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Economics for the Future

How's the economy looking to you?

Of course, none of us has ever seen "the economy," since the term is just an abstraction. But it is an abstraction that covers such a broad range of activities that we probably need a few new words to cover them all.

If you're poor, the economy doesn't look too good. Worse, there are many people with power who don't have your best interests at heart. The US House is flirting with reductions in food stamps of up to $135 billion (while keeping subsidies for already wealthy mega-farmers).    

Cynically, state legislatures are denying the poor the opportunity to receive health care coverage under ObamaCare. In Michigan, for example, working parents now must be below 64% of the federal poverty line to receive Medicaid; jobless parents must be below 37%; and childless adults are ineligible altogether. With Medicaid expansion (a provision of ObamaCare that the Supreme Court ruled each state could make its own decisions about), people in each of these groups would be eligible if their incomes were below 133% of the Federal poverty line. Yet the Michigan Senate is unsure if will allow this, although the federal government will cover more than 90% of the cost for the next decade.

On the other hand, the economy looks pretty bright for those with the smarts -- make that connections -- to benefit. Thomson Reuters has come under scrutiny for packaging the University of Michigan-produced consumer confidence index for the benefit of high-frequency traders who pay to receive it two seconds before it is released more widely -- a window in which hundreds of thousands of trades are executed and millions of dollars made by understanding consumer sentiment just a shade in advance of other stock traders.

Legal or not (there is some question), and ethical or not (ditto), this kind of economy has been designed for the exclusive benefit of the wealthy. Despite claims of creating more efficient markets, there is nothing in this kind of activity that resembles the economic activity that benefits, and that we can "see," on Main Street.

That economy -- the real economy -- is defined by jobs, actual goods and services, and enduring relationships -- not milliseconds. As Marjorie Kelly explains in Owning Our Future, this economy can be structured for sufficiency (genuinely meeting a community's needs, over a long period) rather than efficiency (trying to make as much money and profit as quickly as possible). The key is developing means of ownership that create genuine wealth, whether that ownership is in the hands of employees, communities, or mission-driven organizations.

Just one example, which Kelly mentions: Evergreen Cooperatives in Cleveland provide jobs and opportunities for low-income residents. Its employee-owned green laundry, solar/energy efficiency, and hydroponic gardening businesses contract with major Cleveland organizations including the Cleveland Clinic, University Hospital, and Case Western Reserve University to provide needed services. The revenues from these businesses stay within Cleveland to create community wealth rather than wealth for absentee owners, mainly supporting residents with household incomes below $19,000 (the federal poverty line for a family of four is $4,500 more than that). An institution that received much deserved recognition at the recent BALLE conference, Evergreen businesses allow employees to purchase an ownership stake in the company after six months of employment (which it helps finance), entitling them to vote on all issues (one vote per owner), to receive health insurance, and to expect $65,000 in equity from profits in eight years of employment.

This kind of economy has many different manifestations. What unites them is the vision of a stable, inclusive community, striving for sufficiency, honoring the needs of people and respecting the natural world. An economy built to endure, not live its life in seconds.

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Biomimicry and Cities

I have found my community -- actually, one of several, but a special one.

I attended the BALLE conference (no, not in Bali, but in Buffalo this year), an event focused on more enlightened, more powerful forms of business.  BALLE -- the Business Alliance for Local Living Economies -- emphasizes the primacy of local over global; employment over profit; we over me.

Among the many highlights of the conference, I want to mention this:

Janine Benyus, who is at the forefront of the biomimicry movement, described a type of communitarian "mutualism" in natural ecologies. More simply: A healthy tree requires healthy soil and other healthy plant- and animal-life to survive. Moreover, the only way for a healthy tree to ensure its progeny also have the opportunity to grow and thrive is for their growth to take place under the same, healthy conditions. Thus, through an intricate system involving other plants, animals, and fungi operating in highly mutually supportive ways, a single tree may help restore and replenish the environment of which it is part for its own survival, for the survival of its offspring, and for the survival of the other living organisms that comprise the ecosystem of which it is a part.

I have long admired Benyus' brilliance, and the ways she combines facts, passion, and beauty to convey her overriding message: Nature has been solving many of the same problems that we are trying to solve in modern society; only it has been doing it considerably longer: 3.8 billion years compared to 200,000 years for us (homo sapiens sapiens). So, it is has developed much better solutions. 

Benyus' description of an ecology of mutualism has gotten me considering how our cities can be similarly oriented. More to the point, how can social enterprises be seeded to provide not only single social benefits (such as better healthcare), but to help provide additional capability to support other social enterprises that are, only apparently, distinct from it? 

Benyus described how precise marking and tracing of carbon molecules shows that carbon that is absorbed in the upper canopy of a forest may be found in low-lying plants half a mile away. This movement of nutrients is biologically elegant and its purpose appears clear: carbon that is captured, shared, and redistributed creates a healthier environment for all plant-life in an ecology -- including the tallest trees that capture and might otherwise consume it all just to serve its own, immediate needs.

Here's to cities re-designed to do the same.

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Metaphors for Reviving Detroit


I was in Detroit yesterday learning more about incubators. I came away thinking about metaphors.

My morning began in TechTown, where Faris Alami gave my research associate, Neesha Modi, and me a heady introduction to all that is taking place. TechTown is at once a research and technology park, a business incubator, and a collection of enterprises part of revitalizing Detroit.

We met in TechOne, a five-story facility where GM once designed the Corvette that looks out over the 12 city blocks that TechTown hopes will become home to all types of vibrant businesses. TechOne is home to IT and medical/biotech companies, as its name suggests, but it is more than that. For instance we met with Marion Jackson and Barbara Cervenka, co-directors of Con/Vida, a nonprofit organization that promotes the work of Brazilian and Peruvian artists by organizing exhibitions and selling their work. We also met with TechTown's former executive director, Randal Charlton, whose new venture, Boom! The New Economy, is helping adults 50 years and older create new businesses. But Jackson, Cerveka, and Charlton--themselves in the 60+ age bracket--might bump into middle school and high school aged tenants of TechOne who are there learning how to apply science to solve global problems.

TechTown also offers support services to entrepreneurs hoping to launch Detroit-based businesses. This program, "Thrive," supports entrepreneurs of all stipes, from one individual who needed support to purchase a truck and start a small transportation company to another who is developing a radiation-free breast cancer screening device.

Our next stop, the Green Garage, is another mixture of place, tenants, and business creation. The Green Garage (the place) was a show room for Model T's, but since the Detroit riots in the 1960s its windows had been bricked in, it had lost its charm, and it had generally fallen into disrepair. You'd certainly never know that today, as it has been spectacularly restored using reclaimed building materials and is worthy of a cover of Architectural Digest.

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And that only begins to scratch the surface of what the Green Garage is. The Green Garage is designed to be a net zero energy building: consuming no more energy than it can produce. This is no idle boast, as the facility is constantly deploying new technologies like solar tubes for lighting and chest refrigeration systems and metering and monitoring everything that comes in and goes out of the facility. It represents the very possibility of creating and operating buildings without imposing a cost on the planet.

The tenants at the Green Garage are carefully selected for their "green" approach to business and for their fit with Green Garage's sense of community. I had a conversation with Chad Dickinson, a transplant from Nashville and new tenant, who has designed state-of-the-art recording studios in a holistic way without using blueprints. Dickinson by Design is his Detroit based business. Using vintage power tools in his workshop in a corner of the Green Garage, Dickinson creates beautiful, "green" furniture from 99% reclaimed and recycled materials. He is using his craft to create affordable, long-lasting furniture and woodworking that create inviting homes, just as these homes can help reclaim the city.

But what might be most remarkable at Green Garage is the work being done by its co-founder, Tom Brennan. A former business consultant, he now rejects the idea of creating businesses in the typical way: idea, business plan, financial backing, make money. Instead, he teaches a type of business creation that places any organization squarely in the midst of the other organizations to which it is connected. Brennan believes that any enterprise must create positive economic, community, and environmental benefits for all organizations in its ecosystem, not simply itself.

This idea is reminiscent of Paul Hawken's description of a series of mutually beneficial business relationships in Kalundorg Denmark. The waste (in the forms of heat, steam, gas, sludge, etc.) from various industrial processes became the inputs for other producers. For instance, gypsum, which was the byproduct of a power plant, was used to make sheet rock. Fly ash, the waste from producing coal, was used in constructing roads. These input/output relationships all arose by happy accident, not design.

Brennan suggests that we need not hope for such fortuitous accidents; these sorts of relationships should be baked in to our efforts to develop businesses. And, again, these relationships should benefit all parties in the ecosystem, not just immediate partners, by improving each element of their triple bottom line.

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Which brings us back to metaphors.

The Green Garage explicitly embraces the idea that businesses are like living systems, not machines. For living systems to thrive, they must take care of themselves and the environment of which they are part.

TechTown, in contrast, conjures up the image of Edison's Menlo Park laboratory. A number of business experiments are taking place in parallel--even rubbing shoulders. There is a sense of energy and pragmatism but, by and large, these efforts form a greater whole mainly in the sense that each success creates jobs in a city that badly needs them.

On the drive from TechTown to the Green Garage, Neesha and I stopped for lunch at the Avalon Bakery. Avalon's funky appearance belies what it is: something of a powerhouse that serves 1000 customers daily and delivers baked goods to 40 additional locations in southeast Michigan.

Avalon embraces the Buddhist principle of "right livelihood," its motto being "Eat Well. Do Good." Avalon has the ultimate respect for the earth, never using anything but 100% organic flour. It is also an anchor tenant of the Detroit "Agri-Urban" movement, bringing social and economic benefits to its immediate neighborhood and beyond for the last decade and a half.

All of which raises the question, "Do these metaphors matter in creating businesses?" That is the question that I'm thinking about right now as I reflect on how a city in need can be returned to greatness.

How do you restore Detroit economically while honoring its culture and community and improving the environment? And how do you balance the impulse to let things grow organically at their own pace with the knowledge that there are many people living on the economic edge?

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Rural Schools Need Help. Here's How.

Matt Salefski was a student in my graduate level class, Solving Societal Problems through Enterprise and Innovation.  He wrote a term paper, which I have modified slightly, that talks about the "hidden" problem of serving the needs of poor, rural students and presents ideas for addressing this problem in a cost effective manner.

The Erb Institute at the University of Michigan along with the Union of Concerned Scientists held a workshop last weekend titled, "Increasing Public Understanding of Climate Risks and Choices: What We Can Learn from Social Science Research and Practice."  A video from the public Town Hall can be found here.

As the name of the workshop suggests, the intent was not to advance the science of global warming -- the science is overwhelmingly clear that climate change is occurring, the changes are due to human activity, and the consequences may be extremely destructive.  Instead, the intent of the workshop was centered on effective communication to help make these ideas more widely accepted and, most importantly, lead to action.

Some sobering statistics (courtesy of Anthony Leiserowitz of the Yale Projet on Climate Change Communication):

  • Various polls (Gallup, Pew, Harris Poll, and others) all show that, since 2006, the public has become less convinced that global warming is happening
  • We are also becoming less likely to believe that human activity is the cause
  • The majority of the public does not believe there is agreement among most scientists that global warming is happening, and that misperception, too, has become more pronounced in the last few years.
  • There are "Six Americas" in terms of general beliefs about global warming, those who are: Alarmed, Concerned, Cautious, Disengaged, Doubtful, and Dismissive.  There are approximately the same number of Alarmed or Concerned (37% combined) as there are Disengaged, Doubtful, or Dismissive (35% combined).

Much of the workshop focused on what social science recommends we do to set the facts straight and, more important, create action. Among the the ideas offered were suggestions to make sure  that all messaging 
  • begins emphatically with the idea that scientists agree that climate change is occurring, 
  • that it is caused by human activity, 
  • can lead to drastic changes and 
  • is solvable if we act
Further, to be effective in communication we must 
  • understand which of the Six Americas we're addressing 
  • appropriately tailor messages for each group and 
  • address them through the appropriate messenger (church congregations are vey open to their ministers, e.g.).
But what can you do?

Eric Pooley, of the Environmental Defense Fund and a former reporter, commented on journalists succumbing to "balance bias," where they feel compelled to balance pro's and con's to the point where reporting becomes mush (my word, not his).  

Thus, there is a need for non-mainstream communication, especially social media.  Already we've seen the powerful effects of social media in the Arab Spring and the Occupy movements.  Young people can play a strong role in trying to stay informed and spread the truth.

More concretely, it's possible to act as a environmental gadfly. Climate change deniers deliberately attempt to disseminate bad science.  (How else can we explain the disconnect between the actual consensus about climate change and the public's misunderstanding?)  Where are these views most likely to be published?  Mother Jones? The New Republic?  Not likely.  What about The Wall Street Journal?  Fox News?  You (and friends) might each "adopt" a news outlet that communicates bad science. Vigilantly track everything they publish about the environment and write in to correct errors in fact.  Every time.

Or: Help communicate what efforts work (or don't) in addressing climate change.  Follow and measure efforts in your own backyard and share them with clearinghouses like ClimateAccess.

Use sources such as this and NEON when it is up and running to stay informed about the scientific consensus and what people can do to effect change.  You do not need to be a geothermal scientist to be informed.  But by being informed and acting on your convictions, you just might help us save the planet.  (Put me in the America that is Alarmed.)
 

Food Gleaning Hybrids

glean  verb:  to pick over in search of relevant material --webster.com

In America, the wealthiest country in the world, more than one in seven families are unsure if they will have enough to eat.  Among these 50 million people are 17 million children.

Yet, our country has more than enough food to feed us all. The USDA estimated that more than one-fourth of all food produced is never even eaten.  Others  put the figure at nearly forty percent, or more than 29 million tons of food wasted each year.
So, there is ample "relevant material" to pick through.

That is where organizations such as Gleaners Food Bank of Southeastern Michigan come in.  Founded in 1977, Gleaners obtains and "banks" surplus food, which it then distributes to other agencies that provide food directly to those in need.  In 2010, Gleaners distributed 36.7 million pounds of food.  Gleaners purchases at low cost about one-third of the food it distributes with the rest being donated by grocers, retailers, manufacturers, the government, and others.

Gleaners is a large organizations with $75 million in revenues, including $55 million in donated food.  Gleaners provides food through nearly 500 partner agencies.  The very scale of its operations requires food to be collected, "banked," and then redistributed to others.  This places an emphasis on non-perishable food.

This is where other "hybrid" models of food gleaning have taken up the challenge.  For instance, B-Line Sustainable Deliveries in Portland, takes a very -- well, Portlandia -- approach to gleaning and to delivery more broadly.  Fully in keeping with its ultra bike-friendly culture, for-profit B-Line's goal is to create sustainable, livable urban communities.  Pulling their 600-pound capacity storage crates with electric-assist cargo "tricycles," B-Line makes local pickups and deliveries, freeing businesses from managing these details, and packing a wallop of carbon savings at the same time. Now, B-Line has entered the food gleaning business.  

By being completely "connected" in the local distribution network within Portland, B-Line is able to use its trikes to make small pickups and timely deliveries.  Partnering with high-end food companies like Whole Foods, B-Line whisks food around the city, providing meals at half the typical cost to shelters and food kitchens, and letting them serve delicacies including fresh, organic produce (which might otherwise be landfilled). B-Line's financing model relies on B-Shares, or tax-deductible contributions individuals and its partners make to its mission to eliminate hunger in Portland.  B-shares can be purchased in one-time, $20 denominations (which provide 40 meals) or on a recurring, subscription basis.

But this is but one of many other hybrid gleaning models.  In Ames, Iowa, fresh, gleaned food is intended to provide the ingredients for Food-At-First's non-profit restaurant.  This is a restaurant that serves all strata of Ames -- from those who would typically go to a food pantry to others who simply want to enjoy a meal out. Customers may donate what they can (helping subsidize the meals of others) or offer to work in exchange for what they have eat.

Many benefits flow from this model, certainly not the least of which is the ability to feed the hungry with food that would otherwise be wasted.  But the restaurant also fosters a sense of community between those of us fortunate enough know that there will be a next meal, and those who aren't.  In many of the problems we face as a society, creating a shared mission among community members from different walks of life is a vital first step.

In their book Cradle to Cradle (read it if you haven't) Will McDonough and Michael Braungart describe a new industrial model where waste equals food. In other words, industrial processes should produce "waste" that can become an input ("food") for producing something else.

Gleaners, B-Line, At-First-Food, and other organizations like them show how this advice can be taken literally -- and nutritiously -- to address a problem we are more than capable of solving. 

A number of us at the University of Michigan are banding together to explore sustainable food systems.  Among us are are faculty members representing Ecology and Evolutionary Biology; Natural Resources; Urban and Regional Planning: Public Health, Political Science, Complex Systems; and Business.  The University is funding five faculty positions to support this work.  Stay tuned as I report on this exciting initiative.


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What We Buy Matters

It's Sunday after Thanksgiving. Christmas must be tomorrow, or maybe "Black Friday" has become "Black Every Day" based on my email inbox and all the TV commercials I've seen the past few days.

Buying stuff is alive and well.

But something else is in the air, something I'm reminded of as I plow through end-of-course papers written by my students in my course on "Solving Societal Problems Through Innovation and Enterprise." That something else is the spectrum of ways we can vote with our wallets to bend corporate behavior.

I believe that we can shape the evolution of a better society by creating better tests and then amplifying the efforts of companies that pass them (worldchangingbook.com). What follows are sketches, inspired from students, that give illustration. As these ideas continue to percolate, you'll be hearing more from me about nouveau consumerism.

Mia B. alerted me to consumerism for "slactivists." These are people who aren't deeply involved with political or social causes but can be induced to participate when the situation is right.

Carrotmobs (carrot: as in reward, as opposed to a stick) are relatively ordinary consumers who, when given a signal, mob a store that commits to using an agreed-upon percentage of the mob's revenue to make "sustainability" improvements like changing its lighting or buying organic seeds to grow and sell more healthful produce. 9carrots (9: I have no idea) operates similarly by letting shoppers find participating stores, buy lunch or a ladder there, and receive "9carrot receipts," which direct 10% of their purchases to the proprietor's energy upgrades and allow consumers to track these energy improvements.

For consumers, these can be fun experiences, maybe a bit time consuming if lines get long (but, hey couldn't that make them more fun?), and they just buy what they already intended to anyway. Companies learn that a more inclusive way of being tested ("I'll shop at your store more if you're more socially relevant") can help their business.

TOMS Shoes (TOMS: as in "tomorrow," not Thomas) creates a generational dividing line. I've polled friends and family in my age group -- above 30, well above -- and no one (and I've asked at least two people) has heard of TOMS. But as Mary Fritz begain her paper, "It's impossible not to notice that all the cool kinds are wearing TOMS." TOMS combines consumer choice with a business model built at its foundation to create a better society.

TOMS Shoes creates a better world through consumerism by donating one pair of new shoes for every pair that someone buys. This model has placed one million pairs of shoes on the feet of poor children.

Why shoes? When kids go barefoot it shows that they're poor, but it also contributes to their poverty by increasing the odds that they'll contract disease, get injured, or be denied admission to school. Other buy-one-give-one companies are sprouting up, selling everything from eye glasses and clothes to books, food bars, and even services like tutoring.

Whereas 9carrots lets consumers know that, if they need Crest toothpaste, they can purchase it "sustainably" by shopping at a particular store, the buy-one-give-one business model shapes consumer preferences. Consumers view TOMS as "social" shoes and seek them out, creating a strong, "hip" brand.

GoodGuide is a step ahead of TOMS, possibly 140,000 steps. GoodGuide lets consumers choose products based on characteristics covering their entire life cycle (from manufacture to disposal),  helping put in place new and better tests of which products are best.

GoodGuide takes publicly available information and lets consumers conveniently use it to compare various products. Consumers choosing coffee, T-shirts, or even cars can make comparisons based on societal/environmental considerations including their toxicity, greenhouse gas emissions, labor practices, etc. All told, 140,000 products are rated using over 1,000 different indicators. GoodGuide's genius? Making its free information operate in the background on consumers' computers and smart phones while they create shopping lists, order items online, or want to spot compare at the supermarket. Social comparisons become no more burdensome than deciding that 2 for $1.50 is a better price than 1 for $1.

Bigger efforts to promote sustainable purchasing, led by other parties, are under way, too. Those will have to wait for another day.

Still, the best way to vote with your feet may just be to walk the other way. Ask Patagonia.

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