Archive for April, 2011

Food. Finance. Fuel. Fukushima.

Sunday, April 3rd, 2011 | Uncategorized | 15 Comments

Finance, food, fuel, Fukushima. Each time another crisis occurs it feels like déjà vu—as if we are not encountering the problem for the first time. But what exactly is it that gives these crises such a familiar ring? Here are a few observations on eight characteristics they seem to have in common:

(1) Efficiency: The pursuit of efficiency is one of the main causes of this 4F system breakdown. Our systems are over-focused on efficiency. These efficiencies tend to maximize a single variable (return on investment; yield per hectare; energy return on investment) instead of optimizing a broader set of variables that would improve the viability and health of the larger ecosystem. This over-focus results in a lack of resilience and a blindness to externalities.

(2) Externalities: Over-focusing on efficiency leads to not seeing the negative externalities in the larger system. A financial sector on steroids inflicts huge negative externalities on nature, on people, and on the real economy. A food sector on steroids inflicts huge costs on nature (soil erosion, groundwater pollution), on people (working conditions for workers, health issues for junk food consumers), and on society and culture (agricultural mono-cultures). A fuel and energy sector on steroids leads to technologies like nuclear energy production that are cheap only when and if all the risks and negative externalities are socialized (while privatizing the profits). In other words, it becomes a business model that the Wall Street oligarchy perfected and deployed leading up to the financial crisis of 2008. Which leads me directly to observation no. 3:

(3) Powerful special interest groups hijack regulation, public investment, and government. We have a revolving-door issue: The offices in Washington, D.C., that are supposed to oversee and regulate Wall Street are often occupied by people who come and go from the Wall Street oligarchy (Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase). They are full of people whose thinking has been framed by these institutions (assuming that what’s good for Wall Street must also be good for America). The same revolving-door issue exists in the FDA (Food and Drug Administration) and the EPA (Environmental Protection Agency) with Monsanto, the agri-business multinational, which is at least as problematic as Wall Street. I don’t know all the facts about the energy sector. But I do know that the nuclear power industry was (along with Wall Street) a major contributor to the Obama campaign. And every dollar really paid off for them when you consider the banks got a bailout package with no conditions attached, and when you consider how quickly Obama returned to business-as-usual, saving the nuclear power industry from what its colleagues experienced in Germany: that the nuclear option for future plants is effectively dead, and that all the old power plants are being taken off the grid right now.

(4) Marginalized people pay the most. In all these crisis situations the greatest pain is suffered and the highest price is paid by those who have the least: the poor. While Wall Street bankers are back to enjoying their bonus payments—for activities that not only don’t help the real economy, but also often harm the people working in it, —most people on Main Street are still suffering the ripple effects of the financial meltdown of 2008. They are paying for it by losing their jobs, losing their schoolteachers, losing nutritional support for their children, losing services that have kept afloat those who are struggling the most. In the food system it’s the same situation. What happens when food prices go up? It hurts those who can’t pay the higher prices: the poor.

(5) Delayed feedback prevents learning. All of these systems operated with delayed feedback loops that prevent decision-makers (in government and at the top of global companies like Monsanto and the Wall Street Big Four) from experiencing the negative externalities that their decisions inflict on the larger system and hence prevent real learning and change from happening. As Vandana Shiva, a global civil society thought leader from India, once put it so eloquently: the raw material streams move from the Global South to the Global North, while the streams of waste (and other negative externalities) move from the Global North to the Global South. That description, with some modifications (mainly through the rise of the emerging economies) still describes today’s situation.

(6) Money flowing the wrong way. Another flow that’s moving in the wrong direction concerns money. Money flows readily to those who already have (lots of) it, while those who don’t have it have to struggle even harder to fund ventures that may be high in positive externalities and low or even negative in financial return. The global agriculture business, the non-renewable energy industry, and traditional Wall Street–type banking all have privileged access to capital and money in all forms. It dwarfs the capital that other sectors (renewable energy, social value-based banking, and organic sustainable agriculture, for example) can attract.

(7) Consumer awareness. Consumer awareness, of course, is the key to turning all of this around, which is precisely why the traditional vested interests do everything possible to keep consumer awareness at the lowest possible level. Yet the more consumer advocates succeed in creating transparency about the ecological and social footprint of products in the marketplace, the more numerous and influential will conscious consumers become – gradually shifting and rebalancing the distribution of power between producers and consumers.

(8) Arenas of Awakening. What is it that we have not seen in any of these crisis situations? Arenas of Awakening. Places that facilitate the process of the system becoming aware of itself. The Tahrir space of the food system, of the banking system. Etc. Which is why we haven’t yet seen the toppling of the old tyrants in these systems (as of yet).

What does all of this have to do with Fukushima? Everything. (1) The nuclear power industry is an example of extreme efficiency that makes total sense as long as you disregard all of the (2) negative externalities. (3) It is facilitated by a regulatory framework that privatizes the benefits and socializes the risks. (4) In the case of disasters like Fukushima, the industry put the biggest burdens on the poor, who pay with their health and their lives. (5) The overall structure of the system prevents learning because the negative externalities do not affect the decision-makers themselves (the people who die from radiation overdoses are the workers, not management). (6) Money keeps flowing in the wrong direction, e.g., federal funds continue to be poured into old industries instead of into new, renewable energy technologies. (7) The current structure prevents consumer awareness by not allowing people to choose between nuclear and renewable energy. (8) We also do not see any attempts to create Arenas of Awakening. By contrast, the press conferences of government and Tepco officials are a painful example of communicating the truth too little and too late. Even today the Japanese and the world community have not heard the true and complete story from the leaders of the system.

How can we turn things around? Just reverse all the above principles: (1) multi-variable health (instead of mono-variable efficiency), (2) internalize externalities, (3) use transparent and inclusive multi-stakeholder processes to develop regulatory frameworks, (4) give special attention to and co-create with those who live on the margins of the system, (5) close the feedback loop between decision makers and those impacted by these decisions, (6) reverse the flow of money, (7) empower consumers and citizens, (8) create Arenas of Awakening where the whole system can see itself – and leverage the collective awareness that flows from that.

What do you see going on? What are some other examples you see that are related to these eight observations? Are there additional observations that you consider relevant? What can we do to turn things around?

Thanks for your input. All the best — otto