Wednesday, November 25, 2009

The Smart Grid by 2015 -- is it realistic?

The complexities of going green by 2015 are being driven in part by the limitations of the current electrical grid and the demands that it is being asked to meet.

The video from GreenBeat 2009 via FORA TV below offers an insight into these problems.

Tuesday, September 22, 2009

TOO BIG TO FAIL: Systematic Pragmatism or Moral Hazard

The Economic crisis of 2008-2009 is summarized in the PBS program, Frontline's February 17, 2009 "Inside the Meltdown". This crisis threatened to bring down the American and global economy and lead to the popularization of the phrase "Too big to fail."

"Too big to fail" means that a superorganic entity, "Corporation," is so complex and so intertwined with the other elements that make up the many levels of the superorganic entity known as the "Nation", that the failure of the former could result in the fatal failure or death of the latter.

As the Frontline report makes clear -- when it comes to the superorganic, human moral principles come up against the question of systematic pragmatism. When the survival of the whole depends upon the survival of the one critical part that is TOO BIG TO FAIL, then how do we, as individuals, justify and come to an accommodation with the paradox of personal responsibility vs the greater good?

The questions it raises for us are two-fold:

Should the greed and selfishness which fostered the systematic breakdown of Wall Street's investment banks be punished by letting the individual and institutional immorality be punished by letting them fail regardless of the collateral damage to the nation's financial system? (Moral Hazard)

Or, Should those responsibility for safe guarding the United States' financial system as a whole, step forward and take over the failed system, and, in effect, reward greed and stupidity in order to mitigate the collateral damage and to save the system? (Systematic Pragmatism)

As we come out of the depths of the crisis, it is time to take stock.

Here is the paradox we now face, what was TOO BIG TO FAIL, is today MUCH TOO BIG TO FAIL.

For example: As part of the Bush/Obama solution to the crisis -- big investment banks that failed have been allowed to fail in the case of Lehman Brothers, or forced to merge with stronger ones, i.e. J.P. Morgan/Bear Sterns and Bank of American/Merrill-Lynch. In either case, where there were 5; now there are 2.

Financial innovation such a credit default swaps are sold with no regard to the "product liability" concerns that innovators in other sectors of the economy are held to. Should there be an FDA or CPSC to oversee the manufacture and marketing of "toxic" assets. Should the stock analyst be held accountable for false advertising? Where are the trial lawyers and regulators?

Should the fund managers for the nation's retirement funds, the major investors in Wall Street, be held accountable for their failure as fiduciary agents to safe guard the long term interests of their clients. Should there be special rules for fiduciary capitalism to distinguish it from entrepreneurial capitalism?

Do the survivors of the crisis represent a healthy new heart for our financial system or are they part of the same cancer in the system?

Are the moral ideals of a "free market" and "capitalistic political system" still philosophically valid principles for government today in a global, instantaneous economy where private corporations are free to move assets anywhere at any time without any responsibility to anyone for the consequences?

If governments are the courts and banks of last resort for their people (citizens), can a republican democracy limit their exposure to financial failure while maintaining a principle of moral hazard applicable to its citizens and institutions equally?

Or, Does a systematic pragmatism require a redefinition of the principles of republican democracy and a formal differentiation in the role of government toward different segments of its citizens?

Should any corporation be allowed to become TOO BIG TO FAIL?

These are the questions the American people and their representatives must address in the remaining months of 2009 and will answer in the election of 2010.

Saturday, September 12, 2009

Citizen’s United vs. FEC: America in the Balance .

The United States is about to become a republic of corporations, and not the States nor the people. If the Supreme Court decides in favor of Citizen’s United in the case now before it, the voice of the people will be silenced by the wealth of corporations.

The Supreme Court has within its power to declare human citizens null and void as the owners and source of government power. It will proclaim the CORPORATION as the true citizen of this once great nation founded on the principle of individual human freedom.

This is what is at stake in the case of Citizen’s United against the Federal Election Commission. The case will be argued on the narrow bases of length of the “commercial” as a movie (entertainment) protected under the “free speech” principle, or as political propaganda subject to McCain-Feingold campaign finance law. Yet the underlying principle is between the priority of individual human rights over the rights of class privilege and economic power.

The conservative members of the court are reported to have signaled that they would invite arguments to challenge the constitutionality of McCain-Feingold. Over turning McCain-Feingold, would grant to the CEO’s of American and foreign corporations uncontrollable power to buy the government regardless of the wishes of the citizens of this country.

I find this strange. These are the “strict constructionists” and “libertarian” members who should be pro-individual human being and who respect the only contract that counts, the US Constitution. The purpose of that contract, the only purpose, is set forth in the Preamble, which states:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

That contract is between the people of United States and one another, not between people (humans) and corporations (fictitious persons). Instead these justices appear to be taking the side of the corporations against the true citizens of the country -- born biologically individuals.

The preamble says “ We, the people,” they did it then for ourselves and now we are their “ Posterity”, They “ ordain[ed] and establish[ed] this Constitution of the United States of America” for this purpose.

Human beings are born as an act of nature, or God. Corporations are fictional creatures invented by government and born of state law. When government can create its “fictional citizens” and those “fictional citizens” in turn can buy the government, who needs the people?

Who represents the people’s desire for a more perfect union, justice, tranquility, common defense? Who promotes (much less determines) the common Welfare? And how are the people to secure the blessing of liberty?

Under current McCain Feingold campaign finance law, the individual’s constitutional right is protected and individuals are free to act in a collective fashion to express their preferences. There is no need or reason to grant special status to the corporation when the owners, workers and management can act as individuals already.

Corporations already enjoy special status -- they are allowed to live in perpetuity and those responsible for the corporation are granted limited liability for their actions. No human citizen is granted such special status.

If the Supreme Court sides with the Corporation and empower it to act like a real person without being held accountable as a real person would be, then they will have broken their oath to defend the Constitution. Instead, they will have rewritten the Constitution.

These Strict Constructionist will be legislating. They will be saying that the Corporation is allowed to use its resources to support political activity rather than for the economic activity they promised their investors. Management will become unaccountable to its owners (stockholders) for their fiduciary performance which they were hired to do. We have seen what damage such managerial misbehavior has brought to investors, other stakeholders, and the people of this nation over the last decade. And we have seen the near total lack of accountability and responsibility that they have been held to by government and the courts.

Where and how are the rights of individual citizens to be protected?

McCain-Feingold and similar campaign finance laws, designed to circumscribe corporate political activity, are the only way the balance of power between the individual and the corporation can be maintained.

In my view, strict construction means “WE, the people”, and not “WE, the corporations”. We the people, not some fictional legal construction, own this government.

This case is not that complex. The Supreme Court Justices can decide for the people or for the fictional corporations. Congress has the power and obligation to serve the people by limiting the powers of the vehicles used by those who control great wealth.

What the Supreme Court decides in the case of Citizens United vs. Federal Election Commission will show just how “strict” these strict constructionists really are.

Wednesday, July 29, 2009

The Superorganic Strategy for Survival

Last night, I was surfing the Internet and happened to find this movie, Africa The Serengeti, on Hulu. I'd seen it before and it had a strong impact on me at the time. I found this particular sequence below still has the same impact on me. I hope you can see past the brutality to the honest beauty of life that I found in it.

In 1994, I had the opportunity to see Africa: The Serengeti in IMAX at the Boston Museum of Science. It was a particularly difficult time in my personal life.

In 1984, I began a decade long odyssey that took me from Tucson,Arizona where I had built a life, back to my home town, Providence,R.I. with the idea of beginning a new adventure. But things did not turn as I planned when I began the odyssey. I experienced many changes and disappointments over the following decade. I was still trying to come to terms with these when I saw the movie.

The day I went to the Science Museum, a friend's 10 year old grand daughter was visiting her. We arranged with another couple, who had a niece the same age visiting, to take the girls on a day trip to Boston. The Museum of Science was one of several stops we planned. Going to the IMAX was a spur of the moment decision. A decision that was to be mind changing for me.

The feature film that day was Africa: The Serengeti.. The plot centers around the Serengeti Plain in East Africa, a 500 mile long grassland that stretches from Tanzania in the south to the northern borders of Kenya. The story follows the annual cycle of the plant and animal life that inhabit the plain as they adjust to the seasons and challenges these present.

The stars of the movie are the Serengeti and the African wildebeest (an antelope designed by committee)with a cast of thousands. The large supporting cast include lions, zebra, elephants, jackals, gazelle, vultures, crocodiles,cheetah, etc.. Brutally honest in its portrayal of life on the plain and the relationships between plants and animals, predator and prey, the film is a far cry from the sanitized Disney Wildlife films of my youth.

It was this honesty, more than anything else, which struck me. In the sequence below I experienced an epiphany that had a lasting impact on my outlook on life.

The film is available at and is Sponsored by the Micheal J. Fox Foundation

The scene of the herd trying to cross the river upset and saddened me. It seemed such a tremendous waste and cost to the herd, and especially inhumane for the individual animals. I came away from the movie disturbed. I was also concerned about how the girls had taken it. It turns out that they didn't seem as bothered as I was.

I reflected on the scene and the following scene about the calving. I suddenly realized that the early deaths were required for the new generation to have a chance. This is the strategy that the super-organic entity -- the wildebeest herd and species -- has evolved to insure its survival. It defines the role of the individual within that strategy. Each individual is responsible for its actions and the consequences, Yet regardless of the individual outcome, that outcome contributes to the survival of the herd and the species.

What is the super-organic? It is the wildebeest family, the wildebeest herd, the herbivores, the predator/prey complex, the Serengeti itself. And the Serengeti is but one small super-organic system on a planet, we humans call Earth.

I realized that I could put my own wounds behind me.I had to move on to survive.

Suddenly I saw my place is in something greater than myself.I realize that I am but a small actor in the much larger picture -- the super-organic entity that is humanity.

Tuesday, July 21, 2009

Farewell Walter -- Journalism then and now, a commentary

The passing of Walter Cronkite like the passing of Edward R. Morrow marks the end of the journalist as "individual conscience of the country and a people" here in the United States. Where Morrow marked the transition from radio to TV reporting in the mid-2oth Century, Cronkite marked the transition from network reporting to network TV anchor/managing editor.

Walter Cronkite represents a period in our history when America and Americans were proud of their country and their leaders. When many of the foolish ideals made sense and were worth standing up for, even as we knew things in reality were different (very different). Cronkite exuded a sense of fairness and straight forwardness that those of us growing up with the emerging media of the 60s and 70s appreciated. His excitement about and for life came through in a personal unscripted way that one no longer finds in this overly marketed and packaged culture.

Can an individual replace him today? I doubt it. The times and the environment have changed. The individual no longer counts, only the demographic. The middle has been replaced by the trashing from the extremes. And the shared values of the earlier era have been displaced by the chaos and dynamic of multiple media sources and outlets.

When choice was limited, an individual, such as Walter Cronkite, could raise to the top. But today -- today no one evens knows who all the players are, much less can propose a set of criteria to select the best that everyone or most people would accept.

Today's TV "journalism" is fluff, soft, viciously biased, and factually unchecked. Today the networks, the newspapers, the print media as whole struggle with out dated business models and poorer quality product. The expansion of outlets and sources and the ease of getting YOUR story out, reduces the power, control and quality of editing and end product. The demands of the 24 hour news cycle are well documented and commented upon by those both within and outside the media.The media and the Crowd that create and feed on it demand immediate satisfaction and gratification regardless of the importance or development of the story. Or else they will turn elsewhere.

Everyone and anyone with a cell phone, video recording device, and an link to the internet can be a reporter. Just check out this video.

So where are do we go from here?? The Superorganism that is the Crowd now rules and we find ourselves in the middle of Network, the movie.

Watching the HBO film "John Adams" the other night, I came to realize, as Adams did, the unique qualities of George Washington and how lucky we were to have had him at that particular moment in our history. In some way, I feel the same is true for Walter Cronkite and TV journalism in the mid 20th Century.

Wednesday, July 15, 2009

Customer Service -- Is it dead?

Have you enjoyed your latest visit with the friendly Customer Service Robot?

Did you find yourself going around and round in circles, being cut off, waiting a hour for a human being and then wondering which country you were in?

So what's knew?

It seems that Customer Service has gone the way of all great ideas when put into the hands of large corporations. It is ROIed to death.

The large corporations can turn to its accountants and risk managers and ask them to determine the risk/benefit ratio and cost of a product liability suit settlement. Based on which will be cheaper, fixing the problem with the product or risking customer dissatisfaction, they certainly don't really care about the "customer" nor the "service" only the odds.

. In a mass market, a customer is a commodity, not a brand. Not worth protecting. While we gurus may talk about the value of the individual customer and point to the cost of acquiring a customer and the loss of losing a customer -- the accountants can give management ten reasons why customer service is too costly. If Deeming had been listened to in terms of quality, rather than sold to management as a way to improve efficiency, maybe CS would hold a higher position in many organizations.

It is all ROI. There are many ways to skin the cat or the customer that don't involve the individual customer at all. Tax write offs, transfer pricing, hedges, arbitrage, and other creative accounting that cooks the books and leaves sales and customers out in the cold.

With technological change taking place so rapidly why waste money training the customer service people when the product that will be the source of the complaints will be replaced before we can schedule the workshop for the CS staff?

Let's face it, we grant corporations something God can't grant us individuals -- life in perpetuity. (Think GM, Lotus, Wang, Studebaker)

When you think you can live forever and the only goal is to be profitable anything goes. Us human know there is an end and maybe a reward or punishment so we have to care. Kill the corporation by putting a time limit on them and may be there might be better CS, especially if they get a second life for good service.

Monday, July 6, 2009

IS the superorganic at war with the individual?

Here is an insightful commentary on the influence of environment and basic human development.

Monday, April 20, 2009

The Problem of Power

On November 4th, 2008 the torch of power was passed, again, to a new generation. The torch being passed is enshrined in the Preamble of the U S Constitution which is the purpose and goal statements for our nation.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The Torch has passed to a generation born at the end of the Great Wars of the 20th Century. A generation whose grandparents survived the Great Depression and World War II and who set about rebuilding the post War world order, beginning with the signing of the Charter for the United Nations on June 26, 1945.

It was passed to the generation, whose fathers and uncles, mothers and aunts raised during the coldest days of the Cold War, who face the real prospect of nuclear destruction, who watched the decline of the colonial era and birthing of new nations, and who experienced the heights of national pride when the first man landed on the Moon on July 21, 1969 and the depths of national defeat when Saigon fell on April 30, 1975.

This new generation, born in the last third of the twentieth century, is the heir and beneficiary of the generations whose sacrifice, for better or worse, brought the United States of America at the turn of the millennium to the premier leadership position among the world’s nations.

In the opening days of the 21st Century, America and Americans basked in the hopes that a new century, a new millennium offered. The Cold War had ended. A new technology based on the computer and internet empowered and drove a decade of innovation and entrepreneurship. Cheap oil fueled the globalization of industry and commerce. Global prosperity appeared to be at hand. The new generation is the beneficiary of this legacy.

This generation is also the heir to another legacy. It is a legacy envisioned by the founding fathers. They proposed to a new national model designed to insure that future generations would secure the Blessings of Liberty. This model addresses, in the words of the late Robert F. Kennedy,

The problem of power[which] is how to achieve its responsible use rather than its irresponsible and indulgent use — of how to get men of power to live for the public rather than off the public. (RFK 1964)…

They designed a new national model found on the power of the people and based on the separation of that power into three branch of government. In the first three articles of the Constitution they built firewalls between three branches of the central government, and in Article 4, they built a firewall between the central government and the individual states.

Over the past 3 decades, we have seen the walls erode and power leak and drain away from the institutions they were assigned to and be soaked up by the central executive authorities. We see individuals work their way into positions of power in our government, private and public institutions who are not motivated by any sense of public responsibility, but by the lure of quick personal profit. We have seen individuals forgo the values of personal responsibility for the allure of immediate gratification. Collectively we have watched as a generation sold off their children’s future to the credit card companies and other nations. We have seen and experienced the short sighted leadership of our politician engorge themselves by stealing from the public treasury to insure their re-election.

Wealth is based on the trust of the body politic in their institutions. That trust is missing today. As a result today, we are faced with weakened government, a bleeding financial system, a debilitating war of our own choosing, and a less than perfect sense of union.

For the past half century, we have been drugged out on an ideologically illusion of moral rectitude from both the left and right. The center, which is the source of hope and trust upon which the nation resides, has been eroding. The center is eroding due in part to the commercialization of polarization, and in part by the individual private decision to opt- out of the political process all together.

People do not respond to change easily. Americans do not respond to change easily. We respond to crisis.

9/11 was one of the greatest missteps of leadership this country has ever faced. It demonstrated the institutional rotting that has taken place as the political process has become segmented and commercialized. It had become commercialized to the point where policy is just another commodity hawked on talk radio and blogged on the internet.

9/11 was a wakeup call. Policy has consequences. The American public was prepare and hungry to invited back into the process and make the sacrifices necessary to avenge the attack. Instead, we were asked to go about business as usual and keeping buying stuff. The leadership essentially told the American public to go home, it was not their fight. The government of the people, for the people, and by the people was hijacked by an ideologically bummed out, self appointed elite. That era, I pray, has ended.

I believe that the most important the issue and greatest challenge for the new generation coming into power is to address “the problem of power” head on. The goal for the 21st Century should be to restore “hope and trust” to the political process. This can only happen if …
“We the People of the United States”, commit, or recommit to the central purpose of this nation as spelled out in the Constitutional Preamble “… to form a more perfect Union.” And that our leaders and citizens renew their pledge to support the Constitution through their actions and deeds that

1. establish Justice,

2. insure domestic Tranquility,

3. provide for the common defence,

4. promote the general Welfare, and

5. secure the Blessings of Liberty to ourselves and our Posterity,

These are the criteria, the first principles, upon which the Constitution rests. These are the criteria that all of our elected officials swear when they take their oath of office. And these are the criteria we as citizens, native born or naturalized, pledge to follow as we conduct our lives and judge our leads. This is how America and Americans should judge themselves and those who represent them. And these are the standards by which other nations judge and respect us. In recent times, their judgment has been harsh and their respect for us damaged.

We have faced crises in confidence before in our history and come through it. It has not been easy nor has it been without cost. But each time we have emerged stronger and better for the sacrifice. Maybe if we return to first principles, we can regain our self respect, their respect and our leadership role.

The time to start is now.

Thursday, March 19, 2009

Who will be the leaders of the future?

Business Schools and programs claim that they prepare the leaders for the future. But is this the reality?

The number of B-schools and B-programs has exploded in the past 20 years. In the go-go era of the 1990s, the MBA was the American Express Gold Card. Yet, these programs that promised to create leaders, produced followers instead.

These follower leaders marched over the cliffs of ENRON, Bear Sterns, World Com, Countrywide, etc. like lemmings, taking their investors, creditors, employees, customers and the public into the financial abyss we see today.

Can we expect the B-Schools and programs to change this situation in the future?

Training leaders may not be possible. Developing leaders may be their real job.

Leaders will be developed by those who are willing to follow. Leadership is a nice term but hard to define. Leadership styles within a society or organization change over time both in response to the external environment and the internal demands of the institution being lead.

The leadership literature is full of one size fits all theories. Unfortunately, everyone has a different one size.

Mahfouz Naguib, the 1988 Noble Prize winner in Literature has a quote:

"You can tell whether a man is clever by his answers.

You can tell whether a man is wise by his question."

B Schools have been teaching "cleverness" for the last 20 years, when what organizations and corporations have needed is wisdom. Asking the right question is the skill set organizations today need to negotiate the rapidly globalizing, interdependent business and political environment.

With wisdom comes ethics, with cleverness comes greed. B schools should focus more on training tomorrow's leaders to ask questions, while training the followers to be followers who provide clever answers that wise leaders might consider and question.

Having taught as an adjunct business professor from time to time, I am afraid that most MBA programs reward the clever and are threatened by the wise student.

But then these programs only reflect what the MBA market is asking for in terms of leadership.

Maybe the answer is that leaders will emerge in times of crisis from within the population and in response to the needs created by the crisis. They always have.

But once things return to normal, society will throw them out and replace them with the clever follower leader. Society has always done so.

Tuesday, February 17, 2009

Training for the past or How American education has failed the American economy.

Show me your financials!

Show me your P/L and Balance sheet!

These are the standard questions I have been asking for the past 20 years as a consultant to small businesses, non-profit organizations and individual entrepreneurs. These are the questions a responsible bank or lender will ask of a prospective borrower.

The answer to these questions, however, are more often than I want admit -- is DUH!

We are experiencing a generational tipping point. A tipping point created in part by the failure of American educational philosophy. That is what I want to talk about here.

The average American has NO IDEA, NO Experience, and NO Understanding of the principles of personal finance.

One of the fasting growing business services today is credit counseling. In my 20 plus years as consultant to small business the two most common requests for technical assistance have been financial/accounting and marketing assistance. This mirrors the experience of the Small Business Administration.

These are the areas where most small business fails.

Why is this?

While our economy has been shifting from a mass production and wealth creating economy to a service and mass consuming economy our educational system is still based on the industrial production model.

In an industrial society we need workers, workers who can carry out a set of specific tasks, consistently and continuously. The worker must be trained not only in the skill set required for the task, but for the psychological perspective to accept regimentation. American education has been structured to produce this type of worker. This psychological dimension is building a “positive work ethic,” or “An honest day’s pay for an honest day’s labor.”

Yet today American industry has become global. The type of worker we train here is also available cheaper in the developing world. Or the task itself can be done with technology with fewer workers producing more, more efficiently.

In a service oriented consumer economy very different skill sets are required. These are: Human relations skill, critical thinking and language skills, and artistic and analytical skills. Yet these are the very areas where the educational system is fail and even contracting. Where it is succeeding is producing an oversupply of under-trained consumers.

This is Reagan’s supply side economics at its best and worst. Increase the supply of goods and services and prices will drop and efficiency will result. But as we see today, the world is producing more goods and services than we can consume. We have an oversupply of consumers but the quality of these consumers is deteriorating. That is, their consumption potential is weakened by the quality of their training as consumers.

A consumer can only perform the tasks of a consumer if he or she has the resources seller/producer demands for their product. Those resources are earning from their own product labor (wages and salary), their savings (what they have set aside or has been set aside for them by early generations), and their credit (their ability to borrow against future earning to meet current consumption goals).

All business is based on a relationship between a willing buyer and willing seller. All good business is based on transactions between two informed and rationale parties.

While sellers are trained to sell, they are not necessarily trained to make an intelligent sale. Buyers (general public) are trained to consume, but they are not trained to be informed buyers.

In a consumer society, the educational system should be focusing on training students to become intelligent and informed consumers. It should be training students with the skills and the psychological orientation to be effective and efficient consumers.

So how do we do that?

I am proposing that we reorient the educational system to reflect the need of society for an educated and informed consumer. This can be done by focusing on training build around the personal finance model. Consumers need to be trained in the business skills to effectively perform their economic role in this society. They need to be prepared psychologically to have a “positive consumption ethic.” or “An honest day’s consumption for an honest day’s allowance.”

How do you determine on a personal level what an honest day’s consumption is? What an honest day’s allowance is?

An honest day’s allowance can be determined by dividing your monthly average expenses divided by 720. The average monthly expense is the total of all your basic expenses (food, shelter, transportation, utilities, etc.). 720 is the total number of hours in a 30 day month (24hr X 30days). This tells you what your rate of consumption should be on average. Example: Expenses = $1500 / 720 = $2.0833/hr

Next, an honest day’s consumption is calculated by totaling your average expenses and dividing it by number of compensated hours worked during the month. This tells you how much this tells you how much you have to earn per compensated hour to cover both compensated and uncompensated hours. Example: Expenses = $1,500 / 160 hours (40 hr/wk x 4 weeks) = $9.375/hr

This means that in order to consume fairly and honestly you must net $9.375/hr. If she consumes more than this then she must take form her savings or borrow from the future. If he consumes less than this he is building up savings.

As a consumer, this is his/her value to the economy.

An educational system that focuses on preparing students to balance their roles as both consumer and producer will, I contend, produce a more equitable distribute of wealth for the society as a whole and a better quality of life for the individual.