The Strategist

How not to "restructure" a company's leadership

In his insider's account of the US government's bailout and restructuring of American automakers, Steven Rattner is scathing of GM's leadership...

"Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM...

...the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones).

I found [CEO Rick Wagoner] to be likable, dedicated, and generally knowledgeable. But Rick set a tone of 'friendly arrogance' that seemed to permeate the organization.

Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW.

It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue..."

That's interesting, but after giving Wagoner the boot, Rattner anointed Fritz Henderson as the new CE. Henderson was Wagoner's deputy and, according to Rattner, another "GM lifer (and son of a GM lifer)".

OK, this is a dumb question. But I'm going to ask it anyway. If you're trying to reform a crippled corporation, and a big problem is the rotten leadership, why do you get rid of the boss but promote the right hand man? 

What sort of message does this send to the corporation's "drones"? To American taxpayers who have pumped billions into the moribund auto industry. And to outsiders, like possible investors, who are looking for signs that the corporation has turned a corner?

That's a lot of migrants and money...

Thought you might be interested in this video clip on global migration flows and remittances...

"Latins Americans working in North America sent $36.3 billion home in 2006/07. In the same period, Asians in North America sent just over $30 billion back to Asia."

Gulf of Aden: a lynch pin of global trade

This map shows the intensity of global shipping routes*. You can see why the Gulf of Aden is a lynch pin for global trade: it's the quickest way between Asia, the Middle East, Europe and the eastern seaboard of North America.

This is why shipping companies find it difficult to evade the Somali pirate threat by re-routing ships around the Cape of Good Hope. It would add almost 4000 nautical miles to a passage from Singapore to Europe or from the Persian Gulf to the US eastern seaboard.

  

* Source: WDR 2009 “Reshaping Economic Geography”, World Bank (via Free Exchange).

Caught my eye - the Åland islands, Flight 93, and Malaysia's ghost fleet

Here are some articles and posts that caught my eye this week...

• A superb collection of photographs with an environmental theme.

• Dean blogs about his trip to Åland islands. I like the way he weaves military history into this travel narrative.

• The Oil Drum posts a lecture by Joseph A Tainter on complexity and sustainability.

• Lexington Green argues that Flight 93 shows the "General Militia" is not an antiquated concept.

• A ghost fleet of merchant vessels lies idle off the coast of Malaysia.

Ancient practices for modern times - coppicing and pollarding

The Oil Drum has an interesting post on wood (biomass) as an energy source.

I was intrigued by the discussion about coppicing and pollarding, and the potential that these ancient practices have for generating local or regional sources of fuel, power, income and employment, and habitat for animals.

Coppicing and pollarding are traditionally rural activities, but vacant urban space - the "inner wasteland" - could also be used for growing wood for fuel.

Willow is a mainstay fuel source, but in New Zealand there might also be native equivalents. Mahoe, Melicytus ramiflorus, for example, is a vigorous and fast-growing tree which, when cut back, quickly sends up woody shoots.

Caught my eye - Shag Camp, black swans and farming Detroit

Here are some posts and articles that caught my eye recently...

• Jules Evans at Global Dashboard visits Shag Camp Climate Camp in London. "And for a second, I was jealous of John spending the next few nights in the camp. I bet he meets some really hot women, I thought".

• Nassim Nicholas Taleb lectures British conservative leader David Cameron about black swans and the financial system. Interesting how Taleb doesn't seem to have bothered writing to British Prime Minister Gordon Brown. Wonder what that's all about?

• Mark Dowie writes about the nascent take-off of urban farming in Detroit. He believes that Detroit may "become the first modern American city where agriculture, while perhaps not the largest, is the most vital industry".

Was the Lockerbie bomber set free in a squalid oil deal?

A seedy angle on the release of the Lockerbie bomber is emerging. It sounds like the UK government agreed to set free Abdelbaset al-Megrahi as part of a deal allowing oil majors BP and Shell to tap Libyan oil reserves.

Here's what the Times has to say:

"The strong circumstantial evidence is that a lucrative agreement to allow BP to explore for oil off the Libyan coast was being held up by Mr Megrahi’s exemption from the prisoner transfer programme. The idea that the Westminster government had no view and no influence is not credible."

And the Guardian:

"...ministers and senior civil servants met Shell to discuss the company's oil interests in Libya on at least 11 occasions and perhaps as many as 26 times in less than four years....

The revelations, showing that the government invested large amounts of political capital in securing North African oil, lend weight to claims that commercial interest lay behind last week's decision to release the Lockerbie bomber...from jail in Scotland to receive a hero's welcome in Libya."

Big picture implications?

Once again a democratically elected government seems to have allowed itself to be used as a tool to further the business interests of a coterie of very rich people. The close links between the UK government and Big Oil cast real doubt on Whitehall's commitment to negotiating an effective global climate change treaty at Copenhagen in December. And as long as people like this "run the show", the UK government will never grapple seriously with big concerns like peak oil, resource depletion, and the need to make a transition to a low carbon economy.

Caught my eye - Taliban fighters and Colombian drug money

• In the mountains of south-east Afghanistan, Ghaith Abdul-Ahad spends time with Taliban fighters loyal to Jalaluddin Haqqani. Abdul-Ahad was worried about US drone attacks; the Taliban seemed unfazed.

• More on Afghanistan - Seth Jones's op-ed in the WSJ (h/t Zenpundit), on how the US can win the war by "going local", generates a critique at Ghosts of Alexander and a lively debate at Registan between Froust and readers, including "Njarl" who has just come back from 15 months in Afghanistan.

• Amazing story of some Colombian soldiers who found US $150 million of drug money stashed in the jungle. They turned it over to the authorities, right? Well, not exactly...

• Not that long ago the IEA rubbished the idea of peak oil. Now it's sounding the alarm about the end of global oil supplies.

• I knew there was a good reason for having a cuppa (Earl Grey or English Breakfast) before work - drinking tea helps deal with crises.

Jeff Rubin on why peak oil hasn't gone away

You thought peak oil was just a bad dream, right? Here's a topical interview with economist Jeff Rubin on triple digit oil prices, the rise of localism and the madness of car culture (h/t Global Dashboard). 

"Why don't we invest in our future, not our past? When 50 million North Americans park their cars, is there going to be a bus to get on? Right now there isn't. It's public transit we should be investing in, not single passenger cars."

Governments are very good at looking backwards (or looking forwards to the past). Hence billion dollar bailouts for car makers, construction of new freeways and airports, and economic policies that encourage companies to move their operations to China and the Philippines.

Cool map Monday - the world recession

Here's a cool map showing the recession status of economies around the globe (h/t The Interpreter). If you click on each country a box pops up showing the latest economic information.

I was interested to read that in China GDP growth accelerated rapidly in the June quarter. Meanwhile in the US, "recession began in December 2007 and is intensifying."

Piracy as a business opportunity

Fancy setting up as a pirate? In "Cutthroat capitalism", Scott Carney outlines the economics and business model of Somali piracy...

"Most of Somalia's modern-day pirates are fishermen who traded nets for guns. They've learned that ransom is more profitable than robbery, and rather than squandering their loot, they reinvest in equipment and training. Today, no ship is safe within several hundred miles of the Somali coast."

Somali piracy seems to involve a cosy and lucrative arrangement where most of the parties - pirates, their financiers, insurers and private security contractors - can make loads of money.

Meanwhile taxpayers are hit with the cost of maintaining maritime forces in the area. The threat of naval intervention is an important element in the ransom process, but are the shipping insurers and security contractors paying the taxpayers their dues or getting a free ride? I suspect the latter - it's the good old public cost, private profit equation.

Secondly, if piracy is so lucrative, how come people elsewhere aren't getting into it as well? Is Somali piracy the start of a global trend? Or is there a combination of factors - like high shipping volumes, narrow waterways, secure bases for illegal operations (Somalia), skilled manpower (expert seafarers and gunmen), and many ways to make money - that make piracy around the Horn of Africa a uniquely profitable situation?

Caught my eye - freelance hackers and puppet stooges

Some blog posts and articles that caught my eye this week...

• China plans to use its massive foreign exchange reserves to snap up overseas natural and energy resources.

• David Rondfeldt blogs about collaborative communities as a way of organizing for cyber security.

• Desertec is one step closer to generating electricity from sunlight falling on North African deserts.
  

• Dark Visitor notes a poll of China's netizens: asked which criminal job they'd prefer, most chose freelance hacker over human trafficker, assassin, drug dealer, gambler, gang leader, spy and robber.

• On the 56th anniversary of the great Fatherland Liberation War, a North Korean war hero recalls the defeat of the US imperialist aggressors and their puppet stooges.

Caught my eye - Silvio Berlusconi and the Alaska ethics elves

Here are some articles and posts that caught my eye this week...

• An interview with economist Thomas Schelling on global warming and the collective bargaining of international climate change negotiations.

• The Chinese are worried about their vulnerability to cyber-warfare. Meanwhile a Sino-Turkish cyber conflict may be about to break out.

• Possibly the most pathetic opinion piece I've ever read: poor Sarah Palin, hounded to resignation by the "Alaska ethics elves" (h/t AE).

• Global Dashboard almost causes a diplomatic incident with Italy, then makes a grovelling apology to Silvio Berlusconi. My take on this: who cares if Silvio's hosting of the G8 was crap? He throws some bloody good parties and that's all that matters.

• On 13 July Korean News fondly remembered the visit of DPRK President Kim Il-sung to a farm co-operative's vegetable greenhouse in May Jurche 70: "That day, the President instructed officials that the brook in the rear of the greenhouse should be dug two meters deep".

Cyber saboteurs emerge from the shadows

OK, so I've been rather sceptical about North Korea's cyber warfare capabilities. It's a tad hard to square news of elite cyber saboteurs with this crappy DPRK government website. But maybe I was wrong.

Over the weekend, North Korean-linked hackers carried out distributed denial-of-service (DDOS) attacks against US and South Korean government and commercial websites.The websites targeted included those of the US Secret Service and the White House, the New York Stock Exchange, and South Korea's Defense Ministry and National Assembly.

Tim Stevens, who blogs at ubiwar, was quoted as saying that "this type of 'denial of service' attack was designed to disrupt rather than penetrate a system to obtain data". Opinion varies about the scale and sophistication of the attacks. The Guardian described it as "a paralysing barrage of electronic cyber attacks", but this article claimed that the attacks were relatively unsophisticated and small-scale, involving 50,000 to 65,000 computers.

Another thing I've been sceptical about is the effectiveness of DDOS attacks. What's the big deal if a couple of websites are down for a day or two, right? But according to the Technology Liberation Front...

"The only real cost of an attack such as this one is writing an effective bit of malware that can spread itself around, compromise tens of thousands of machines, and allow an attacker to call on this army of unwilling silicon conscripts whenever it wishes.  When viewed from the hundred-billion-dollar heights of nation-state budgets, this cost is essentially zero....

DDOS attacks are a cheap (hijacking is free), relatively hard to trace, and very effective way for a state or non-state actor to inflict meaningful economic losses on others."

Banks and companies carry out a lot of business via their websites. Increasingly, government departments are delivering core services through their web portals, like getting people to apply online for welfare benefits and grants. Even temporary disruptions can inflict big costs on businesses, departments and customers alike. This is a pretty good return on investment for hackers.

Trend watch: China's move a big strategic play

More on China's move into renewable energy, especially wind. I've said it before - this is a big strategic play...

"If China matches growing technological prowess with its cheap production costs and a massive internal market, it could become a global power in the production and use of green technology.

This would this enable China to gain a crucial hold in key industries of the future. It would help clean up a heavily polluted environment. And it would lessen a dangerous strategic vulnerability: China's dependence on foreign oil which must be imported along sea lanes controlled by the US Navy and other competitors, like India and Japan."

Meanwhile Western governments mainline on Middle East crude and Russian gas, oblivious to the huge costs, the environmental and economic risks, and the strategic vulnerabilities. 

Rise of the eco-skyscraper

Who'd have thought that skyscrapers, that symbol of rampant capitalism, would go green? It's like someone ripping out the guts of a Hummer and dropping in a poncy electric motor.

Chicago's Sears Tower is getting a green makeover. It will be retrofitted with solar panels and wind turbines, upgraded wall and window insulation and water systems, advanced lighting, fuel cell boiler plants, and energy efficient elevators.

The owners claim that the retrofit will lead to "unparalleled energy savings and reduced CO2 emissions...reducing the base building electricity use by up to 80 percent".

Meanwhile in Guangzhou, the Pearl River Tower is being hyped as the most energy efficient superskyscraper ever. When finished in 2010, the tower will have wind turbines, sun shields, solar panels, smart lighting and water-cooled ceilings. It's designed to use half the energy of similar sized buildings.

Of the two strategies - retrofitting an existing skyscraper or building a new one - I'd argue that retrofitting is the way to go. If you've got an existing structure, it makes sense to kit it out with the latest green technology.

A new structure may use less energy and emit less CO2 than a retrofit (because it was designed that way at the start). But you have to factor in the vast amount of energy that is used and the CO2 that is emitted in the manufacture and transport of building materials and the construction. And the building will still use extra energy which has to be generated somehow, probably through burning coal.

So while it's cool to see green design and technology coming to the fore, it's a shame that this is being wasted on monstrosities like skyscrapers, rather than making 21st century cities green, liveable and energy efficient.

And yes, call me a cynic, but we have to be mindful of "eco-skyscrapers" as another form of greenwashing, designed to give corporate owners and tenants a veneer of environmental respectability. Like Okhta Tower in St Petersburg, the fancy new head office of Russian gas corporation Gazprom.

Caught my eye - China power and cyber "strikeback"

• China's making massive investments in solar and wind power. As I've mentioned before, this is an important trend to watch, and one where China could steal a technological march on the west.

• Edward Glaeser writes about bulldozing America's shrinking cities, and how "urban decline is a reality in much of older, colder America".

• America and Britain prepare to "strikeback" against Russian, Chinese, and North Korean (???) hackers.

Notes on resilience: growing new farmers and urban gardeners

A boot camp for farmers? Here's an article about an organic farm in Cabarrus County, North Carolina, which is training newbie farmers to grow food for local eating (h/t Global Guerrillas)...

"For a $100 yearly fee, participants get their own half-acre to work, use of a tractor and other equipment. Those who stick it out for three to five years should be ready to make it on their own and, like rotating crops, will be replaced by a new class....

Among the first nine 'participant farmers' are a stay-at-home mom, a banker nearing retirement and a volunteer intent on supplying food to the homeless at Charlotte's Urban Ministry Center. Most are home gardeners, but none had grown on a commercial scale.

Before they first turned dirt, they went through nine weeks of basic training, from building soil to buying insurance to handling finances."

You could run similar schemes in cities for people who want to grow their own food in their back gardens but lack the know-how. Set up a community group, get some grant funding, and organize a group of skilled gardeners (such as green-fingered retired folk) to train and mentor budding gardeners. In exchange, newbies might tithe a share of the produce to the mentors and local charities.

Inner wasteland 6: the shrinking city of Flint, Michigan

An abandoned house in my neighbourhood.

SE emailed me about my Inner Wasteland and Regeneration series:

"While I cannot say I agree with you in every instance about the utility of making greenspace for the sake of greenspace, I can say that your ideas on Urban Wastelands may be coming to fruition in the US".

He kindly sent me this article about Flint, Michigan, a city with a dwindling population. Here the local county is shrinking the city - allowing abandoned suburbs to revert to woodland, and concentrating housing, business and services in the city's core...

"The local authority has restored the city's attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas. Mr Kildee estimated another 3,000 needed to be demolished, although the city boundaries will remain the same. Already, some streets peter out into woods or meadows, no trace remaining of the homes that once stood there."

Now I'm not arguing for making urban "greenspace for the sake of greenspace". What I'm suggesting is that urban wasteland should be converted into space that is productive in some sense. Examples of productive use could include...

• communal gardens, which would provide food and livestock, plus employment and local resilience;

• parkland, which would provide recreational opportunities; and

• woodland, which would absorb carbon dioxide, stabilize hill-slopes, minimize rainwater runoff, and provide habitat for wildlife.

SE's given me a couple of other interesting ideas to chew on, which I'll follow up in another post.

Kilcullen on Islamic radicalization in Europe

Last week Alex Evans wrote that Global Dashboard is a "hotbed of David Kilcullen fandom". Bravo! I am too, and as you know I've been reading Kilcullen's The Accidental Guerrilla.

In the book Kilcullen writes at length on counterinsurgency campaigns in Afghanistan and Iraq. He also looks at guerrilla warfare in East Timor, Pakistan and southern Thailand (the long-running Malay separatist struggle). Another interesting section deals with Islamic radicalization in Europe...

Read the rest of this post here at Global Dashboard, where I'm guest blogging in June...

Change is constant, except for cars

I grew up in the 1970s. Aside from Stars Wars, the Stranglers and the threat of nuclear holocaust, I remember the '70s as a time when earth-shattering technological advances seemed just around the corner. Perhaps I read and watched too much sci-fi, but undersea cities, space colonies on Mars and contact with aliens by the year 2000 sounded very plausible.

While we're still earthbound, technological breakthroughs in communications, materials, fabrics, energy, medicine and so on have drastically changed our lives. But what I find weird is that cars haven't really changed in the last 40 years or so.

The other night I saw a TV ad for a new range of cars. These cars were said to be the "latest in automotive design". By "latest" they meant styling, comfort, entertainment - everything that is cosmetic about a car. It might also, if you're lucky, mean greater fuel efficiency. But the fundamental aspect of the car - its internal combustion engine - remains the same, decade after decade. We're told that electric and fuel-cell cars are just around the corner, but that line's well-worn. 

Why do cars stay the same? Is it because auto-designers are lazy? Or because there's a conspiracy on the part of auto-makers and oil corporations? Or because of gargantuan sunk costs (our economies, livelihoods and lifestyles are based around the car, and to retool would be phenomenally expensive)? Or simply because the internal combustion engine, for all the problems it causes, is an incredibly effective piece of kit and for that reason is enduring and hard to beat?

The last two reasons go a long way to explaining why, in the absence of a deep shock to oil supply, shifting transport to a low carbon pathway is going to be damned hard. For example, any practical alternative to the internal combustion engine has to match it on ease of use and effectiveness.

You'd also want to make sure that a new engine design didn't replicate the environmental problems of the old one (carbon dioxide emissions caused by burning fossil fuels). This is a big problem for electric cars. It's a cool idea to charge them from the grid, but it's not so cool if the extra electricity is generated by coal-burning power stations.

Inner wasteland 5

Yesterday I took my camera and went for a walk around an industrial park at Rongotai, near Wellington's airport.

Like most old industrial parks, Rongotai is bleak and ugly, an inner wasteland of asphalt, steel, bricks, corrugated iron, concrete, and barbed wire fences. Walking around, you notice the enormous amount of empty space: the wide streets; the large parking lots and yards; and the many smaller spaces  squeezed between or behind buildings and festooned with rubbish, weeds, rusting engine blocks, pallets and packing cases. 

And yet, in the cracks and corners of this urban desert, a profusion of weeds, grasses, shrubs and trees have taken root. Self-seeded natives like dune grasses, karo, cabbage trees, ngaio and taupata - survivors of an ancient ecology - are thriving. It's an object lesson in resilience, and a reminder of nature's tenacity.

Such tenacity suggests the regenerative potential for even the bleakest of urban deserts. Trees, shrubs and grass could be planted to soften the harsh edges of industrial areas, provide places of relaxation and recreation for workers, and absorb rainwater and carbon dioxide. As industrial areas decline and die, the land could be regenerated as park land and urban forest (for recreation, and carbon dioxide capture) and turned over to growing food. 

Top four challenges for India's new government

With India's Congress-led UPA coalition winning another term in office, it's timely to read Aravind Adiga's analysis of the top challenges facing the Indian government (h/t Global Dashboard).

Adiga believes that Prime Minister Manmohan Singh will have to deal with big problems in terrorism, a ballooning fiscal deficit, the Naxal insurgency, and nation-wide water shortages (which could spark unrest).

Car-free communities and climate criminals

Here's some things that caught my eye this week...

• A car-free community in Germany...

• Brand new suburban homes being demolished in the US...

• Global warming forces Carteret Islanders to abandon their homes...

It's ironic, and tragic, that the car-free Carteret Islanders have to flee their ancestral islands because of the greed of these climate criminals.

Sunday morning reflection - on "experts"

"Fossilized Wall Street", photo Johnzo Washington

They're at it again. Experts, brimming with confidence, no doubt wearing ties, telling us to place our lives and savings in their hands. In this case predictions that the worst of the global recession has passed and that a bull market in stocks is about to take off...

Anthony Bolton, a respected financial adviser and stock-picker in London, predicted: “All the things are in place for the bear market to have ended . . . If you wait for things to get better, you’ll miss the rally.”

David Schwartz, a prominent stock market historian, said that lessons from the past century of share price ups and downs pointed decisively to a new bull market. “History says fill your boots, sell your wife, dive in."

About a decade ago I was burned with an investment in tech stocks. One thing I took out of that was never trust the financial "experts", especially when they're confidently forecasting good times ahead. Either I make up my own mind, based on my own research and analysis, or I leave well alone. (And to be honest, I've got more interesting things to do than research stocks.) As a result, I'm not rich, and I'm not poor. And I've never had to anguish about losing my home and jeopardizing my family's security.

So, Andrew Bolton and David Schwartz, you could well be right. Or you could be spectacularly wrong. No matter - as far as I'm concerned you can take your advice and stick it in a place where the sun don't shine...

Micro-lending more than just loans

Lately I've got interested in micro-lending initiatives. The basic idea is lending small amounts of money, at low interest rates, to poor people who want to set up businesses but can't get money from banks because they don't have enough collateral.

Two examples of micro-lending initiatives are Bangladesh's Grameen Bank and Kiva. Grameen loans money to small village-based groups of women. Kiva is a US-based not-for-profit organization that enables people with money to lend directly to local entrepreneurs in developing countries via the internet.

It was interesting to read this post at Free Exchange, which considers how really poor people make ends meet. It makes this point about micro-lending:

"Ironically, many of the aid workers and celebrities who claim to speak for the poor can't balance their own check books. They often promote microfinance, which can be helpful. But most poor people need financial services that enable them to smooth their consumption more than they need a loan to start a new business."

Last week I was involved in a debate about micro-lending. One of my colleagues made the point that it's not just about the money. If you want poor people to be successful with their business ventures - and really, this is the point of the exercise - you need to provide them with tuition (e.g., basic reading, writing, book keeping) and ongoing advice and support, e.g., through a mentoring programme. In other words, less of a bank, more of a business incubator.

Big Oil gives a rat's arse about climate change

Avaaz via Global Dashboard

Inner wasteland 3

Apologies to any golfers...

Golf courses are one of the worst examples of the "inner wasteland". They occupy a lot of space yet are used by a small number of people. They require large amounts of water. Vast quantities of chemical pesticides and fertilizers are dumped on them.

Imagine if this golf course in Wellington, NZ, was converted to a mix of community energy, food and wood production. Some areas of the space could be covered with solar panels, perhaps with sheep grazing the rows between. Other areas could be converted into community vegetable gardens, chicken coops, fish ponds, and stands of fruit, nut and coppiced trees.

As a global society we are butting our heads against natural limits to growth. There is, for example, not enough accessible oil left to satisfy our insatiable demand. There are not enough fish left in the world's oceans to meet our insatiable appetites. Throughout the world, the area of arable land is shrinking due to changing weather patterns, advancing deserts, salinization, and the exhaustion of rivers and aquifers. 

In such a world, we have to rethink how we use available land, and for whose benefit. In such a world, golf courses are an extravagance, a waste of space.

>> Regeneration series

Inner wasteland 1

For some time I've been writing about the urban 'inner wasteland': vacant lots, grassed or concrete verges and backyards, old industrial sites, empty rooftops and so on. And about the need to use such land productively - for cultivating food, generating electricity, collecting and storing rainwater, absorbing runoff, and growing trees to provide timber and fuel and soak up carbon dioxide.

Why? So that our communities can become more resilient by providing at least some of the basics of life - energy, water, food. So that our communities can generate extra employment and activities for local people. So that our communities can take a more active role in local environmental management.

I'm posting a series of photos to highlight the inner wasteland in my city, Wellington, NZ. It's not difficult to find inner wasteland. There are sites all around us - empty, ugly, weed-infested; strewn with rubbish, discarded condoms, and abandoned shopping trolleys; often tucked just out of sight and out of mind. Like the site pictured above - an empty building and lot at Burnham wharf, Miramar. For a society that is obsessed with property rights, we make poor use of a great deal of land.

I'll also look for regenerating places, where people are making productive use of land that was once waste (e.g., for urban gardening), or where nature is doing the job for us.

>> Regeneration series

Signs of the times: US job losses

The Curious Capitalist has drawn a graph comparing American job losses in the current recession with those during the previous five (h/t The Daily Dish).

Ye gods!

A world free of black swans?

Nassim Nicholas Taleb, author of The Black Swan, outlines ten principles for a black swan-free world:*

Principle number 3:

"People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean."

Free Exchange makes a peevish response:

"Also it was not the job of academic economists to predict the crisis. They teach economics and produce research on a myriad of topics. Their job description never included economic forecasting."

No-one said that academic economists should get their arses kicked for not predicting the financial meltdown. If you read The Black Swan, and I'm not sure that the Free Exchange writer has, then you'll get Taleb's point that black swan events are essentially unpredictable.

What's worrying is that academic economists teach the people who become the regulators, central bankers, government officials etc. These are the people who failed to ensure that financial systems were effectively regulated. These are the people are now tell us that they know how to fix things, and that everything's going to be ok.

* H/T Global Guerrillas 

China - getting ahead of the game

In January 2007 I wrote that "China's unquenchable thirst for oil will lead to a clash of interests with the West....If western nations were smart, they would change the game by switching to new energy sources and technologies - the way of the future - rather than fight over a rapidly declining energy source."

In a fascinating twist, it's now China, rather than the west, that's trying to "change the game" with an aggressive move into clean transportation: the manufacturing and use of electric and hybrid vehicles (cars, buses, scooters).

As Jonathan Watts points out, this seems part of a deeper strategy:

"the science and technology minister, Wan Gang, said the country aimed to come out of the economic downturn greener and more advanced than it went in. 'Accompanying every financial crisis is a revolution in technology that serves as an engine for economic development. This time, new energy technology will probably be the new driving force.'"

China is already a big player in solar and wind power. If China matches growing technological prowess with its cheap production costs and a massive internal market, it could become a global power in the production and use of green technology.

This would this enable China to gain a crucial hold in key industries of the future. It would help clean up a heavily polluted environment. And it would lessen a dangerous strategic vulnerability: China's dependence on foreign oil which must be imported along sea lanes controlled by the US Navy and other competitors, like India and Japan.

Bring back the boring old bankers

Today on the radio I heard some London wanker banker opining about how people need to remember that "money makes the world go round".

"Fuck off" was my instant reaction, and then "Is it 1789 yet?" Then I read this Global Dashboard post on ideas to rein in rock star bankers:

"Cable basically suggested a two-tier banking system: some retail banks would be considered crucial to the payment system and the economy, and thus ‘too big to fail’. They would be managed like electricity utilities, with very strict regulation, and owned, he suggested, through some form of public-private partnership, or as mutuals.

Any other financial players would be treated like hedge funds, and ‘would have no claim on tax-payers’ money should they fail’."

I'm not exactly a whining old fart banging on about the 'good old days', but I do like the idea of bankers being boring old sods.

Signs of the times: exports plunge

Free Exchange on the collapse in world trade:

"Argentina's exports were down 35.8%. Canada's were off 34.6%. Chile's by 41.3%. China's were down 17.5%. Ecuador's fell by 47%. Germany's by 28.7%. France's by 30.7%. India's by 15.9%. South Korea's by 32.8%. Malaysia's by 35.3%, etc. I could go on....

For this year, the WTO is forecasting a 9% drop [in global trade] - a lot bigger than the 2% drop the World Bank was forecasting back in December."

Friday linkfest

• Not exactly happy hour, but here's John Robb's testimony to the US Congressional House Armed Services Committee: "Threats to US security in the early 21st century". Whenever I read John's work I feel the need to drink whisky, lots of whisky.

• Free Exchange flags Beijing's drive to become a global leader in the production of electric cars. Another nail in Detroit's coffin?

• Friday night music: one of my favourite classical pieces, the Preobrazhensky March. Good stirring stuff!

1789 and all that

"The Storming of the Bastille", by Jean-Pierre Houël.

According to the Times, Scotland Yard is expecting big trouble during the G20 summit, which is being held in London on 1-2 April.

The officer commanding the police response said that a hard core of protesters was intent on storming buildings and provoking violence.

“Everything is up for grabs. That is the aspiration, to get in and clog up these City institutions as best they can,” Commander Bob Broadhurst, of the Metropolitan Police, said.

“We are seeing unprecedented planning among protest groups. Some of the groups of the late 90s are coming back to the fore and there is a coming together of anarchists, anti-globalisation groups and environmentalists. They are plotting and planning what they are going to do and the picture is changing almost every minute. They have some very clever people and their intention on April 1 is to stop the City.”

There's a palpable air of crisis to this story, a mood of circling the wagons, very 1789. It's hard to tell if this is for real - if the protests really do pose a danger to G20 politicians - or if this is a story manufactured by government PR, with the aim of providing cover for a massive crackdown.

Also interesting is how the Times chose to accept without question the police view, and play up the "violent disorder" angle. But there are other, deeper, angles to this story:

• Are the protests driven by popular anger over the inability of politicians to respond effectively to global crises, like the near collapse of the financial system (and the greed and incompetence of financiers) and the threat of climate change?

• To what extent do the protests reflect a general loss of confidence in politicians, and how widespread and enduring is this likely to be?

• And has the Met become the defender of an ossified power system and those who benefit from it (a global elite of politicians, financiers and corporate executives)?

When I think about the times we are living through, two big questions grip me. Firstly, can our national and international institutions do what's needed to ward off economic and environmental crisis and collapse? Answer: probably not - the track record to date hasn't been flash, and our politicians seem to lack the skills, inclinations and imagination to tackle the problems.

And secondly, is this an epoch of transformation in the way we organize ourselves politically, economically, socially and in relation to the natural world? Answer: probably - and if so, what are the key areas of transformation, and how will change come about? Through violent upheavals, grassroots organization, re-invigoration of existing institutions, and new forms of networking and organizing - or all of the above?

The Bullshit Files #10: Labour's retro retro-fit campaign

This is an excellent idea from the opposition New Zealand Labour Party - a campaign to retrofit most New Zealand houses with insulation (h/t Kiwiblog)...

"A comprehensive nationwide retrofitting scheme would make houses warmer, save on power bills, take pressure off our health system, cut absenteeism at work and schools, and create real jobs."

It's just a pity that Labour didn't do this during the last nine years that they were in power. Having done sweet fuck all while in government, Labour now has the gall to run a campaign that, while sensible, has zero chance of being implemented.

Yep, chalk up another one for the Bullshit Files.

Signs of the times

The Economist on structural unemployment in the US economy:

...unsurprisingly, the construction industry is haemorrhaging jobs. These jobs will probably not come back anytime soon because the real estate bubble resulted in excess housing capacity. Manufacturing has also lost jobs, and that probably reflects a long term structural change in the economy. Another big loser has been “computer and mathematical”. I may be a bit optimistic here, but I suspect job losses there may be cyclical rather than structural.

Not a smart move...

As the economic crisis deepens, British police forces are planning to cut thousands of officers. Talk about poor timing...

One of Britain’s most experienced chief constables said that forces were being dangerously weakened at a time when a strong police force could be essential to “hold the line”. Timothy Brain, Chief Constable of Gloucestershire since 2001, said: “There is a risk of increased crime and disorder as a result of the effect of recession and many police forces will be made weaker as a result of the latest grant and council tax settlements.”

In a slump, people cut back spending on all but the essentials. Governments do the same with "line-by-line reviews" - cutting costs primarily through cutting jobs. This is useful if freed-up resources are redeployed to areas of need, e.g., front-line services, or initiatives that have long-term social and economic benefits (like infrastructure and education investment). But how confident can we be that politicians and government planners will get this right?

With cost-cutting drives there's a risk that resource-starved public services will become brittle and prone to failure, especially as demand for those services grows. Fewer police to cope with more criminals is a recipe for a breakdown in service. It's arguable that in a slump governments should be maintaining resource levels, or boosting them, to build redundancy into systems and allow for surges in demand.

To make this point another way - if war broke out, would governments react by cutting costs and jobs in the armed forces? Would we be worrying that combat units were "overstaffed"?

Of course not.

Back to the farm we go

In this Global Dashboard post on the future of urbanization, Alex Evans compares and contrasts the views of Richard Florida and James Howard Kunstler, author of The Long Emergency. Both men agree that suburbs are dead. But while Florida believes that megacities are set to flourish, Kunstler thinks that we're going to be living locally, in villages and towns.

Alex ends the post with a critique of Kunstler's pro-localization perspective...

"Throughout human history, after all, complexity and non-zero-sum co-operation have grown in tandem - and cities have been a central part of that process.  If we were all to pull back to more or less self-sufficient communities, then that looks to me a lot like the collapse scenarios discussed by Joseph Tainter in his seminal book The Collapse of Complex Societies."

If you want to find out what "pulling back to self-sufficient communities" might look like - in a worst case scenario - read Bryan Ward-Perkins' The Fall of Rome (2005). Based on archaeological and historical evidence, Ward-Perkins argues that the violent barbarian invasions and takeovers of the fifth century AD

"destroyed a complex civilization, throwing the inhabitants of the West back to a standard of living typical of prehistoric times."

This sudden collapse, Ward-Perkins claims, was characterized by drastic, widespread and enduring declines in urbanization, economic sophistication, prosperity, population, literacy and well-made goods.

John on sustainable living for city slickers

Responding to this post, John of Lifeboat Farm offers some advice to urban folk who want to live sustainably:

"If I was going through our "exit strategy" again but constrained to staying urban, the single most important thing I'd do would be to reduce or eliminate debt, with learning gardening as a secondary priority.

While it's romantic to think about alternative energy or farming in an urban context, the reality is it is much cheaper and easier to save a kilowatt than capture one. Reducing energy use, reducing waste, and making the most of what you have are all rewarding strategies for a more sustainable existence."

I should add that John ran the thought-provoking Kiwi Foo seminar on sustainable living that I referred to in the post.

Give an inch...

Give someone an inch and they'll take a mile. According to Free Economist, Chrysler seems to understand this idea exceptionally well...

"Today, roughly two months after receiving a $4 billion loan from the government, Chrysler reported its plan for a return to profitability. It's a two part plan, based on the press reports: 1) keep doing what they've been doing, and 2) ask for more government money."

The lime kilns of Warkworth

While I was in Warkworth for Kiwi Foo Camp 2009 I did a couple of walks around the town. In Kowhai Park I came across these ruined lime kilns, which were built in the late 19th century. The kilns were part of a large local industry which made lime and cement for many landmark structures and buildings in New Zealand and Australia.

Much of the talk at Kiwi Foo was about high technology and new business practices. These ruins made me reflect about the ongoing shift in New Zealand industry - from business that has a corporeal presence in the landscape (like kilns) and makes material objects (like cement), to business that has little or no physical presence and produces services and products (like software) which are essentially ethereal.

In a century's time, what will be the ruins of today?

Some things I learnt at Kiwi Foo

I was at Kiwi Foo Camp 09 over the weekend, among a group of technologists, inventors, entrepreneurs, designers, media people, bloggers, advocates and many others. Here are some compelling ideas that I came across in seminars and discussions:

• Economy - with the global credit crunch and diminishing natural resources, people will be crying out for technology that helps them do things cheaper, faster and more efficiently.

• Community participation - Thinksmall, an online platform which aims to encourage New Zealanders to debate and develop solutions to issues that are vexing them. The platform is pitched at national issues, but could be used by communities as a tool for discussing and organizing on local concerns - anything from rates hikes and vandalism to local government spending on costly "legacy" projects (e.g., new stadiums).

• Microfinancing - P2P (peer to peer) lending systems, where investors can lend directly to people who want money (e.g., for a business start-up, to buy a house) and choose different types of risk to suit their lending approaches.

• Sustainable living in cities - I've written before about the "inner urban wasteland" - vacant lots, grassed road verges, backyards, old industrial sites, bare rooftops - and how we could productively use these spaces, e.g., for growing food and generating energy. At a session on sustainable living, one of the participants suggested growing fruit and nut trees on road verges, thereby providing food, shade and soaking up carbon dioxide.

• People with disabilities - encouraging government, business and communities to actively tap the skills and expertise of disabled people, rather than treating them as a drain on the public purse. This is one aspect of developing a resilient society and economy.

I'll be writing more about these interesting ideas - and others - over the next couple of weeks.

Thank heavens I flunked Econ 101...

I did economics at high school, enjoyed it, and got good marks in the subject. Different story at university. I was put off economics, mainly because I'm not much chop at mathematics. For a maths ignoramus there didn't seem to be a future in the subject beyond the first semester of Econ 101.

But if Anatole Kaletsky is right, this was probably a lucky break...

"One reason why such fruitful [non-mathematical] insights have been ignored is the convention adopted by academic economists some 30 years ago that all serious ideas must be expressed in equations, not words. By this weird standard, the intellectual giants of the subject — Adam Smith, Ricardo, Keynes, Hayek — would not now be recognised as serious economists at all."

Kaletsky argues that mainstream economics has been discredited by the events of the global financial crisis. (He's not the only one saying this, and people like Nicholas Nassim Taleb - author of The Black Swan - were making similar arguments well before the crisis.) His article outlines the ideas of unorthodox thinkers - like Benoît Mandelbrot and George Soros - and explains why their ideas should be heeded.

More cool and clean energy technology

Here's another example of very cool, very clean energy technology - "green" speed bumps that generate electricity as cars drive over them (thanks Flan, for alerting me to this idea).

As designer Peter Hughes explains...

"With a steady flow of traffic, four of the ramps used as speed bumps would be enough to power all the street lights, traffic lights and road signs for a mile-long stretch of street. The ramp is silent, comfortable and safe for vehicles."

Like turbo expanders, the beauty of this sort of technology is that it's embedded in existing systems, it taps energy that would otherwise be wasted, and it produces power at the point of demand.

Malignant 4GW force or powerful grassroots movement?

What say 4GW guru William S Lind has got it dead wrong? What say the return of veterans from Iraq and Afghanistan turns into a good thing - if, as JC and Ralph suggest, those who've seen foreign war, poverty and anarchy decide that their communities and countries won't suffer the same fate?

To take this a step further - what would happen if demobilized vets, with their experience of discipline and initiative, and their expertise in providing security, local governance, construction and development in counterinsurgency situations - put this to good use in their own communities?

Professional soldiers usually come from poorer communities - urban slums, strip-mall suburbs and rural towns which are crime-plagued, poverty-stricken, and hard hit by industrial and agricultural decay and economic slumps. Instead of being left to their own devices, these men and women could be mobilized and resourced to organize their communities, around concepts of communal safety, resilience and sustainability. They would take a lead in local representation, crime-prevention, localizing energy, food and water supply, and nurturing community cooperation and assistance.

Instead of the malignant 4GW force of Lind's fevered imagination, these men and women could be the vanguard of a grassroots movement for community regeneration.

*"Great War on Terror"

'Shaping the post-crisis world"

Over the last few days the world's top brains were at Davos for the annual World Economic Forum. This year the forum was modestly called "shaping the post-crisis world".

If you thought that the assembled politicians, business leaders, intellectuals and journalists might've come up with some bright ideas for saving us from economic calamity, then think again. Here's Jeff Jarvis' take on Davos:

"I’m talking with other people who are getting more depressed as the day goes on and here, I think, is why: We are surrounded by the leaders who fucked it up: bankers, marketeers, regulators, and the press. They were in charge. That’s what Davos is: the people in charge. So who’s to say that we’re going to find the answers in Davos? Well, the people in Davos will. But I think the evidence is strong that the answer is not here."

Having just read the final media release from Davos, I can see what Jarvis is getting at. The forum concluded that...

"[world] leaders must continue to develop a swift and coordinated policy response to the most serious global recession since the 1930s: global challenges demand global solutions."

Yep, it doesn't take a rocket scientist to work that out.

Pinch me, I must be dreaming...

...or maybe I've drunken one too many glasses of red wine (hey, it's been a long hard day at work).

Anyway, it's remarkable to hear an American president put energy, climate change and environment policies at the heart of his administration's agenda, and to directly link these to economic and national security strategies:

"Now America has arrived at a crossroads. Embedded in American soil, in the wind and the sun, we have the resources to change. Our scientists, businesses and workers have the capacity to move us forward."

On 26 January President Obama set out his plan for creating a low carbon economy, reducing America's disastrous dependence on foreign oil, and leading the world to fight human-induced climate change. Here are the key points of what I hope will be a landmark address:

• New energy economy: develop clean energy investments and double the capacity to generate alternative energy over the next three years; construct 3,000 miles of transmission lines; make 75% of federal buildings energy efficient; insulate 2 million homes.

• Increase automobile fuel efficiency: implement new standards for model year 2011 so that all cars and trucks get 35 miles to the gallon by 2020 (representing a 40% increase in fuel efficiency).

• Lead on climate change: the federal government to work with states to reduce greenhouse gas emissions. This includes allowing California and other states to raise vehicle emissions standards well above the national standard.

Bad news for Beijing

More bad news for Beijing on the economic front...

Free Exchange:

"China's economy 'expanded' by 6.8% in the fourth quarter of last year. In fact, the story is worse than that; China computes its growth figures year-over-year, so that 6.8% number reflects stronger growth earlier in 2008.

In fact, Chinese GDP probably grew at something like a zero annual rate during the last three months of the year. (And those paying attention to power consumption figures are arguing that the economy may well have shrunk.)"

The rate at which China's economy grows (or shrinks) has big implications for stability in China, and the legitimacy of the ruling Communist Party. Or so conventional wisdom has it. As Free Exchange puts it, "...something between 6% and 8% output growth is necessary to provide employment for China's huge urbanising population, and that without such growth, social tensions will erupt".