigm
1. precautionary
2. personnel
3. predictions
4. policies
rationality agenda - confronting problems and issues
1. runaway effects of technology
2. biopower
3. Wexelblatt effects
4. tripping hazards
Arendtian Ethic - homo faber = intelligent person vs. animal laborens
V. Joan Michelson - Speaking to All Points of View
This talk is really about advertising and creating demand. Consumers drive 70% of the economy. Consumers make decisions based on emotions. "Do I love it?"
She recommends the book "Nudge" by Richard H. Thaler and Cass Sunstein.
behavioral economics - losing something makes people feel twice as bad as gaining feels good. people want feedback/compliments
choice architecture
iNcentives
Understand mappings
Defaults
Give feedback
Expect error
Structure complex choices
key problem for reducing carbon footprint is that energy is Invisible!
part of why the Prius is successful is because they look different and are thus easily identifiable allowing the ownership to have social rewards
Things need to be easy, attractive, affordable, convenient, and popular or at least perceived popular
-create econometrics and incentives for energy
develop energy use standard to make it tangible by making an Energy label similar to Nutritional facts label.
she also recommends "Influence" by Robert Cialdini
another thing could be an Energy Efficiency Card like a membership card where people get discounts for things. It would also become a status symbol.
VI. Dr. Brian Czech on Moving Towards a Sustainable Steady State Economy
He is the president of CASSE, Center for the Advancement of a Steady State Economy.
Academics -
Physiocrats
Classical
Marxist
Georgist
Neoclassical
Heterodox
Henry George wrote "Progress and Poverty." Georgists became shunned because they recommend taxing land. In response, there was a Marginalist Revolution that established American economics and the tax code.
"The Corruption of Economics" by Mason Gaffney documents the rise of Marginalism and neoclassical economics and the anti-George backlash.
The Solow, Lucus, Romer production function Y = f(K,L) where output is a function of capital and labor. Land or other natural resources are not included. Perhaps they are nominally included in capital, but that's not usually how it's calculated.
ecological economics would incorporate the laws of thermodynamics. (This seems iffy to me).
The sigmoid curve shows that as time passes, the GDP, which represents human activity correlates to a greater percentage of available natural capital.
scale - Daly
Distribution - Martinez-Alier
Allocation - Costanza
conventional economic policy uses three tools -
1. fiscal - budgets and taxes
2. monetary - interest rates, money supplies
3. trade
Herman Daly's top ten suggestions for a sustainable economy
1. cap and trade systems
2. tax throughput not labor/capital
3. limit range of income inequality
4. flexible working hours - overemployment problem
5. use tariffs to protect cost-internalization
6. "downgrade" IMF-World Bank-WTO, prevent trade surpluses as well as deficits
7. adjust reserve requirements to 100% (that will never happen)
8. enclose remaining commons in public trust
9. stabilize population
10. reform national accounts
Optimum scale and marginal utility - we need to distinguish economic vs. uneconomic growth.
ISEW - Index of Sustainable Economic Welfare
GPI - Genuine Progress Indicator
De-growth movement is gaining traction in Europe
La Decroissance, Growth moratoria, Thaland's sufficiency economy, Bhutan's Gross Happiness
We have a pro-growth complex of economic policy authorities, corporations, and politicians. A coalition of professional societies can break through this complex.
Degrowth Economists - Herman Daly, Richard Douthwaite, Roefie Hueting, Tim Jackson, Joan Martinez-Alier, and Peter Victor
The Potomac Institute for Policy Studies (PIPS) is a science and technology think tank. They work for a variety of people including defense. They just started a new research group called the Center for Environmental Economics and Ethics headed by James Tate. The workshop was hosted by Jim Giordano, who is the head of all the Academic Programs at PIPS. He introduced the speakers and also summarized their points pretty well although he has a pretty erudite way of speaking that was sometimes hard to follow. But he did tend to be precise in what he said.
I. James Tate give an introductory talk on the New Green Economy, kind of a historical overview.
CP Snow - thinker who talked about the cultural dichotomy of science and the humanities. -> there is currently a dichotomy between neoclassical economics and "value economics."
In Wealth of Nations, Adam Smith took laws of physics and applied them to economics, focusing on markets and pricing. However, constraints on renewable and nonrenewable resources are not taken into account. At that time, when resources were much more abundant, the assumption was that there would always be much more resources to accommodate human activity.
James W. Boyd wrote about how non-commodity resources are not factored into the GDP.
Robin O'Malley, a scientist at the Heintz Center wrote the 2008 Heinz State of the Nation's Ecosystems Report. He tried to implement some metrics, but it's hard to establish any monitoring system in the US politically.
Two growing fields are 1. Conservation biology and 2. behavioral economics to explain market inefficiencies.
Herman Daly is the grandfather of ecological economics.
In order to transition to ecological economics
1. teach critical thinking and scientific method
2. understand mankind is subject to laws of nature
3. spread the word and facts
4. fund research into natural sciences
5. manage population levels of organisms, especially humans
6. develop and implement sustainable strategies for agriculture, energy use, and natural resource management
Giordano mentions the concept of "tripping points." I'm not exactly clear on what he's talking about, actually.
II. Dr. Richard Margrave, Global Economics for Growth and Survival
Dr. Margrave is a British consultant in policy, politics, and media. He actually gave a talk through Skype. He talked about G20 and how they had declared commitment to sustainable development at some point. They said they were interested in a "resilient, sustainable, green recovery." He says that financial institutions are shaken right now, although they seem to be doing better than many other sectors right now.
He offered 12 steps to sustainable development
1. develop macroeconomic capability (I'm not that sure about that wording).
2. invest in public access and infrastructure
3. increase financial and fiscal prudence, increase public control of investment, outlaw short selling
4. reform macroeconomic accounting, less emphasis on consumption
5. sharing work and work-life balance, reduce working hours, don't discriminate against part time work
6. tackling systemic inequality because income inequality drives consumption (question: is high pay for GM workers consistent with this policy)
7. measuring capabilities, include health and social indicators
8. protect public things such as museums, public broadcasting
9. reverse culture of consumerism, regulate commercial media, fair trade
10. respect ecological limits, emission caps, declining caps on throughput, limits for per capita waste and emissions
11. fiscal reform for sustainability, green taxation - shift from income tax like Denmark and Germany
12. support technology transfer, set up global technology fund
These suggestions were put forth in a Report by the Sustainability Commission in the UK. richard -at- margrave -dot- co -dot- uk
He mentioned "Our Common Future," which is also known as the Brundland Report put out by the UN World Commission on Environment and Development
However, Iceland recently voted down reining in the banks, which is a setback.
III. Warren Flint on A Systems Approach to Sustainable Development.
He's a consultant in Seattle at 5E's Unlimited. He mentioned McDonough's "Fractal Triangle of Sustainability." His systems approach is not the same as system dynamics, though. It's more about the triple bottom line and community development.
He talks about how governments are attempting to increase liquidity to get out of the recession and he showed a graph of the credit market debt as a percentage of GDP. There was a spike in the 30's and it has been ramping up recently. Getting goods needs to depend on availability of resources not money, which depends on the continuance of economic growth.
Borrowed man and the Tildian Iteration (sp?).
IV. Jim Giordano and A Green Economy, Practical and Ethical Issues
This talk was more about framing the issues.
Business as Human Enterprise - technologic imperative "if I build it, they will come," but do we want them to come
ecology and security of "goods"
1. biopower - use/misuse of ecological resources to control, manipulate and/or manifest vulnerability of others or systems
2. biopolitics - socio-political activities of biopower of groups and/or nations
ethics : human ecology - care, sustainability, and stewardship
risk and ethical management paradigm
1. precautionary
2. personnel
3. predictions
4. policies
rationality agenda - confronting problems and issues
1. runaway effects of technology
2. biopower
3. Wexelblatt effects
4. tripping hazards
Arendtian Ethic - homo faber = intelligent person vs. animal laborens
V. Joan Michelson - Speaking to All Points of View
This talk is really about advertising and creating demand. Consumers drive 70% of the economy. Consumers make decisions based on emotions. "Do I love it?"
She recommends the book "Nudge" by Richard H. Thaler and Cass Sunstein.
behavioral economics - losing something makes people feel twice as bad as gaining feels good. people want feedback/compliments
choice architecture
iNcentives
Understand mappings
Defaults
Give feedback
Expect error
Structure complex choices
key problem for reducing carbon footprint is that energy is Invisible!
part of why the Prius is successful is because they look different and are thus easily identifiable allowing the ownership to have social rewards
Things need to be easy, attractive, affordable, convenient, and popular or at least perceived popular
-create econometrics and incentives for energy
develop energy use standard to make it tangible by making an Energy label similar to Nutritional facts label.
she also recommends "Influence" by Robert Cialdini
another thing could be an Energy Efficiency Card like a membership card where people get discounts for things. It would also become a status symbol.
VI. Dr. Brian Czech on Moving Towards a Sustainable Steady State Economy
He is the president of CASSE, Center for the Advancement of a Steady State Economy.
Academics -
Physiocrats
Classical
Marxist
Georgist
Neoclassical
Heterodox
Henry George wrote "Progress and Poverty." Georgists became shunned because they recommend taxing land. In response, there was a Marginalist Revolution that established American economics and the tax code.
"The Corruption of Economics" by Mason Gaffney documents the rise of Marginalism and neoclassical economics and the anti-George backlash.
The Solow, Lucus, Romer production function Y = f(K,L) where output is a function of capital and labor. Land or other natural resources are not included. Perhaps they are nominally included in capital, but that's not usually how it's calculated.
ecological economics would incorporate the laws of thermodynamics. (This seems iffy to me).
The sigmoid curve shows that as time passes, the GDP, which represents human activity correlates to a greater percentage of available natural capital.
scale - Daly
Distribution - Martinez-Alier
Allocation - Costanza
conventional economic policy uses three tools -
1. fiscal - budgets and taxes
2. monetary - interest rates, money supplies
3. trade
Herman Daly's top ten suggestions for a sustainable economy
1. cap and trade systems
2. tax throughput not labor/capital
3. limit range of income inequality
4. flexible working hours - overemployment problem
5. use tariffs to protect cost-internalization
6. "downgrade" IMF-World Bank-WTO, prevent trade surpluses as well as deficits
7. adjust reserve requirements to 100% (that will never happen)
8. enclose remaining commons in public trust
9. stabilize population
10. reform national accounts
Optimum scale and marginal utility - we need to distinguish economic vs. uneconomic growth.
ISEW - Index of Sustainable Economic Welfare
GPI - Genuine Progress Indicator
De-growth movement is gaining traction in Europe
La Decroissance, Growth moratoria, Thaland's sufficiency economy, Bhutan's Gross Happiness
We have a pro-growth complex of economic policy authorities, corporations, and politicians. A coalition of professional societies can break through this complex.
Degrowth Economists - Herman Daly, Richard Douthwaite, Roefie Hueting, Tim Jackson, Joan Martinez-Alier, and Peter Victor
NCSE Conference Debriefing
I went to DC last week for a conference on the New Green Economy put together by NCSE (National Council for Science and the Environment), a non-profit independent NGO, and it was really great.
It was a three-day conference packed with events. Most of the events were at the Ronald Reagan and International Trade Center Building in downtown DC, which is also where the EPA offices are located. (Interesting tidbit: There was a lot of security in those buildings. You get screened when you come in, and there were a lot of places where you needed different levels of security clearances.)
It was attended primarily by representatives of universities like heads of the sustainability programs and people who worked in the government like EPA employees. There were also a number of small business owners in the renewable energy market and various environmental and economic consultants.
On the whole, discussions were very interesting and several major themes emerged.
1. The current economic model of exponential economic growth is not environmentally sustainable. At the very least, material throughput and carbon emissions need to stop growing. It's unclear how this is possible while maintaining full levels of employment. Not everyone was behind this idea. It's unclear if the business people really understood what this meant, and certainly many panel speakers had never heard of this concept. More work needs to be done in the field of ecological economics as an alternative to neoclassical economics to provide a robust framework for national economic policy.
2. Everyone needs to think about what a "new green economy," an environmentally sustainable economy will look like. People at this conference were interested in providing a better quality of life for people, a stable society, a stable economy, and providing for future generations.
3. There is still a lot that can be done within the current economic framework to increase energy efficiency and reduce material throughput. The most useful things the government can do is to create demand through incentives so that energy efficient technologies and renewable energy businesses can break into the market. People were interested in more accurate accounting of positive as well as negative externalities, which includes pricing the usage of resources such as water.
4. A lot of the demand needs to come from the bottom up, which means we have a long ways to go to educate the public about these issues. Politically, there have been major setbacks to those who are interested in a new green economy. People were certainly starting to feel a little sick, almost despairing, but in general felt even greater urgency than before and committed to action. It got to be like rallying the forces by the end.
I took a lot of notes and will be blogging about all the events I went to in the next few posts.
It was a three-day conference packed with events. Most of the events were at the Ronald Reagan and International Trade Center Building in downtown DC, which is also where the EPA offices are located. (Interesting tidbit: There was a lot of security in those buildings. You get screened when you come in, and there were a lot of places where you needed different levels of security clearances.)
It was attended primarily by representatives of universities like heads of the sustainability programs and people who worked in the government like EPA employees. There were also a number of small business owners in the renewable energy market and various environmental and economic consultants.
On the whole, discussions were very interesting and several major themes emerged.
1. The current economic model of exponential economic growth is not environmentally sustainable. At the very least, material throughput and carbon emissions need to stop growing. It's unclear how this is possible while maintaining full levels of employment. Not everyone was behind this idea. It's unclear if the business people really understood what this meant, and certainly many panel speakers had never heard of this concept. More work needs to be done in the field of ecological economics as an alternative to neoclassical economics to provide a robust framework for national economic policy.
2. Everyone needs to think about what a "new green economy," an environmentally sustainable economy will look like. People at this conference were interested in providing a better quality of life for people, a stable society, a stable economy, and providing for future generations.
3. There is still a lot that can be done within the current economic framework to increase energy efficiency and reduce material throughput. The most useful things the government can do is to create demand through incentives so that energy efficient technologies and renewable energy businesses can break into the market. People were interested in more accurate accounting of positive as well as negative externalities, which includes pricing the usage of resources such as water.
4. A lot of the demand needs to come from the bottom up, which means we have a long ways to go to educate the public about these issues. Politically, there have been major setbacks to those who are interested in a new green economy. People were certainly starting to feel a little sick, almost despairing, but in general felt even greater urgency than before and committed to action. It got to be like rallying the forces by the end.
I took a lot of notes and will be blogging about all the events I went to in the next few posts.
Monday, January 18, 2010
Financial Meltdowns Just Happen Sometimes
Krugman's take on bankers
Some highlights.
On the other hand, according to the Economic Long Wave Theory, these large crashes do happen every so often as a part of a cycle.
Some highlights.
The official Financial Crisis Inquiry Commission — the group that aims to hold a modern version of the Pecora hearings of the 1930s, whose investigations set the stage for New Deal bank regulation — began taking testimony on Wednesday. In its first panel, the commission grilled four major financial-industry honchos.
There were two moments in Wednesday’s hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that “happens every five to seven years. We shouldn’t be surprised.” In short, stuff happens, and that’s just part of life.
Still, Mr. Dimon’s cluelessness paled beside that of Goldman Sachs’s Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted. Phil Angelides, the commission’s chairman, was not amused: The financial crisis, he declared, wasn’t an act of God; it resulted from “acts of men and women.”
But there was nothing accidental about the crisis. From the late 1970s on, the American financial system, freed by deregulation and a political climate in which greed was presumed to be good, spun ever further out of control. There were ever-greater rewards — bonuses beyond the dreams of avarice — for bankers who could generate big short-term profits. And the way to raise those profits was to pile up ever more debt, both by pushing loans on the public and by taking on ever-higher leverage within the financial industry.
On the other hand, according to the Economic Long Wave Theory, these large crashes do happen every so often as a part of a cycle.
Changes In Cambridge
Last Friday, Smark and I went out to dinner, and we decided at the last minute to go to the Thailand Cafe for some bad Thai food. Usually this place is pretty empty, but this time it was totally full of Chinese people. Apparently, six months ago or so they got a new chef from Szechuan, and now they mainly serve Szechuan food, and it's really really good! I always suspected the owner and the server woman were Chinese, but they never spoke much so I couldn't tell. Well, now they're always speaking with the customers in Chinese, and they had hired a few more Chinese servers, too. However, it's still called Thailand Cafe, and they haven't changed the decor at all.
This review on Yelp pretty much sums it up.
This review on Yelp pretty much sums it up.
No, I don't understand what this place has to do with Thailand, but the Sichuan food they serve is fantastic.
So - shopping at the Korean market - question arises - where to have lunch. Honey says: "Let's go to Thailand Cafe across the street." I say: Thailand and Sichuan cuisine? You must be out of your mind. If they cannot make up their mind, how can the food be any good? Uhhh was I wrong.
Ignore the Thailand signage and decor if you like really good Sichuan food. Chengdu spicy chicken, beef jerky (added 3 orders for take out - not kidding), dan dan mien and a cold cucumber dish were all fantastic. Two weeks earlier I was in Chengdu and I must attest, the food at Thailand Cafe could not have been more authentic Sichuan. It rivals the classics in the suburbs (Sichuan Gourmet and Sichuan Garden).
Saturday, January 16, 2010
NCSE Conference Update
I looked through the talks more carefully, and I think I'm going to go with this lineup.
Alternatives to Neoclassical Economics for Business and National Security:
Bridging the GREEN-GAP Between Environmentally-Sustainable Product Research...
A Renewable Energy Future: Can We Get From Here to There?
Rethinking City Economics: How Green Infrastructure and Deconstruction Can Provide Green Jobs, Revitalize Communities, and Encourage Local Self-Reliance:
Alternatives to Neoclassical Economics for Business and National Security:
Bridging the GREEN-GAP Between Environmentally-Sustainable Product Research...
A Renewable Energy Future: Can We Get From Here to There?
Rethinking City Economics: How Green Infrastructure and Deconstruction Can Provide Green Jobs, Revitalize Communities, and Encourage Local Self-Reliance:
New Green Economy Conference Speakers
Herman Daly is a professor at the University of Maryland Public Policy School
I've also been reading about economic growth theory and economic dynamics and I found a resource for the history of economic thought.
I've also been reading about economic growth theory and economic dynamics and I found a resource for the history of economic thought.
Friday, January 15, 2010
Energy Talk at MIT with Sterman
This is from last year IAP, actually. John Sterman, the system dynamics guy is the moderator, and Harvey Michaels is a speaker along with some other people I'm not that familiar with yet. Through this, I found some interesting companies.
XENERGY
Environmental Law Institute
and also driving to work today, I saw Alteris Renewables
XENERGY
Environmental Law Institute
and also driving to work today, I saw Alteris Renewables
Wednesday, January 13, 2010
C-ROADS
The latest system dynamics model for the climate, energy, and the economy is C-Roads. All the leaders in system dynamics are involved: John Sterman, Tom Fiddaman, people at the Sustainability Institute, and others. Their website is the http://climateinteractive.org/ and their blog is http://climateinteractive.wordpress.com/
Synapse Energy Economics
Went to a talk at MIT today, and the ECO of Synapse Energy Economics was there.
Tuesday, January 12, 2010
Deep Economy
When I visited DC last year, I saw someone was reading Deep Economy by Bill McKibbon. I'm not sure if it's good, but it looks relevant to what I'm interested in.
Sustainability Resources
http://www.sustainer.org/ Sustainability Institute founded by the late Donella Meadows, a system dynamics modeler.
Monday, January 11, 2010
Urban Dynamics Review : Part Four
Part Four - Applications to Urban Policy Design
Self-Learning Revival Policies in Urban Dynamics by Nathaniel Mass
The policy response can vary with the dynamically changing parameters of the system. "We will introduce a 'self-learning' revival policy," which is like a compensator in an electrical circuit. In urban dynamics, the rates of slum demolition and the incentives for new enterprises are adjusted each year according to the new parameters of the system.
Control of Urban Growth by Jay W. Forrester
Forrester suggests some policy tools to implement solutions from urban dynamics models.
Money - "The trend toward interpreting urban problems as a financial demand on higher levels of government must be reversed. Higher levels of government can be most effective by exerting pressures for local action, by altering the tax policies that encourage the perpetuation of old buildings in declining urban areas, and by reversing the policies that favor housing over jobs so that residential construction will no longer rise beyond the economic population-supporting capacity of the area."
Tax Laws - "The aging of buildings is an intimate part of the urban decline process. the shifting of taxes from real estate to incomes means that the old buildings and the land they occupy need not be used effectively; then can be allowed to decay with little tax penalty."
Population Density - "Population densities in both residential and commercial zones are allowed to rise in response to the fallacious argument that rising land prices require more intense use...we allow a land-price-population-density spiral to continue until excessive loads are thrown onto transportation, pollution, psychological trauma, and other factors of the urban environment."
Zoning - "Zoning as in the past divided land into blocks that are too large and too homogeneous that deteriorates as a whole into a substandard condition avoided by new construction to become a slum. Too much area is also zoned for residential use compared to industry. The failure to zone so that only forest and agriculture are allowed in rural areas immediately adjacent to urban areas permits urban sprawl to develop and removes the necessity to rebuild and reuse the aging urban areas."
Selected Stresses - "We must cherish and preserve the pressures that go with the chosen style of urban environment."
Realistic Goals - "We must contemplate realistic urban goals that include negative forces powerful enough to limit population and population density."
Control of Urban Growth by Jay W. Forrester
"This was presented as the keynote address to the meeting of the American Public Works Association in Minneapolis, Minnesota, Sept 25, 1972." Forrester makes a case for why technology in the form of more road infrastructure, sewage, and electrical wiring cannot solve the problems in a city without limiting the population density. Also, exponential growth cannot continue forever.
Lowell Dynamics: Preliminary Applications of the Theory of Urban Dynamics by Walter W. Schroeder
The Urban dynamics modelers worked with the city of Lowell to discuss the biggest problems and make policy recommendations. There were nine "biggest" problems: unemployment, parking, transportation, taxes, city revenues, education, housing, crime protection, code enforcement, and federal and state controls.
They consider the two leading suggestions by the Lowell planners, which are to demolish the Mill and to impose a service tax plan on currently untaxed property. The analysis showed that demolishing the mill would be expensive, and one alternative would be to convert existing "large plant facilities to several smaller industrial condominiums...small-scale development would make it financially possible for small, young firms to locate in these structures. Since the condominiums would be organized such that none of the units could be demolished without the consent of the other occupants, the threat of forced relocation in the near future would be significantly reduced." The system dynamics analysis discourages the service tax plan. The problem is that more and more money will always be perceived as necessary.
Some really interesting results and policy recommendations had to do with land assessments, taxes, and zoning. One problem is that residential buildings are assessed at a lower value than commercial and industrial buildings so that businesses pay more taxes than the homeowner. This drives the trend towards excess housing.
Similarly, homeowners end up paying higher taxes than renters because of tax rules, and thus the area is trending towards higher-density living. The buildings then deteriorate faster because there is less incentive for the renter or landlord to maintain the facilities.
The authors recommend reducing the stock of substandard housing because "aged housing contributes little to the city's tax base or to its socioeconomic vitality." It would be best if landlords demolished or renovated their old buildings voluntarily. This can be done by limiting tax abatements that the city grants to owners of old buildings. "Should the owner fail to demolish, at least the more rapid buildup of back taxes would warrant the city taking a lien on the property before it loses all of its market value."
They also recommend reducing reliance on federal assistance for subsidized housing. Zoning can also help to create a healthy balance between residential buildings and commercial buildings.
Self-Learning Revival Policies in Urban Dynamics by Nathaniel Mass
The policy response can vary with the dynamically changing parameters of the system. "We will introduce a 'self-learning' revival policy," which is like a compensator in an electrical circuit. In urban dynamics, the rates of slum demolition and the incentives for new enterprises are adjusted each year according to the new parameters of the system.
"This policy is a fairly simple example of an engineering 'integral controller.'...The concepts of system sensitivity developed in this paper apply to a very broad class of systems. Frequently, changing parameter values in a social system can 'shift the mode of operation so as to affect the design of new policies.' A careful search for such influential parameters should accompany any policy design effort. Once an influential parameter has been identified, the analyst should look for ways to make the system insensitive to that parameter."
Control of Urban Growth by Jay W. Forrester
Forrester suggests some policy tools to implement solutions from urban dynamics models.
Money - "The trend toward interpreting urban problems as a financial demand on higher levels of government must be reversed. Higher levels of government can be most effective by exerting pressures for local action, by altering the tax policies that encourage the perpetuation of old buildings in declining urban areas, and by reversing the policies that favor housing over jobs so that residential construction will no longer rise beyond the economic population-supporting capacity of the area."
Tax Laws - "The aging of buildings is an intimate part of the urban decline process. the shifting of taxes from real estate to incomes means that the old buildings and the land they occupy need not be used effectively; then can be allowed to decay with little tax penalty."
Population Density - "Population densities in both residential and commercial zones are allowed to rise in response to the fallacious argument that rising land prices require more intense use...we allow a land-price-population-density spiral to continue until excessive loads are thrown onto transportation, pollution, psychological trauma, and other factors of the urban environment."
Zoning - "Zoning as in the past divided land into blocks that are too large and too homogeneous that deteriorates as a whole into a substandard condition avoided by new construction to become a slum. Too much area is also zoned for residential use compared to industry. The failure to zone so that only forest and agriculture are allowed in rural areas immediately adjacent to urban areas permits urban sprawl to develop and removes the necessity to rebuild and reuse the aging urban areas."
Selected Stresses - "We must cherish and preserve the pressures that go with the chosen style of urban environment."
Realistic Goals - "We must contemplate realistic urban goals that include negative forces powerful enough to limit population and population density."
Control of Urban Growth by Jay W. Forrester
"This was presented as the keynote address to the meeting of the American Public Works Association in Minneapolis, Minnesota, Sept 25, 1972." Forrester makes a case for why technology in the form of more road infrastructure, sewage, and electrical wiring cannot solve the problems in a city without limiting the population density. Also, exponential growth cannot continue forever.
"Growth has continued past the point where suboptimizing is satisfactory. Suboptimizing means the meeting of a local goal without attention to consequences in other parts of the system. During the past period of our industrial growth, the various facets of the technical-social-economic system were sufficiently uncoupled that suboptimizing was a satisfactory procedure for decentralization. Suboptimizing allowed different groups to pursue their own ends independently, with confidence that the total good would thereby improve.
"I see no solution for urban problems until cities begin to exhibit the courage to plan in terms of a maximum population, a maximum number of housing units, a maximum permissible building height, and a maximum number of jobs.
"A city affects its local choice between quantity and quality mostly by how it handles the diffuse versus the compartmentalized components of attractiveness. The objective should be to maximize the diffuse characteristics of the city in order to improve the quality of urban life while controlling the compartmentalized characteristics in order to prevent the expanded population that would defeat the improvement for present residents. The diffuse characteristics, such as public safety and clean air, are shared equally by all...and they apply alike to present residents and those who might move in. The compartmentalized characteristics of a city, like jobs and housing are identified with particular individuals; they can be possessed by present residents but are not necessarily available to others."
Lowell Dynamics: Preliminary Applications of the Theory of Urban Dynamics by Walter W. Schroeder
The Urban dynamics modelers worked with the city of Lowell to discuss the biggest problems and make policy recommendations. There were nine "biggest" problems: unemployment, parking, transportation, taxes, city revenues, education, housing, crime protection, code enforcement, and federal and state controls.
They consider the two leading suggestions by the Lowell planners, which are to demolish the Mill and to impose a service tax plan on currently untaxed property. The analysis showed that demolishing the mill would be expensive, and one alternative would be to convert existing "large plant facilities to several smaller industrial condominiums...small-scale development would make it financially possible for small, young firms to locate in these structures. Since the condominiums would be organized such that none of the units could be demolished without the consent of the other occupants, the threat of forced relocation in the near future would be significantly reduced." The system dynamics analysis discourages the service tax plan. The problem is that more and more money will always be perceived as necessary.
Some really interesting results and policy recommendations had to do with land assessments, taxes, and zoning. One problem is that residential buildings are assessed at a lower value than commercial and industrial buildings so that businesses pay more taxes than the homeowner. This drives the trend towards excess housing.
Similarly, homeowners end up paying higher taxes than renters because of tax rules, and thus the area is trending towards higher-density living. The buildings then deteriorate faster because there is less incentive for the renter or landlord to maintain the facilities.
The authors recommend reducing the stock of substandard housing because "aged housing contributes little to the city's tax base or to its socioeconomic vitality." It would be best if landlords demolished or renovated their old buildings voluntarily. This can be done by limiting tax abatements that the city grants to owners of old buildings. "Should the owner fail to demolish, at least the more rapid buildup of back taxes would warrant the city taking a lien on the property before it loses all of its market value."
They also recommend reducing reliance on federal assistance for subsidized housing. Zoning can also help to create a healthy balance between residential buildings and commercial buildings.
Sunday, January 10, 2010
Urban Dynamics Review : Part Three
Part Three - Model Alterations
Structural Changes in Urban Dynamics: Housing Obsolescence and Housing Demand by Nathaniel J. Mass
This explores a reformulation of the rate of housing-obsolescence saying that it should be slowed by an excess of housing in the next lower category of housing quality. However, after running some simulations, Mass shows that the result is the same.
Modeling City-Suburb Interactions by Alan K. Graham
The urban dynamics model assumes that people live and work in the same city, not accounting for commuting. The conclusion is that the additions to the model do not impact the recommendations.
Two Modifications to the Tax Sector of Urban Dynamics by Michael R. Goodman
Forrester's urban dynamics model applied outside funding to new programs in a city. One modification could be that outside funding would only go towards paying down the debt, "a revised financial aid subsidy program." This does result in an improvement in the Tax per capita radio, Tax ratio needed, and the Underemployed to labor net.
Another modification could be to change the tax needs per person such that they "increase with progressively higher local unemployment rates, and conversely." However, there is no difference in the results after this is implemented partly because this is already incorporated into the old model although not explicitly.
A Dynamic Model of Land Pricing and Urban Land Allocation by Nathaniel J. Mass
The Urban Land Market is incorporated into the Urban Dynamics model. This also did not have a significant impact on the results. However, this analysis can help city planners with determining appropriate zoning policy. "Zoning policy would need to be combined with other policy measures designed to control urban population."
Adapting Urban Dynamics to Lowell by Walter W. Schroeder III and John E. Strongman
Here is some analysis about whether the urban dynamics model accurately describes Lowell, Massachusetts. They conclude that it can, and that it can help design policy for urban renewal.
Structural Changes in Urban Dynamics: Housing Obsolescence and Housing Demand by Nathaniel J. Mass
This explores a reformulation of the rate of housing-obsolescence saying that it should be slowed by an excess of housing in the next lower category of housing quality. However, after running some simulations, Mass shows that the result is the same.
Modeling City-Suburb Interactions by Alan K. Graham
The urban dynamics model assumes that people live and work in the same city, not accounting for commuting. The conclusion is that the additions to the model do not impact the recommendations.
Two Modifications to the Tax Sector of Urban Dynamics by Michael R. Goodman
Forrester's urban dynamics model applied outside funding to new programs in a city. One modification could be that outside funding would only go towards paying down the debt, "a revised financial aid subsidy program." This does result in an improvement in the Tax per capita radio, Tax ratio needed, and the Underemployed to labor net.
Another modification could be to change the tax needs per person such that they "increase with progressively higher local unemployment rates, and conversely." However, there is no difference in the results after this is implemented partly because this is already incorporated into the old model although not explicitly.
A Dynamic Model of Land Pricing and Urban Land Allocation by Nathaniel J. Mass
The Urban Land Market is incorporated into the Urban Dynamics model. This also did not have a significant impact on the results. However, this analysis can help city planners with determining appropriate zoning policy. "Zoning policy would need to be combined with other policy measures designed to control urban population."
Adapting Urban Dynamics to Lowell by Walter W. Schroeder III and John E. Strongman
Here is some analysis about whether the urban dynamics model accurately describes Lowell, Massachusetts. They conclude that it can, and that it can help design policy for urban renewal.
Urban Dynamics Review: Part two
Part two - Conceptual Issues
Aggregation and Definition: The Underemployed, A Case Study by Michael R. Goodman
The underemployed in Forrester's Urban Dynamics model is not the same as defined by census data. We have to be careful about definitions.
Business Structures and Economic Activity in Urban Dynamics by Nathaniel Mass
Some clarifications about business construction. "New-enterprise buildings are constructed predominantly by established firms that are expanding their production capacity and employment levels" not start-up ventures. Actually, young firms are usually in declining-industry structures. "New enterprise structure may be either newly constructed or newly renovated, as long as...employment densities in the building are comparatively high, and the building's tax contribution to the city is large because of its high assessed value."
Turnover in a building happens for several reasons. One is that "changing technology imposes changing requirements for headroom, floor weight capacity, power, and lighting, and work-flow patterns. Turnover rate also depends on...the business climate within the community, taxes, labor, and manager availability, and the socioeconomic character of the urban area...High business turnover rates promote rapid obsolescence of industrial structures because new owners often use the space less efficiently, employee density decreases, and the building becomes more technologically obsolescent."
Dynamic Migration Models by Michael W. Laird
This contrasts the systems dynamics model for migration with the conventional model for migration, which is the gravity model. The main difference is the calculations for attractiveness that are dynamic. The gravity model implies that migration depends only on the sizes of the populations and the distance between places. It mentions the work of I. S. Lowry, who includes an attractiveness factor, but it is not dynamics, although he notes the feedback nature of attractiveness.
Issues of Empirical Support for the Migration Formulations in Urban Dynamics by Michael R. Goodman and Peter M. Senge
This article is interesting because it discusses some difficulties in measuring correlation in real empirical data, making it difficult to verify the causal links in system dynamics models. It discusses four issues.
Metropolitan Population growth, Land Area, and the Urban Dynamics Model by Wilbert Wils
Wils compares the urban dynamics model with actual data of population growth in Massachusetts where "vigorous expansion initially occurs in the central city, but growth later moves outward to the periphery of the city where population densities are lower." This result almost seems like common sense. One distinction from other theories, though, is that in the urban dynamics model, urban decay in the central city precedes expansion rather being caused by expansion.
Urban Dynamics and Its Critics by Louis Edward Alfeld
This is mainly a defense of urban dynamics. Most critics focus on the specific recommendations without addressing fixes to the model with most criticism directed at how the recommendations are bad for the poor and how there is not enough empirical data.
Understanding Urban Dynamics: An Analysis of Garn's Interpretation by Alan K. Graham
This is a response to analysis and criticisms of Harvey Garn of the Urban Institute. Garn was concerned that the urban dynamics recommendations might just be keeping the poor out, make the city better but the nation worse, and that the model neglects the impact of the city-suburb interaction.
Aggregation and Definition: The Underemployed, A Case Study by Michael R. Goodman
The underemployed in Forrester's Urban Dynamics model is not the same as defined by census data. We have to be careful about definitions.
Business Structures and Economic Activity in Urban Dynamics by Nathaniel Mass
Some clarifications about business construction. "New-enterprise buildings are constructed predominantly by established firms that are expanding their production capacity and employment levels" not start-up ventures. Actually, young firms are usually in declining-industry structures. "New enterprise structure may be either newly constructed or newly renovated, as long as...employment densities in the building are comparatively high, and the building's tax contribution to the city is large because of its high assessed value."
Turnover in a building happens for several reasons. One is that "changing technology imposes changing requirements for headroom, floor weight capacity, power, and lighting, and work-flow patterns. Turnover rate also depends on...the business climate within the community, taxes, labor, and manager availability, and the socioeconomic character of the urban area...High business turnover rates promote rapid obsolescence of industrial structures because new owners often use the space less efficiently, employee density decreases, and the building becomes more technologically obsolescent."
Dynamic Migration Models by Michael W. Laird
This contrasts the systems dynamics model for migration with the conventional model for migration, which is the gravity model. The main difference is the calculations for attractiveness that are dynamic. The gravity model implies that migration depends only on the sizes of the populations and the distance between places. It mentions the work of I. S. Lowry, who includes an attractiveness factor, but it is not dynamics, although he notes the feedback nature of attractiveness.
Issues of Empirical Support for the Migration Formulations in Urban Dynamics by Michael R. Goodman and Peter M. Senge
This article is interesting because it discusses some difficulties in measuring correlation in real empirical data, making it difficult to verify the causal links in system dynamics models. It discusses four issues.
1. Limitations on inferences which can be drawn from statistical techniques in the face of the restricted time span and range of existing migration data
2. Problems in interpreting parameter estimates derived from cross-sectional data analysis
3. Difficulties in estimating nonlinear relationships containing significant time delays
4. Problems in drawing statistical inferences regarding the error process of a continuous dynamic system.
Metropolitan Population growth, Land Area, and the Urban Dynamics Model by Wilbert Wils
Wils compares the urban dynamics model with actual data of population growth in Massachusetts where "vigorous expansion initially occurs in the central city, but growth later moves outward to the periphery of the city where population densities are lower." This result almost seems like common sense. One distinction from other theories, though, is that in the urban dynamics model, urban decay in the central city precedes expansion rather being caused by expansion.
Urban Dynamics and Its Critics by Louis Edward Alfeld
This is mainly a defense of urban dynamics. Most critics focus on the specific recommendations without addressing fixes to the model with most criticism directed at how the recommendations are bad for the poor and how there is not enough empirical data.
Understanding Urban Dynamics: An Analysis of Garn's Interpretation by Alan K. Graham
This is a response to analysis and criticisms of Harvey Garn of the Urban Institute. Garn was concerned that the urban dynamics recommendations might just be keeping the poor out, make the city better but the nation worse, and that the model neglects the impact of the city-suburb interaction.
Saturday, January 9, 2010
Urban Dynamics: Book Review
I finished reading a book on Urban Dynamics, which is a system dynamics model of cities originally by Forrester.
Readings in Urban Dynamics : Volume I
edited by Nathaniel Mass, 1974
Even though I didn't read Forrester's original paper, these readings fill me in about the most important aspects of the model and also resulting controversies. I'm going to summarize most of the articles.
Part One - Overview
Managing Our Cities - Can We Do Better? by John F. Collins
John F. Collins was the former mayor of Boston and afterward became a consulting and visiting professor at MIT, so it's interesting to hear his perspective. His main points are that the problems of poverty, inadequate housing, crime, unemployment, and overcrowded transportation systems in cities do not simply lack money. It is impossible to build a "perfect city" because of the "attractiveness principle" in Urban Dynamics. Basically, a city that is universally more attractive compared to its environment attracts people who move in and overload the city's amenities. Cities therefor need to cater improvements towards its residents and seek to be distinct from other cities so that it's not attractive to everyone. Cities at the time (I don't know about today) were becoming more alike. Instead cities could specialize and become resort cities, manufacturing cities, educational, or educational cities, etc.
System Analysis as a Tool for Urban Planning by Jay W. Forrester
Managerial, urban, and economic systems are nonlinear complex systems. Forrester summarizes the Urban Dynamics model he came up with.
new enterprise - mature business - declining enterprise
premium housing - worker housing - underemployed housing
managerial professional - labor - underemployed
Forrester recommends reducing slum housing by about 5%/year and putting in incentives for new enterprise. According to his models, in the long run, this will produce a reduction in the underemployed to job ratio and the tax ratio needed.
Understanding Urban Dynamics by Gerald O. Barney
Barney clarifies some subtleties in the model. "The urban system is an example of a 'complex system' - a system whose behavior is dominated by multiple-loop, nonlinear feedback processes."
Forrester's solutions have two criteria : must be lasting (decades) and must increase upward mobility of underemployed.
Forrester's proposal of demolishing slum housing just seems like making a place richer by reducing the number of poor people. In a sense that is the solution because the problem is that there is too high a percentage of underemployed and not enough wage earners to generate tax revenues needed for the city to provide amenities to the residents. However, his solution ultimately benefits the underemployed because attracting new enterprises and jobs increases the number of underemployed that the city can support, and it also improves upward mobility so the quality of life for the city's underemployed is improved.
A Systems Approach to Urban Revival by Louis Edward Alfeld and Dennis L. Meadows
They mention the that many people have been migrating to California, and now it is becoming a less attractive place to move to. It's interesting that they said this in the 74 since I'm pretty sure in-migration has continued and still continues although now they really have a massive budget and water crisis.
This article then goes into a little bit more technical detail about the urban dynamics model and solution. It depicts the feedback loops with in-migration and housing availability, feedback loops with job availability and migration, and feedback loops with revenue needs, migration, and housing construction.
Readings in Urban Dynamics : Volume I
edited by Nathaniel Mass, 1974
Even though I didn't read Forrester's original paper, these readings fill me in about the most important aspects of the model and also resulting controversies. I'm going to summarize most of the articles.
Part One - Overview
Managing Our Cities - Can We Do Better? by John F. Collins
John F. Collins was the former mayor of Boston and afterward became a consulting and visiting professor at MIT, so it's interesting to hear his perspective. His main points are that the problems of poverty, inadequate housing, crime, unemployment, and overcrowded transportation systems in cities do not simply lack money. It is impossible to build a "perfect city" because of the "attractiveness principle" in Urban Dynamics. Basically, a city that is universally more attractive compared to its environment attracts people who move in and overload the city's amenities. Cities therefor need to cater improvements towards its residents and seek to be distinct from other cities so that it's not attractive to everyone. Cities at the time (I don't know about today) were becoming more alike. Instead cities could specialize and become resort cities, manufacturing cities, educational, or educational cities, etc.
System Analysis as a Tool for Urban Planning by Jay W. Forrester
Managerial, urban, and economic systems are nonlinear complex systems. Forrester summarizes the Urban Dynamics model he came up with.
"Nine levels are groups into three subsystems. The industrial sector contains commercial buildings in three categories distinguished primarily by age. Across the center are residential buildings in three economic categories of population. Across the bottom are three economic categories of population...The age of a building tends to determine the character of its occupants. A new commercial building is occupied by a healthy, successful commercial organization that uses relatively more managers and skilled workers than unskilled workers. As the building ages, it tends to house a progressively less successful enterprise with lower employment skills. In addition to the changing employment mix as the industrial building ages, there is a tendency for total employment per unit of floor space to decline. On the other hand, as residential buildings age, there is a tendency for occupancy to increase as well as to shift to a lower economic category of population. One then perceives a condition in which the aging of buildings in an urban area simultaneously reduces the opportunities for employment and increases the population. The average income of the community and standard of living decline."
new enterprise - mature business - declining enterprise
premium housing - worker housing - underemployed housing
managerial professional - labor - underemployed
Forrester recommends reducing slum housing by about 5%/year and putting in incentives for new enterprise. According to his models, in the long run, this will produce a reduction in the underemployed to job ratio and the tax ratio needed.
Understanding Urban Dynamics by Gerald O. Barney
Barney clarifies some subtleties in the model. "The urban system is an example of a 'complex system' - a system whose behavior is dominated by multiple-loop, nonlinear feedback processes."
Forrester's solutions have two criteria : must be lasting (decades) and must increase upward mobility of underemployed.
Forrester's proposal of demolishing slum housing just seems like making a place richer by reducing the number of poor people. In a sense that is the solution because the problem is that there is too high a percentage of underemployed and not enough wage earners to generate tax revenues needed for the city to provide amenities to the residents. However, his solution ultimately benefits the underemployed because attracting new enterprises and jobs increases the number of underemployed that the city can support, and it also improves upward mobility so the quality of life for the city's underemployed is improved.
"In actual practice, [current urban programs] generally have a similar and characteristic development pattern: an initial period of slight improvement and generation of hope, followed within a few years by readjustments within the urban system that result in a loss of gained ground. The net result has been increased concentrations of underemployed, continually decaying conditions, and growing hostility of the underemployed toward the 'System' and toward the 'Establishment' that they think controls the 'System.' Actually...the failure of our urban programs is due not to the control of the establishment, but rather to a collection of feedback processes that are at work within the system and are almost beyond the influence of the establishment."
"Urban renewal (as practiced in the fifties) and the relocation of underemployed in low-rent suburban housing have destroyed communities and transplanted the underemployed to new locations where they are needed and wanted no more than they were before the relocation."
A Systems Approach to Urban Revival by Louis Edward Alfeld and Dennis L. Meadows
They mention the that many people have been migrating to California, and now it is becoming a less attractive place to move to. It's interesting that they said this in the 74 since I'm pretty sure in-migration has continued and still continues although now they really have a massive budget and water crisis.
"Schools and other city services become overloaded, available job opportunities decrease, recreational facilities become crowded, travel becomes difficult, and natural beauty is continually despoiled by an expanding population."
This article then goes into a little bit more technical detail about the urban dynamics model and solution. It depicts the feedback loops with in-migration and housing availability, feedback loops with job availability and migration, and feedback loops with revenue needs, migration, and housing construction.
NCSE Conference Talks
So far, I signed up for these talks, but I have to do more research on them, though.
Alternatives to Neoclassical Economics for Business and National Security:
Bridging the GREEN-GAP Between Environmentally-Sustainable Product Research...
Counterpoint: The Limits of Markets to Achieve Sustainability: The Dangerous Illusion of Endless Growth:
Rethinking City Economics: How Green Infrastructure and Deconstruction Can Provide Green Jobs, Revitalize Communities, and Encourage Local Self-Reliance:
Alternatives to Neoclassical Economics for Business and National Security:
Bridging the GREEN-GAP Between Environmentally-Sustainable Product Research...
Counterpoint: The Limits of Markets to Achieve Sustainability: The Dangerous Illusion of Endless Growth:
Rethinking City Economics: How Green Infrastructure and Deconstruction Can Provide Green Jobs, Revitalize Communities, and Encourage Local Self-Reliance:
Wednesday, January 6, 2010
Chinese People on the Internet
I saw this comment on ChinaSmack, translated from Chinese. It was in response to an article about the British man that was recently executed for drug smuggling in China. I laughed so hard I was crying at my lab-bench.
the Chinese original
The article was comparing this incident with the Opium Wars.
Another funny comment. Actually, I think the Chinese original is not as funny.
Prime Minister Brown, do you think that China is stuck in the times of the Opium war? You are an example of an undeveloped life form, an alien that has undergone genetic mutation, a high school student with the development of a kindergartener, a mongoloid inborn frog head, an abandoned infant at the top of Everest, the turd blocking the toilet, a dark descendant of Africa, hermaphrodite gorilla, a hippo squashed by Noah’s ark, the erupting mouth of a new volcano, the shameless sound of a barking horn, an Eskimo’s disgrace, a superman living with cockroaches, a rotting vegetable, a person made of rubbish who smells, the etymological source of the word “spurned”.
the Chinese original
英国首相布朗，你以为中国还是鸦片战争时候吗？你是进化不完全的生命体，基因突变的外星人，幼稚园程度的高中生，先天蒙古症的青蛙头，圣母峰雪人的弃婴，化粪池堵塞的凶手，非洲人搞上黑*的后裔，阴阳失调的黑猩猩，被诺亚方舟压过的河马，新火山喷发口，超大无耻传声扩音喇叭，爱斯基摩人的耻辱，和蟑螂共存活的超个体，生命力腐烂的半植物，会发出臭味的垃圾人，“唾弃“名词的源头.
The article was comparing this incident with the Opium Wars.
Another funny comment. Actually, I think the Chinese original is not as funny.
WHAT IS LZ TALKING ABOUT? COMPARING OUR GLORIOUS MODERN HARMONIOUS SOCIETY WITH THE CORRUPT QING DYNASTY!? YOU SCHEMING BASTARD!
Tuesday, January 5, 2010
Operations Research
Journals on operations research, a related field that I maybe should look at for grad school programs.
Technology and Public Policy Essay
Prompt: In this supplement, we would like you to articulate your reasons for studying technology and policy at MIT - to someone who is not acquainted with the field.
There are many challenges facing the nation and the world today that need to be met to provide a high standard of living for a growing global middle class without depleting the very resources required to do so. In other words, our way of life needs to be environmentally sustainable. In order to achieve this vision, we need new technology. We may also need to change human behavior through effective policies for things such as business practices and land use. System dynamics is a field that is developing and using rigorous analytical tools for designing policy. I’m interested in studying system dynamics, technology policy, and the economy to help transition to an environmentally sustainable way of life. MIT is the leader in the field.
The way we generate and use energy needs to transition from a system that is contributing to the accumulation of carbon dioxide and other pollutants into the atmosphere to one that has zero net impact on the environment. We need sources of energy that will not be depleted faster than they are consumed. New technology is currently being developed for alternative sources of energy as well as more efficient usage of energy. On the other hand, some goals such as lowering demand for energy can be reached with policy solutions that change behavior. New technologies need to work in concert with these policies. Otherwise, more efficient appliances may be followed by an increase in the number of appliances used, wiping out any potential reductions in energy consumption.
Developing new technology is resource intensive, requiring a large amount of capital, time, and manpower. One prominent theory for the best way to prioritize technology development is that the free market automatically selects for the best ideas and allocates resources the most efficiently. This is often touted as the main advantage of capitalism, minimizing the need for policy and planners. However, ideas can only be sorted by quality if the quality is correctly correlated with the price, and environmental and social impacts are often not included in the price of development or consumption of products. It can be hard to gauge the effectiveness and thus value of a new technology because it can be hard to identify causal links, especially when there are delays in the system. That is why it is difficult for the market to prioritize effectively. In practice, there are many government programs and a variety of tax incentives in an attempt to correct for the free market system.
Alternatively, analytical tools can be used to prioritize technology development and policy implementation. The system dynamics field develops and uses analytical tools to model systems such as the energy sector to determine the causal links of the system. These mathematical models can then be used to simulate the effects of different policy implementations or new technologies on a computer. If relative impacts, especially long term impacts, of potential innovations or policies could be quantized, it would be a very effective way to prioritize resource allocations for new technology. Then, better policies can be made for city and national planning by combining new technologies with a model of the economy. What system dynamics can reveal about the causes of economic growth and recession will be critical. With a better understanding of the system, policies can be optimized to complement each other rather than inadvertently canceling out each other's intended effects.
Many people have worked on system dynamics models for energy, the climate, and the economy. System dynamics was founded at MIT by a former electrical engineer, Professor Jay Forrester in the 1960s. These modeling techniques are not yet widely practiced in policy-making, which is a challenge, but MIT continues to be a leader in this growing field. MIT alumni developed Vensim, the leading software for system dynamics modeling, and they continue to collaborate with ESD and the Sloan School on research and education. Professor John Sterman does research on energy policy and environmental sustainability and has developed many tools for policy-making. The ESD program has collaborative research projects using systems analysis to evaluate and develop technologies for wind power and carbon sequestration.
There is an especially rich discussion about new technology and public policy at MIT because MIT is at the cutting edge of research for new technologies such as alternative energy sources. MIT also has invaluable resources in mathematics and computer science as well as a culture which supports rigorous work. Studying at MIT would allow me to make the biggest contribution to environmental sustainability.
There are many challenges facing the nation and the world today that need to be met to provide a high standard of living for a growing global middle class without depleting the very resources required to do so. In other words, our way of life needs to be environmentally sustainable. In order to achieve this vision, we need new technology. We may also need to change human behavior through effective policies for things such as business practices and land use. System dynamics is a field that is developing and using rigorous analytical tools for designing policy. I’m interested in studying system dynamics, technology policy, and the economy to help transition to an environmentally sustainable way of life. MIT is the leader in the field.
The way we generate and use energy needs to transition from a system that is contributing to the accumulation of carbon dioxide and other pollutants into the atmosphere to one that has zero net impact on the environment. We need sources of energy that will not be depleted faster than they are consumed. New technology is currently being developed for alternative sources of energy as well as more efficient usage of energy. On the other hand, some goals such as lowering demand for energy can be reached with policy solutions that change behavior. New technologies need to work in concert with these policies. Otherwise, more efficient appliances may be followed by an increase in the number of appliances used, wiping out any potential reductions in energy consumption.
Developing new technology is resource intensive, requiring a large amount of capital, time, and manpower. One prominent theory for the best way to prioritize technology development is that the free market automatically selects for the best ideas and allocates resources the most efficiently. This is often touted as the main advantage of capitalism, minimizing the need for policy and planners. However, ideas can only be sorted by quality if the quality is correctly correlated with the price, and environmental and social impacts are often not included in the price of development or consumption of products. It can be hard to gauge the effectiveness and thus value of a new technology because it can be hard to identify causal links, especially when there are delays in the system. That is why it is difficult for the market to prioritize effectively. In practice, there are many government programs and a variety of tax incentives in an attempt to correct for the free market system.
Alternatively, analytical tools can be used to prioritize technology development and policy implementation. The system dynamics field develops and uses analytical tools to model systems such as the energy sector to determine the causal links of the system. These mathematical models can then be used to simulate the effects of different policy implementations or new technologies on a computer. If relative impacts, especially long term impacts, of potential innovations or policies could be quantized, it would be a very effective way to prioritize resource allocations for new technology. Then, better policies can be made for city and national planning by combining new technologies with a model of the economy. What system dynamics can reveal about the causes of economic growth and recession will be critical. With a better understanding of the system, policies can be optimized to complement each other rather than inadvertently canceling out each other's intended effects.
Many people have worked on system dynamics models for energy, the climate, and the economy. System dynamics was founded at MIT by a former electrical engineer, Professor Jay Forrester in the 1960s. These modeling techniques are not yet widely practiced in policy-making, which is a challenge, but MIT continues to be a leader in this growing field. MIT alumni developed Vensim, the leading software for system dynamics modeling, and they continue to collaborate with ESD and the Sloan School on research and education. Professor John Sterman does research on energy policy and environmental sustainability and has developed many tools for policy-making. The ESD program has collaborative research projects using systems analysis to evaluate and develop technologies for wind power and carbon sequestration.
There is an especially rich discussion about new technology and public policy at MIT because MIT is at the cutting edge of research for new technologies such as alternative energy sources. MIT also has invaluable resources in mathematics and computer science as well as a culture which supports rigorous work. Studying at MIT would allow me to make the biggest contribution to environmental sustainability.
Ventana Systems
I looked up Ventana Systems, which is a company founded by Tom Fiddaman and some other people. They're located in Harvard, MA, which is near Boxborough, and I think I'm going to contact them to see if I can do an internship or something there.
This Economic Analysis Collaborative project sounds really interesting.
This Economic Analysis Collaborative project sounds really interesting.
MIT's Copenhagen delegation
from MIT News John Sterman led the MIT delegation.
On Dec. 11, John Sterman, the Jay W. Forrester Professor in Computer Science at the Sloan School of Management and delegation leader for the MIT group in Copenhagen, will speak about C-ROADS (Climate Rapid Overview and Decision Support), a computer simulation program that emerged from research at MIT. The simulation model can quickly calculate the climate impacts from mitigation proposals that are presented during the climate change talks.
Throughout the conference, Sterman and his team of modelers and researchers, including four MIT alums — Tom Fiddaman PhD ’97, Travis Franck SM ’05, PhD ’09, Andrew Jones SM ’97 and Beth Sawin PhD ’96 — are providing a “climate scoreboard” that uses the C-ROADS model to assess the likely change in global mean temperature resulting from all the emissions reductions proposals offered by the nations of the world. Sterman’s group is from Climate Interactive, a joint project of MIT, the non-profit Sustainability Institute and Ventana Systems Inc., a software and consulting firm founded by MIT alumni.
System Dynamics Reading List
MIT System Dynamics Group Literature Collection is a DVD with papers on system dynamics.
I would probably be able to get all the readings at the MIT libraries, though.
a powerful tool that will advance your knowledge of the important history of the field at MIT and help build a foundation for understanding future growth.
I would probably be able to get all the readings at the MIT libraries, though.
David Brooks Sounds Sad
Republican political analyst who is part of the "educated class" notes the rise of the Tea Party.
What to do...what to do...
What to do...what to do...
Monday, January 4, 2010
Sociotechnical Systems
Another field of study at MIT that is part of the Engineering Systems Division is Sociotechnical Systems.
The Kondratieff Cycle
article from the Donella Meadows archive has a more comprehensive explanation of the causes of the Kondratieff Cycle. According this this account, there is a cause, although it's systemic, and thus there should still be ways to avoid it. There just might not be much the government itself can do in terms of monetary policy.
In a market economy there is no signal to tell the steel industry, for instance, how much steel the world really demands on a long-term basis. There is only one way to find out -- produce more steel and see if it sells. But that takes a long time. Each company has to make a decision to expand, get financing, build a plant, start producing, implement a marketing strategy, and sort out the confusing short-term signals from strikes, trade breakdowns, business cycles, and all the other noise of the economy.
All companies are expanding together, and they are fighting for market share, so each has an incentive to out-expand the others. The result is significant overbuilding, industry-wide, economy-wide, world-wide. It takes decades for the economy to overbuild itself, then to get the message that it has done so, then to believe that message. It takes another decade or two to cut back factories and workforces to the level of production the economy really needs. And since no one knows what that level is, the cutback, like the building phase, goes too far. When that finally becomes obvious, the next upturn of the cycle begins.
The Kondratief cycle is caused by a great lumbering economy, which takes decades to change course, seeking by trial and error for an ever-changing equilibrium point. The government doesn't cause the cycle's downturn, though it usually gets the blame; it also doesn't create the upturn for which it likes to take credit. Even if the economy consisted of nothing but well-run companies making impeccably rational decisions, the cycle would exist. The presence of greedy companies making foolish decisions makes it worse, as does a government trying to spur investment at a time when investment has already gone too far.
Speculative booms at the beginning of the downturn seem to be inherent. There is no real expansion to put money into -- no need for more oil wells or electric plants or steel mills when existing ones are standing idle. So excess money stops going into building the economy and starts going into conspicuous consumption and wild speculation. The stock market loosens its tethers to the real economy and starts soaring, blown up by money with nowhere else to go.
Interview with Jay Forrester
I think Forrester is hilarious. Here's interview from 1992 with McKinsey.
Explaining the Downfall
Bernanke made some speeches recently about how the housing bubble was caused by bad regulation not because of low interest rates.
However, Forrester disagrees. I still have to find the original posting, though.
However, he also says that this recession along with the Great Depression was just part of the economic long wave, the Kondatrieff Wave. That might imply that there was no cause and that nothing could have been done to prevent it.
This excerpt is from his paper System Dynamics and the Lessons of 35 Years 1991
However, Forrester disagrees. I still have to find the original posting, though.
However, he also says that this recession along with the Great Depression was just part of the economic long wave, the Kondatrieff Wave. That might imply that there was no cause and that nothing could have been done to prevent it.
This excerpt is from his paper System Dynamics and the Lessons of 35 Years 1991
In a similar way at the national level, the System Dynamics National Model shows that puzzling and controversial economic behavior arises directly from known structure and managerial policies (Forrester, 1979). By building production sectors of the National Model using managerial policies derived from 20 years of corporate modeling, we find that most economic behavior arises from the private sector. Governmental taxation and monetary policies have less effect than usually assumed and lack the expected leverage for controlling economic behavior. The Great Depression of the 1930s has been blamed both on restrictive monetary policy and on protective tariffs, but we find that depressions arise at 45 to 60 year intervals as a result of the economic long wave, or Kondratieff cycle, which is driven primarily by major shifts in private-sector incentives for investing in capital plant, borrowing, and saving (Forrester, 1977; Sterman, 1986).
Debate about the economic long wave illustrates the situation depicted in Figure 3 (Kondratieff, 1984; Freeman, 1983; van Duijn, 1983). There is little acceptance by economists of the idea that structures could exist capable of producing a major economic fluctuation with some 50 years between peaks. Yet much of the theory for such a long economic wave already is established in the mainstream of economic thought.
In teaching macroeconomics, the classic multiplier-accelerator process is often used to explain short-term business cycles having 3 to 10 years between peaks. The multiplier (rising consumer income causing increased demand) and the accelerator (rising demand causing increased capital investment, wages, and consumer income) represent widely accepted and fundamentally correct assumptions about structure and policies belonging in the top category in Figure 3.
However, the belief that the multiplier and accelerator interact to cause short-term business cycles arises from an assumed dynamic solution to the equations describing the structure. The assumed dynamic solution belongs to the middle category in Figure 3 where beliefs are often incorrect.
While investigating cyclic economic behavior, several system dynamics investigators have shown that the multiplier and accelerator are not significant in creating short-term business cycles but are powerful contributors to generating D-4224-4 19
much longer cycles having several decades between peaks (Forrester, 1982,
(Nathan B.); Low, 1980; Mass, 1975).
Even though the economic long wave has been broadly rejected in economics, the accepted multiplier-accelerator relationships go far in explaining long-wave behavior. Here we see a common situation. Both sides in a debate can usually agree on underlying assumptions. But there is disagreement about the dynamic consequences. Building those accepted assumptions into a dynamic model begins to resolve differences arising from incorrect intuitive solutions to complex systems.
Copenhagen Analysis
Good analysis from the Breakthrough Institute on the problem with Copenhagen. It is similar to the comment that Fallows published. Maybe they are the same people, though.
Sunday, January 3, 2010
Little Things I Drew On Vacation
front side of a DVD cover for a fake
movie for Smark's dad, who is also
named Mark. inside was money for
fixing the whirlpool. everyone has
been giving him money for the "spa
fund" instead of buying him presents.
right side: back side for the fake movie
Smark's brother drew the little crabs
holiday card for Smark's family
hangs on the tree.
little pics for the coasters.
Forrester on Reagan Proposals
Evaluation of the Reagan Economic Proposals by Jay W. Forrester and Nathaniel J. Mass
July 23, 1981
Summary of a presentation made to Sponsors of the System Dynamics National Model on May 5, 1981
I found Nathaniel Mass's obituary. Apparently after being Associate Professor at MIT he just worked at a bunch of consulting companies.
Anyway, I wanted to write about a few notable points from the paper.
Forrester argues that American businesses are not doing as well globally or even domestically not because of government regulation or labor, but because of "managerial ineffectiveness" and "fundamental long-term economic changes." By managerial ineffectiveness, he is referring to the fact that inefficient practices are being passed on to the consumer as higher prices. "Prices could be raised to cover rising costs because the increasing money supply created a public ability to pay higher prices." I wonder how relevant this criticism is today. Regarding "long-term economic changes," Forrester cites his paper "Productivity as Affected by Long-Term Economic Changes," 1979.
He also says that contrary to popular belief, tight money supply has little effect on business cycles and real economic activity. "Business cycles can combine with an underlying steady inflaction caused by the creation of excess money to induce the Federal Reserve to tighten money just ahead of a recession that was already imminent." "Our computer simulations of economic behavior indicate that the mild recessions following World War II were not a result of government policy but instead were a consequence of the capital-construction boom at that time for rebuilding the capital plant that had become obsolete during the depression of the 1930's and World War II." I wonder if there is more analysis somewhere about why the Great Depression happened.
Forrester says that "the Johnson administration has correctly come to be blamed for starting the trend toward high inflation." Although, he notes that "the process of inflationary deficits coupled with money creation to cover the deficit" has been perpetuated by every administration since. Apparently, the ave annual deficit during the Johnson administration was $8.6 billion. During Nixon's first time, it was $16, during his second term, it was $43.5, and during the Carter administration, it was $47.3 billion. We all know what happened from there.
Forrester approves of reducing government spending, a 'supply-side' policy, although he doesn't think the Reagan administration is putting enough emphasis on it. Indeed, while Reagan reduced spending on social programs, I believe that he increased defense spending so much that the deficit ballooned. "As people are released from government employment and from support through transfer payments, more human resources become available for private-sector production. Only through such transfer to making goods, growing food, and building housing can the standard of living of the country be raised."
The concept of the velocity of money is also notable. I'm not too clear on what it is, but it seems like the idea of increasing leverage of banking institutions. "As velocity increases and becomes more volatile, the Federal Reserve loses more and more of its control over the effectiveness of money. Because of the multiple forces now converging to increase velocity, a direct legal control of velocity may soon be needed. Such a control would take the form of setting a minimum permissible bank balance in terms of a specified number of days worth of average transactions."
I wonder if Forrester and System Dynamics began to fall out of favor with their assessment of the Reagan policies since Reagan became immensely popular. However, their prediction that Reagan's policies would increase the deficit certainly happened, although I'm not sure if their prediction about rising inflation happened. Perhaps that prediction just materialized with the crash in 2008.
July 23, 1981
Summary of a presentation made to Sponsors of the System Dynamics National Model on May 5, 1981
I found Nathaniel Mass's obituary. Apparently after being Associate Professor at MIT he just worked at a bunch of consulting companies.
Anyway, I wanted to write about a few notable points from the paper.
Forrester argues that American businesses are not doing as well globally or even domestically not because of government regulation or labor, but because of "managerial ineffectiveness" and "fundamental long-term economic changes." By managerial ineffectiveness, he is referring to the fact that inefficient practices are being passed on to the consumer as higher prices. "Prices could be raised to cover rising costs because the increasing money supply created a public ability to pay higher prices." I wonder how relevant this criticism is today. Regarding "long-term economic changes," Forrester cites his paper "Productivity as Affected by Long-Term Economic Changes," 1979.
He also says that contrary to popular belief, tight money supply has little effect on business cycles and real economic activity. "Business cycles can combine with an underlying steady inflaction caused by the creation of excess money to induce the Federal Reserve to tighten money just ahead of a recession that was already imminent." "Our computer simulations of economic behavior indicate that the mild recessions following World War II were not a result of government policy but instead were a consequence of the capital-construction boom at that time for rebuilding the capital plant that had become obsolete during the depression of the 1930's and World War II." I wonder if there is more analysis somewhere about why the Great Depression happened.
Forrester says that "the Johnson administration has correctly come to be blamed for starting the trend toward high inflation." Although, he notes that "the process of inflationary deficits coupled with money creation to cover the deficit" has been perpetuated by every administration since. Apparently, the ave annual deficit during the Johnson administration was $8.6 billion. During Nixon's first time, it was $16, during his second term, it was $43.5, and during the Carter administration, it was $47.3 billion. We all know what happened from there.
Forrester approves of reducing government spending, a 'supply-side' policy, although he doesn't think the Reagan administration is putting enough emphasis on it. Indeed, while Reagan reduced spending on social programs, I believe that he increased defense spending so much that the deficit ballooned. "As people are released from government employment and from support through transfer payments, more human resources become available for private-sector production. Only through such transfer to making goods, growing food, and building housing can the standard of living of the country be raised."
The concept of the velocity of money is also notable. I'm not too clear on what it is, but it seems like the idea of increasing leverage of banking institutions. "As velocity increases and becomes more volatile, the Federal Reserve loses more and more of its control over the effectiveness of money. Because of the multiple forces now converging to increase velocity, a direct legal control of velocity may soon be needed. Such a control would take the form of setting a minimum permissible bank balance in terms of a specified number of days worth of average transactions."
I wonder if Forrester and System Dynamics began to fall out of favor with their assessment of the Reagan policies since Reagan became immensely popular. However, their prediction that Reagan's policies would increase the deficit certainly happened, although I'm not sure if their prediction about rising inflation happened. Perhaps that prediction just materialized with the crash in 2008.
Saturday, January 2, 2010
China and the RMB
analysis by James Fallows on Krugman's article on why China needs to appreciate the yen, and why it would be a good thing for Americans if they sold some of their dollars.
China and Rare Earth Metals
Interesting article on China and rare earth metals. Apparently, they mine 97% of the world's supply, and they may be limiting the amount they export. This would be very interesting if it's true since these metals are crucial to green technology.
Commandeering Words
Today I found out that a "wicked problem" is a technical term in the field of social planning that refers to
"super wicked problems" are wicked problems where
the cited example is global climate change. hahaha
a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. Moreover, because of complex interdependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems.
"super wicked problems" are wicked problems where
Time is running out.
There is no central authority.
Those seeking to solve the problem are also causing it.
the cited example is global climate change. hahaha
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