Monthly Archives: April 2009

Principle #3: For Some Choices We've Gotta Choose Together

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young women enjoying the hell out of mass transitIf you want to buy a car, you can choose it yourself. Sure, you can get advice from your uncle, who’s like your own personal Car Talk (only without an off button). Or you can watch TV ads that teach you how buying the right ride will bring fun into your life and crank up your sexiness. But ultimately, it’s your own choice.

But you can’t choose a great mass transit system by yourself. If you want to choose taking Metro to your job instead of driving, you can’t go to Mass Transit-R-Us and say, “I’d like to buy a slice of Metro for one person, please.” Either the folks in your town choose together to pay for Metro, or you don’t get to choose it.

(You could, of course, choose by yourself to move to a city that had a great mass transit system, but even that individual choice is possible only because the people in that city chose together to build and maintain that mass transit system).

That’s Principle #3: For Some Choices We’ve Gotta Choose Together.

It’s amazing how often people ignore this simple reality.

Take housing and Smart Growth. Conservatives often complain Smart Growth is a government plot to take away the choices people really want. Look at all those people choosing to move to the ‘burbs, they say. The market has spoken: most folks want a big suburban house with a big lot, not some liberal, low-fat soy chai-inspired fantasy.

But many people “choose” to move to the suburbs even though they love city life. If they could really choose what they wanted, they’d choose an affordable house or condo in a nice, safe city neighborhood. They don’t make that choice because in most communities that choice doesn’t exist.

Why doesn’t their real choice exist? There are several reasons. But by far the biggest factor is that in the 30s, 40s, and 50s, between creating the FHA, shoring up the S&Ls, and building a massive highway system that made it possible to commute from suburban homes to downtown office jobs, the federal government dramatically reshaped the housing niche of the economic ecosystem. If you were white, it was now often cheaper to own your own home in the suburbs than rent an apartment in the city.

In other words, their real choice doesn’t exist today because 70 years ago, voters chose together to reshape the economy to create a new set of choices. There is no reason we can’t choose to create a different set of choices today — but we can only do it if we choose together.

A great economy should give everyone lots of choices. The freedom to make choices by yourself, according to your unique set of values and desires, is something we should treasure. But we can only make some choices — sometimes the most important, most long-lasting choices we will make — when we choose together.

Principle #2: Stack the Deck in Favor of the Good Guys

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Say you’re running a small business and you want to do right by your employees. You want to pay a good wage, offer good health care benefits, support worklife balance. But you’re swimming in an ecological niche where most of your competitors pay crappy wages and no benefits. Treating your employees better would give you a small advantage — turnover is less, and more dedicated, skilled employees tend to gravitate to your shop. But in your niche cost is king, and this advantage is overwhelmed by the costs of treating your employees well. If you live by your values, your business will die.

Right now, the deck is stacked against you. What if we turned it around — tweaked the ecosystem so the rules favored your values? In short, we could follow Principle #2: Stack the Deck in Favor of the “Good Guys.”

Sometimes Stacking the Deck is about just giving good folks a small edge — offering tax credits for businesses that offer certain benefits, creating a fast approval track for developers who’re creating a Smart Growth development. This approach has the advantage that it’s not dictating outcomes — nudging, if you will.

But sometimes nudging isn’t enough. If we want an ecosystem in which offering good health care benefits or good wages isn’t a death sentence for your small business, we’re going to need to reshape the ecosystem so competing by treating workers like crap isn’t an option.

Reshaping the ecosystem doesn’t always mean using the government. I used to work at a union that was helping workers organize low-wage small service businesses in a city. One of the interesting things I learned working on the campaign was that once in a while a small business owner would admit — privately — they were happy about the union drive. They wanted to pay their workers a living wage. But so long as their competitors could pay abysmal wages, they’d lose every contract if they followed their values. If the workers won a citywide master contract, the small business owners could stop competing based on how crappily they treated their workers and start competing on quality of service.

Stacking the Deck doesn’t ask for the impossible. In keeping with Principle #1 — We Can’t Control the Economy — it tries to be sensitive to the realities that organizations face. If small businesses in an ecological niche can’t afford the current cost of health care benefits, we can’t just insist they pay for it. Either we need to reshape the healthcare ecosystem so small businesses can comfortably afford it, or we need to reshape the ecosystem so everyone gets high quality, affordable healthcare and they don’t get it through their job.

And Stacking the Deck isn’t a panacea. We can’t magically create a world where the Good Guys always win. But here and there, we can do what we can to give them a leg up.

Principle #1: We Can't Control The Economy (or, Smokey and Stalin Were Wrong)

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Once upon a time there was a character named Smokey the Bear. Smokey would tell children, only you can prevent forest fires. Be careful with matches and campfires, and the forest will be safe.

Turns out Smokey was wrong — you can’t prevent forest fires. You can avoid tossing a lit cigarette into a bone-dry forest. But fire is an integral part of a forest’s ecosystem. If you try to prevent all forest fires, you create a tinderbox of underbrush. Sooner or later, a small random spark will ignite this tinderbox and millions of acres will burn.

What’s true of forests fires is true of the economy: we can’t control it.

You might say, this is a surprise? Here’s what I’m trying to get at:

  • Sometimes I hear some of my fellow lefties describe how a just economy would work and I think, have you spent any time in the real world? What makes you think we could ever control the economy as much as you’re assuming? Life is not Sim City.
  • At the same time, I’m not saying the market is inherently smarter than the government. This isn’t about the Wisdom of Crowds. Remember the crowds that were convinced housing prices would never go down? It’s not about whether the market or the government is smarter, it’s about forces outside our control — angry gods to which we can make offerings but cannot dictate outcomes.

How much influence can we have over the economy? Here’s a useful metaphor from forest management: controlled burns. Today, forest managers acknowledge we can’t eliminate all forest fires. Instead they use smaller, strategically placed fires called controlled or prescribed burns to get rid of the buildup of underbrush, dramatically reducing the odds of catastrophic fires. In short, by giving up the idea of controlling all forest fires, they’re able to gain a little control over the most dangerous fires.

Regardless of where we end up when we talking about shaping the economy, one thing is clear. We’ve got to start from a profound sense of the limits of our power.

The Economy As Ecosystem

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I’ve been trying to come up with a better metaphor for the economy. To be useful, the metaphor’s got to get us out of the brain-dead government vs. market trap. My first try: the economy as an ecosystem.

Here’s how it might be useful. Say a conservative and a liberal are arguing about the market. The conservative talks about nimble, risk-taking entrepreneurs, the liberal about big businesses that crush the little guy. Both are right – because they’re describing different animals.

The market isn’t a single entity, it’s many different actors with different characteristics. It’s the funny, warm guy who owns the fabulous toy store near my house, and it’s the multinational fueled by child labor in Bangladesh. It’s the start-up creating a really cool green invention, and it’s soul-deadening behemoths like Haliburton that suck millions out of the government. The economy as ecosystem gives us a way to for capture that complexity.

The economy-as-ecosystem metaphor can also capture the world outside of market/government. Take the weird world of Open Source software. It’s at the heart of one of the great recent triumphs of capitalism -– the rise of the Net. And yet it’s based on free property. It’s easy to fit this weird duck into the economy-as-ecosystem metaphor.

And by treating corporations, governments, and nonprofits as actors in an ecosystem, the metaphor helps us see patterns across these actors. Conservatives rant about how the government takes away our freedom. Liberals rant about how much power corporations have over us. But if you’re getting stomped, does it really matter if the boot doing the stomping is the DMV or your health insurance company? Either way you feel powerless. And preventing people from being powerless, not whether government or market is more of a threat to liberty, is the problem we need to solve.

The same’s true for most jobs. I’ve worked for corporations, governments, unions, and nonprofits. Liberal “evil corporation”-speak notwithstanding, I’ve seen more similarities than differences in how organizations treat their workers.

I’m still wrapping my head around the economy- as-ecosystem metaphor. It’s more of an intuition than something I can put into words. And there are too many pieces of my first cut model of the economy that don’t neatly fit into this metaphor. But it’s not a bad place to start.

Next up: thinking about how to shape this ecosystem..

Intro: "Whatever Works" Doesn't Work

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Last Fall, free market worshipers were dealt a devastating blow. Even Alan Greenspan admitted the free market model had failed us.

What should replace this failed model? Whatever Works, says Businessweek.

Call it industrial policy, or use the euphemism of “public-private partnership.” But as America emerges from the rubble of the credit bubble and soberly confronts the task of building a strong, sustainable economy, the new credo will likely be “whatever works.”

But “whatever works” is how we got into this mess. It’s the second-to-last step in a dysfunctional dance that goes something like this:

  • Corporate America, the Right, and establishment Democrats say, Government bad, Markets good! Unleash the risk-taking power of Markets and we’ll all be rich.
  • But they don’t really want to get rid of government safety nets. So these players create the worst of both worlds — corporations can do what they like, but everybody understands that Big Daddy will bail out companies when they get into trouble.
  • Eventually the system spirals out of control and crashes. Out goes government bashing, in comes “whatever works” — we do what’s necessary to clean up the mess, and taxpayers foot the bill.
  • After a brief respite, we forget what happened. And the dance begins again.

If we’re tired of this dance, what’s the alternative? Is there a better way of thinking about the economy?

I don’t have an answer. But given the economic crisis we’re facing, I think it’s time to start stumbling towards one.

It feels a little weird to take time out in the middle of an economic meltdown to blog about how the economy does & should work. I feel like I should be obsessing over the latest details of the bank bailout or the next Obama bill like the rest of the wonky blogosphere is. But unless I’m freakin’ brilliant and can magically win five more seats for the Democrats, my ranting about, say, derivative regulations will have zero impact. Since I’m not one of those poor folks who’s in the hot seat right now, now’s the time to be thinking big & thinking long-term.

Over the next year I’m going to use this blog to work out my Version 0.5 of a model of how to nudge/influence/shape the economy and the actors in it to create growth, opportunity, and justice. I’ll try to ground it as much as possible in real world consequences: how does this model help us build a better world? How does it help in making tough decisions?

A few things about this project:

  • The “stumbling towards” in the blog’s tagline? I really mean it. For at least the first year, I’m going to try to treat this blog as an online intellectual diary — as a place where I can romp in the intellectual mud. It’s going to take me a while to get comfortable with blogging as a diary; it’s so not how I’m used to writing.
  • Although I have a healthy-sized ego, I’m not crazy enough to think I’ve got the answer. This blog is simply a place for me to wrestle with the issues and engage with other folks.
  • I’ve got messed up hands — carpal tunnel, RSI, whatever you want to call it, my hands aren’t built for Net speed. Let’s just say I’m an involuntary member of the slow blogging movement. And if you post a comment or email me, I may not be able to get back to you quickly. If I don’t, don’t take it personally. I’m probably just having a bad hands week.