We haven't figured out sustainable economic growth yet

There's a big picture problem that we haven't figured out yet.

Our population keeps growing and the amount of stuff we build and create keeps growing - but there's only one planet. Eventually, we're going to run out. We're going to run out of clean water. We're going to run out of fossil fuels to burn for our energy. We're going to run out of lithium and iron. There's only so much stuff and if we keep growing at 3 or 4 percent a year, that growth will hit the limit.

To demonstrate the point more insightfully than I can do, I'll quote from an essay from the Chief Investment Officers of a $100 billion company (actually condensed in a Guardian column by George Monbiot) on the impossibility of sustained compounded growth.

Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.

Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It's 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.

That's something else.

Let that sink in.

It's like the bad side of collecting interest in a bank account for 30 years. Instead of getting rich on wealth, we're getting buried in the stuff we're consuming.

Taking the long-term view (a dozen generations or so) means our current social model of perpetually increasing consumption won't work. It will break when we hit the limit of our resources. And we're bumping up against the limits of oil, natural gas and coal in the next few decades (not to mention we've basically passed the limits of what the atmosphere can handle from our pollution).

On the other hand, creating a perpetually higher living standard (healthier, wealthier, smarter) is fundamental to ... humanity. The best reaction to recognizing the impossibility of sustained compounded growth isn't to give up on a progress. There's got to be a way to raise our standard of living without relying on ever-increasing consumption.

What a great problem to solve! Sustainable societies and economies!

I don't know what the answer is, but I'm really interested in trying to figure it out. I think renewable energy has to be at the center of the solution. Stamping out inefficiencies in our industries (like health insurance financing) has to part of it.

But it also probably involves the very nature of work, money and wealth. We probably need to find a way to value (and pay for) services more than goods. We need better measurements of economic prosperity that value services more than goods so more people can make a living from services.

It's a big problem. I can barely get my arms around it, but it's exciting to think about in order to generate the inspiration and the fuel to start changing our economy now to move in the direction of that sustainable society.

Policy: Electrify transportation for climate change, prosperity backed by utilities

Burning oil for transportation as we all do for our cars, trucks, buses and trains, is an expensive habit. Most of us live in regions like Chicagoland or Illinois that don't have any oil, so we have to import it. That reduces our wealth, leaving less to go around for everything else. And to get that oil out of the ground in the first place, whether from under the sands of the Middle East or under the water in the Gulf of Mexico, is very expensive. Thus, oil costs more than $100 a barrel this week and gasoline costs more that $3.50 a gallon. Those prices are likely to rise.

Even worse, burning that oil pollutes the atmosphere and contributes to climate change, which is a very expensive habit. Extreme weather and coastal flooding (Hurricane Sandy in NYC and New Jersey as one of the most expensive examples) is, to put it mildly, not cheap.

To quit polluting so much and reduce climate change, we need to largely stop burning coal and natural gas for electricity and switch to solar and wind. That's the push for clean energy.

But we can't use any renewable energy like solar or wind for any of our vehicles that run on gasoline. They only run on oil.

That means we need to electrify our transportation network and run electric-powered cars, trucks, buses and trains in order to use non-polluting energy.

That isn't widely appreciated, even among leaders who are pushing to stop climate change. There's a policy gap. Most of the environmentalists (for lack of a better term) push for changing the existing electrical distribution mix from fossil fuels to renewables (phasing out coal in favor of solar). They are right to do it.

But we need to also expand the reach of electrical distribution to those sectors that use oil (like transportation). Otherwise we could have a 100% solar and wind powered electric grid and be burning oil for all our cars and trucks -- clearly, not good enough to hold us back from the tipping point of global warming.

The natural political power in this policy campaign would be the electrical companies that would benefit from new customers. Our utilities are among the most influential entities in politics. It would be ideal to harness their power for such an innovative improvement to our economy and our environment. We do make electricity here, so substituting domestically-produced electricity for imported oil would generate more prosperity. Shrinking imports is the same as expanding exports -- and the latter is a clear policy objective.

One big gap in our knowledge: what is the actual economic impact for substituting an imported barrel of oil for domestically-created renewable power? Is there a multiplier of some sort? I would imagine so, but we don't know that. The first step would likely be a gathering of economists and policy makers to review the state of the literature and identify what we need to learn in order to adequately and concisely explain the job-creating impact of electrifying transportation. We should hire some economists to come up with that number.

Policy changes to implement electrification would include changing tax laws to favor electric cars, requiring licensed gas stations to install fast chargers, buying electric instead of diesel buses for transit agencies and running electric wires over railroads (like the Metra Electric in Chicago or the Acela on the Northeast Corridor) to phase out diesel-powered trains.

I hope some far-sighted utility executives see the light on a campaign to electrify transportation.

The Price is Not Right. Prince Charles is correct: global capitalism needs to change

One of the best things I learned in law school is the myth of a black-and-white debate between "capitalism" and its opposite (socialism or communism or sometimes just government regulations). Life and our economy are much more complicated and nuanced than that.

With that context, I'm glad to see Prince Charles calling for a fundamental transformation of global capitalism in order to avoid global warming's catastrophes. In this Guardian article, Prince Charles said business must “account properly for carbon dioxide emissions, the use of water and fertiliser, the pollution we produce and the biodiversity we lose." Today, of course, no one pays for their pollution. So we're collectively binging on it. Hey, it's free! Dig in!

This is the fundamental transformation we have to figure out how to implement: getting the price right. Right now, buying a shirt made from renewable energy costs the same as buying a shirt made from polluting energy. There's no pollution tax. And there should be. There should be a pollution tax built into the price of everything we buy or sell, so that we'll buy less of the things that pollute and more of the things that don't. There is a huge cost to all that pollution. Someone has to pay it, and currently, the people who are making that pollution just aren't paying the bill, because we haven't figure out as a society how to invoice the polluters.

This is where the anti-government reflex of way too many Americans kicks in. It's not that people think it makes sense to keep pollution free. It's that they just don't want government 'involved'. They'd rather have a 'private sector' solution. And so any attempt to get the price right runs into the anti-government crowd.


There is no such thing as a free market without government regulation. Private property doesn't exist without a government full of police and courts to enforce it. Government regulation is baked into any market. It's a question of degree, not kind. It's still 'capitalism' to quit letting polluters freeload and instead start to charge them for the damage they cause through a fee or a tax.

If we can earn more hearts and minds and convince more Americans to understand that's how government and 'free markets' work - regulation is part of the structure of any market and making pollution free is as much 'socialism' as charging polluters something -- then we're closer to building a consensus that we should get the price right. 

Manage the commonwealth wisely: another way to change the world

Some of our older states have better names than our younger states. Massachusetts, Virginia, Pennsylvania and Kentucky are all, legally, commonwealths.

That's the right way to think about the $3 trillion in assets held by state and local pension funds. They are the commonwealth. That tremendous pool of wealth is deployed to finance some activities and not others.

What are we doing with our commonwealth?

As the world's wealth distribution gets more unequal (hurting our economy and lowering the median standard of living) and as a maniacal focus on short-term strategy by many business leaders leaves us hurtling ever closer to the point of no return for coastal-flooding, drought-creating climate change, we should be investing our commonwealth into those institutions that are pushing us in a more sustainable direction. Companies that are building and buying renewable energy should get our commonwealth, not those that are building and buying climate-change-causing energy. Companies that pay their top managers 400 times more than their lowest-paid workers should not be financed; companies that pay their lowest-paid workers a high wage with great benefits should.

I don't trust Wall Street money managers to use our commonwealth wisely. Their investments in private prisons, predatory lenders, mega-polluters and manufacturers of weapons of mass destruction make the world a worse place. How can we find better stewards of our commonwealth?

One tactic is legislative -- passing new state laws and local ordinances that regular how the commonwealth will be invested to create the Great Society -- more equal, more just, more prosperous, more peaceful. I suspect European nations have some of these laws on the books for their pension funds. I'd like to know more about that.

Another tactic is entrepreneurial -- join the team of pension fund managers as a consultant for using the commonwealth to advance the Great Society. Advise the pension funds how to vote on shareholder resolutions. Represent the pension funds as internal advocates within publicly-traded companies for longer-term strategies and sustainable business practices. Recruit candidates for corporate boards who will insist on raising pay for workers, not CEOs, and get them elected. Find smaller scale companies who need access to capital and devote part of the commonwealth to those entrepreneurs.

I don't think there are many money managers of pension funds (or the vastly greater pool of private wealth) who deliver services beyond promising the highest rate of return -- no matter the costs to society of extracting that wealth. There can't be many managers of wealth who can show they have invested their clients' money in companies that are responsible for high wages, renewable energy and increased general prosperity. I suspect there's an untapped demand for that. And if there isn't much of one today, we need to convince our elected representatives to hire more far-sighted managers of our commonwealth.

If you know of any good managers, please let me know.

Memorial Day is an echo of horror unimaginable

We remember the veterans -- usually men who when they were boys or very young men were sent to a faraway hell on earth to maim and kill and hope to survive the carnage. We honor their service and remember the dead and try to reconcile the faded monuments from the Great Army of the Republic who defeated a slave-owning Southern empire and the very old men who defeated an alliance of genocidal nations in the Second World War with the younger veterans who were sent to Vietnam and Iraq and Afghanistan with more ambiguous results.

We hear the stories of war, if we want to hear them. They aren't pretty or comforting. They are often senseless and brutal. They are often kept from us. My wife's grandfather would lose his smile and his eyes would lose their focus when he talked of the Pacific. Butchery. Savagery. Scars of the soul that never heal.

We see the movies about the war in Iraq and they rivet us. For an hour or so. And then we can shrug them off and award the director wearing a gown and the actor in a tuxedo for their work. We can forget the fear after the film. But they can't forget.

We honor veterans more than any other government employee: more than police officers, more than firefighters, more than teachers. We elevate them to an unreasonable pantheon: our heroes. We upbraid those who don't sufficiently honor them with health care or employment. We do this because of what we do to them.

We tell them to kill in our name.

We wage war. We do. We have too much.

We can do better.