Isn’t there an inherent contradiction between the interests of business and the environment?

Reinoldo Poernbacher, CEO of Klabin S.A., “Brazil’s biggest paper producer, exporter, and recycler,” says no:

It would be a contradiction if there aren’t common rules for everybody. If we all play by the same rules, I don’t see any contradiction. On the contrary, the way we see all this is as the biggest opportunity in the world, whether for scientists or for creating new jobs—for everything. The key point is that everyone should play by the same rules, and then we will have a big opportunity for business worldwide.

In short, by Stacking the Deck In Favor of the Good Guys, we make it easier for the Poernbacher’s, the Auden Schendler’s, and many other folks pushing for environmental change inside their corporations.

Imagine if Apple said, you can’t write rules to protect you from your iPhone exploding or frying your brain. You aren’t smart enough. All you’ll do is stifle innovation. Would anyone take them seriously? Fuggedaboutit.

Is it because you understand how your iPhone’s physical innards work? For that matter, how the brakes on the last elevator you rode on works? Or the engines of the last jet you flew on? I’m guessing not.

Most of us are ignorant techno-peasants, swimming in a river of quasi-magical objects we don’t really understand. But that doesn’t mean we give manufacturers a free pass.

How do we do it? As a society, we’ve put together rules of the game that foster an ecosystem of players that create checks and balances and stack the deck in favor of us not getting killed and foster innovation. It’s not perfect, but it works.

Why should Wall Street’s “products” be treated any differently?

UPDATE: based on some feedback I got, some folks really don’t get how insanely complicated the iPhone is — they think derivatives are much, much harder to understand. So here’s a reality check. This is the least geeky explanation I could find of just one piece of the iPhone’s innards:

The CPU is based on the ARM11 core, in specific it is the ARM1176JZF-S. The CPU runs at 412MHz to save power, although the core is capable of running at 667MHz. The ARM11 CPU is a single-issue in-order microprocessor with an 8-stage integer pipeline. It’s got a 32KB L1 cache (16KB for instructions, 16KB for data) and no L2 cache. The ARM11 CPU in the iPhone also has a vector floating point unit, but thankfully the SoC includes a separate GPU for 3D acceleration….

Paired with this CPU is a PowerVR MBX-Lite GPU core. This GPU, like the CPU, is built on a 90nm process and is quite simple. The GPU does support hardware transform and lighting but it’s fully fixed function, think of it as a DirectX 6/7 class GPU (Riva TNT2/GeForce 256).

Here’s PowerVR’s block diagram of the MBX:

The MBX-Lite in the iPhone shares the same architecture as the MBX but is optimized, once more, for power efficiency and thus is significantly slower.

Personally, I think comparing the iPhone’s GPU to a DirectX 6/7 class GPU is like comparing a Degas to a Kandinsky –- actually I don’t, because I have no freakin’ idea what they’re talking about. If they’d put this Kandinsky in place of the MBX’s block diagram, I wouldn’t have been any worse off. Although I get software, when it comes to hardware I’m more of an “iPhone pretty, Ogg Like iPhone” kinda guy.

And remember, kids, that iPhone hardwaregeeksprecken is just the tip of the iceburg. Just to make sense of that explanation, you need to know, for example, what a “vector floating point unit” is. Here’s the least geeky explanation I could find of what they mean by “vector” when they say “vector floating point unit”:

In general terms, CPUs are able to manipulate one or two pieces of data at a time. For instance, many CPUs have an instruction that essentially says “add A to B and put the result in C,” while others such as the MOS 6502 require two or three instructions to perform these types of operations.

The data for A, B and C could be—in theory at least—encoded directly into the instruction. However things are rarely that simple. In general the data is rarely sent in raw form, and is instead “pointed to” by passing in an address to a memory location that holds the data. Decoding this address and getting the data out of the memory takes some time. As CPU speeds have increased, this memory latency has historically become a large impediment to performance.

In order to reduce the amount of time this takes, most modern CPUs use a technique known as instruction pipelining in which the instructions pass through several sub-units in turn. The first sub-unit reads the address and decodes it, the next “fetches” the values at those addresses, and the next does the math itself. With pipelining the “trick” is to start decoding the next instruction even before the first has left the CPU, in the fashion of an assembly line, so the address decoder is constantly in use. Any particular instruction takes the same amount of time to complete, a time known as the latency, but the CPU can process an entire batch of operations much faster than if it did so one at a time.

Vector processors take this concept one step further. Instead of pipelining just the instructions, they also pipeline the data itself.

Any questions?

[It] traces a narrative of the changing nature of credit and debit cards, where services and goods became free because they explicitly took on hidden fees and charges, hoping to net enough from a large body of consumers to make profits. Shailesh Mehta [former CEO of Providian, a major credit card company] is quite explicit about this, as are other insiders.

There’s been a lot of fascinating research in behavioral applied microeconomics along these lines recently; it seems that the credit card industry already figured it out a long time ago. Mehta points out that the most affluent consumers pay the least, while the poorest pay the most.

Mehta’s exact words are pretty stunning:

Mehta: Now, if somebody pays their monthly bill in full, and zero interest income, and if you don’t charge annual fee, zero fee income. So you have to make up everything from the merchant side, which you cannot. So what banks ended up doing is therefore they were subsidizing this whole group, because still two-thirds of the people were not making full payment. And that interest income covered the losses of the people who were paying in full.

So overall, the business looked profitable. But … in a strange way, banks were charging borrowers higher interest rates in order to give the wealthy people a break — in a strange way, if you look at it, because the people who have money were paying in full, and they were getting the break at the expense of the people who couldn’t pay in full. [Emphasis added]

PBS: So it was sort of an unintended transfer of wealth.

Mehta: It’s unintended, exactly. I don’t think anybody thought through that. But correct.

Business groups are worried by the potential effects of provisions banning the import of all goods made with convict labor, forced labor, or forced or indentured child labor that were included in a customs bill sponsored by Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA)…
These groups are examining the ramifications of the bill’s provisions, especially in light of the bill’s requirements that a newly created office in the Department of Homeland Security (DHS) annually report to Congress on the volume and value of goods made with child labor, forced labor or convict labor that have been stopped at the border.

Business sources say this reporting requirement could cause DHS to more actively seek out imported products made with child labor, forced labor or convict labor…

One source did expect a push from lobbyists closer to the Finance Committee markup of the bill, and speculated that U.S. industry groups and foreign governments could form ad hoc coalitions to help send a united message.

Ewww , Eww, Ewww!

Aside from being truly morally disgusting, there’s a basic economic problem with this vile approach:

Whereas comparative advantage used to be about natural advantages (ie. one country has optimal soil for grapes, another country has optimal soil for corn), “free trade” encourages countries to create comparative advantage through man-made laws. Some countries, for instance, creates a comparative advantage by letting factories pollute as much as they want, thus encouraging companies to move their factories there from other countries where pollution controls are more serious. Other countries create a comparative advantage by permitting children to be enslaved, thus encouraging companies operating in countries with more expensive non-slave labor to shift operations to a place where they can make products with all but free labor.

The way to stop this is for the world’s largest economies to establish basic rules which everyone else will inevitably follow as a price of admission to those economies’ markets. If the United States says companies cannot sell products in our market made with child slave labor, most companies will cease making products with child slave labor fearing the loss of access to our market which would destroy their business.

Of course, that’s why business has opposed every effort to put basic labor, environmental and human rights standards into our international trade agreements…

According to Wikipedia:

The term originated from the magician’s gimmick of “stacking the deck”, which involves presenting a deck of cards that appears to have been randomly shuffled but which is, in fact, arranged in a preconceived order. The magician knows the order and so is able to control the outcome of the trick; the audience is unaware of the gimmick. In poker a deck can be ’stacked’ so certain hands are dealt to certain players.

The problem is, you can’t control the economy. Sure, there are small pieces of the economy where you can at least temporarily control the outcome. But as a metaphor to build a model around, it implies way too much control.

Oh well. Time to look for a new metaphor.

Grassley recently sent a letter to National Institute of Health saying they need to crack down. Why is Grassley putting pressure on the NIH as opposed to, say, lobbying the AMA? As the New York Times explains,

That is significant because the N.I.H., a federal agency in Bethesda, Md., underwrites much of the country’s medical research. Many of the nation’s top doctors depend on federal grants to support their work, and attaching fresh conditions to those grants could be a powerful lever for enforcing new ethical guidelines on the universities.

In other words, Grassley wants to the power of Big Predator Government to distort the market — and, one assumes, destroy freedom. Senator, feel free to send your next corporate donation here.

As [Kimberly-Clark] CEO Thomas Falk began a speech to an executive-education program at his alma mater, the Wisconsin School of Business, two Greenpeace activists switched his PowerPoint for theirs. Instead of a primer on Kimberly-Clark’s success, the audience saw photos of the Canadian boreal forests that supply the company’s wood, with before (lush trees) and after (a clear-cut moonscape) shots followed by a smiling Falk declaring, “It’s all business as usual.” After panicked organizers ordered everyone out (”There are activists in the building!”), the attendees trooped into a cafeteria where Greenpeace had placed menus for such delicacies as “songbird stir-fry,” noting that half the songbird species in North America migrate to the boreal forests that supply Kimberly-Clark.
…

The Greenpeace the public doesn’t know operates somewhat differently. A decade ago it formed a partnership with a German company to manufacture refrigerators that don’t use chemicals called HFCs as their coolant (HFCs are greenhouse gases, now responsible for 17 percent of man-made global warming but on track to contribute as much as carbon dioxide). Greenpeace first got China’s largest refrigerator-maker to produce Greenfreeze fridges, then one in Japan, then major Western manufacturers such as Whirlpool and Miele, with the result that 300 million Greenfreeze fridges are in homes worldwide. No sit-ins, no banners, no PowerPoint sabotage was required; just business deals. “If Greenpeace is going to ring the siren saying there is an [environmental] emergency,” says Amy Larkin, who directs the group’s Solutions campaign of working with businesses, “we better bring the ambulance. I’m proud of my colleagues who are climbing companies’ smokestacks to unfurl banners, but we need every kind of action.”

Greenpeace can’t say for sure that the possibility of smokestack climbing (and worse) makes companies more willing to cave to the group’s demands, but “what we hear over and over again, especially after a few drinks, is company people telling us, ‘We wouldn’t be talking to you if we weren’t scared of you’,” says Greenpeace research director Kert Davies. Even if the threat is merely implicit, pairing hard-core activism with opportunistic cooperation may be exactly what the environmental community needs right now. The world has been backsliding on climate change for decades, and even a global recession has made hardly a dent in emissions: atmospheric concentrations of carbon dioxide, the chief man-made greenhouse gas, rose 2.1 parts per million in 2008, the National Oceanic and Atmospheric Administration reported last week, essentially unchanged from the 2.2ppm in booming 2007. And, yes, the Environmental Protection Agency just took the first steps toward regulating carbon dioxide, but if you believe that’s going to cut emissions in time and be enough to avert expensive climate change, I have a nice bridge you might be interested in.
…

The good-cop, bad-cop strategy has paid off. Coca-Cola, Pepsi and Unilever have all developed Greenfreeze technology for their vending machines and coolers; Unilever, maker of Ben & Jerry’s ice cream, alone has deployed 2 million ice-cream coolers worldwide, including 2,000 in Boston and Washington on a test basis. (The EPA has to rule that the technology is safe and effective—that the fridges keep food cold and don’t blow up, for instance—before Greenfreeze coolers can be rolled out commercially.) This year Wal-Mart began using a non-HFC refrigeration system in one of its Canadian stores, and is moving toward implementing the technology in the U.S., where its coolers are responsible for more greenhouse gases than its trucks. Greenpeace also got guitar makers, including Gibson and Fender, to press their suppliers to stop using 250-year-old Sitka spruces from Alaska’s Tongass National Forest for the instruments’ sound boards. As for Kimberly-Clark, Greenpeace has persuaded 20 colleges and 700 small businesses, such as mom-and-pop grocery stores, not to carry its products, and the company just introduced Scott Naturals, with some recycled fiber rather than just fiber from ancient trees. Score another for the bad cop.

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.