What does sustainability mean?

Posted on August 9th, 2019
Grain field in Norway

August 6, 2019

I’m currently visiting my Daughter and family in Norway. As always I enjoy observing the differences in cultures, societies and the way people do things in different countries.

Norway prides itself as a leader in clean energy and other environmental practices that are “sustainable”. Norway is a leader in hydro-electric production and electric car utilization. Forty percent of new car sales are electric. Hi-efficiency wood pellet and garbage burning energy plants abound. Trees are fully utilized.

The intensive use of agriculture, forests and aquaculture may not be sustainable by the definition of others. How destructive to wild species and bio-diversity are the Norwegian practices? In other places environmentalists and scientists oppose many of these same practices as unsustainable.  

Clear cutting forests is the major methodology of forest harvest in Norway and Sweden. They do seem to be stopping the planting of non-native tree species, which had been done previously.  Many times, I see second growth forests that are dark, with no underbrush just like the clear cuts of SE Alaska that environmentalists have fought to stop.  With private lands in Nordic countries this is much harder to stop versus public forests.

Alaska has banned farmed salmon to protect wild salmon.  Norwegians bemoan the loss of wild salmon but are the world leaders of promoting farmed salmon.  Has Norway had the same diseases spreading to wild fish and the local farm pollution that other areas of farmed salmon are experience?

Russians are negatively impacting Norway by bringing Pacific Ocean species such as red king crab and pink salmon to Western Russia along the Norwegian coast.  These species are expanding their territory with negative consequences for native species of fish in Norwegian rivers.

Farming is highly subsidized in Norway.  This promotes clearing of natural forest lands into fields of grass, grain and livestock in Norway. There is no diversity of plants on these lands compared to adjacent lands which have incredible flowers, berries and tree diversity. How does this change the flora, fauna, insect and microbiological environment in Norway?

Does sustainable mean “naturally sustainable” as the original balance of nature was?  Or, does it mean sustaining an altered human production mode of agricultural, forest or aquaculture usage? Land could be used as a tree farm and only measured for its sustained yield of one species of tree.  Land could be used as a farm and only measured for its sustained yield of one crop of wheat, corn, rice or potato.  A bay or fjord could be used to farm Atlantic salmon and only measured for salmon production.

Hawaii is an extreme example of an altered land mass and biosphere by humans.  Only a small percentage of land is covered by native plants.  Hawaiians are struggling to keep native plant and tree species alive. This has also extended to native birds. The masses of birds you see in Hawaii are introduced species whether on the ground, in the trees or in flight. Many Hawaiian birds have gone extinct and many more are endangered because the native plants they were adapted for have disappeared. Rats, mongooses, feral cats and other feral animals are also destroying native birds and plants.   

We can find some places in the world where humans have not taken over and totally altered the environment, but these places are increasingly rare.  Even in remote uninhabited islands that I have been to like the Aleutians, South Georgia, Svalbard or the Antarctic Peninsula the impacts of heavy harvest of sea mammals, introduction of species like rats or reindeer have changed the environment significantly. Four hundred years later whales have not returned to Svalbard in any comparable numbers.

Wiping out salmon to a mere shadow of itself in Washington, Oregon and California has altered the environment in ways we can no longer measure or even imagine.  We have no baseline to compare to.  We can go to Alaska and see and measure the impacts of returning salmon runs so thick “you can walk on them”.  When you see the abundance of salmon in Alaska you can then imagine how the Columbia River should look and the tremendous loss humans have wrought on the Columbia River and all the rivers of the west coast of America and Canada.

As I tour Norway and Sweden how can I imagine what is missing or changed from the alterations by humans over thousands of years? Is what I see sustainable or will it be altered again in a few generations? Are current practices “sustaining” more than humans?

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My Book on Leadership and Management Best Practices

Posted on March 1st, 2015

“Six Word Lessons to Build Effective Leaders: 100 Lessons to Equip Your People to Create Winning Organizations”, has been published on Amazon, Kindle and soon Nook and iTunes. All proceeds from the book will fund the Best Practices Wiki.

This book is part of a series developed by Lonnie Pacelli that is aimed at providing succinct lessons in a given field for busy people.

For me the writing of this book was a natural extension of the Best Practices Wiki which is a free public repository of best practices in all fields from many authors. The primary audience is leaders and managers of small medium size organizations – businesses, nonprofits and government organizations. Nearly half of all people work at these organizations and they are critical to the economies of each country. Sharing best practices can help each organization be optimally successful.

More on the book HERE.

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European Update

Posted on May 31st, 2013

It has been a couple of years since I started writing about the failed approach in European to solving their financial and economic problems. The May 31, 2013 headline now blares out the news about record high unemployment:

“Joblessness in the 17-nation currency area rose to 12.2 percent in April, EU statistics office Eurostat said on Friday, marking a new record since the data series began in 1995.”

2/3 of Greek youth are out of work, but so are 40% of French youth. I am surprised in some ways there are not riots in the street. At least the Romans had the sense to keep the poor and downtrodden satisfied with “bread and circuses”.

In the last three years since I wrote about the inadequate bandaids we have seen cycle after of cycle of European “crisis” followed by defensive, late to the game half a loaf solutions. European leaders (and maybe voters shares some blame?). The list includes – Ireland, Spain, Portugal, Italy, Greece (multiple act play) and most recently Cyprus. (Did I forget some???)

Britain is only half in the EU and Euro game and they have bumbled along with a second recession and their own austerity strategy. They really can’t blame the EU since their repeat recession is at their own policy hand.

Investors are likely trying to calculate the bottom, so they can buy in cheap at the bottom. Given the repeated procrastination and ability to get ahead of the curve demonstrated since 2007 (6 years now) by European leaders, investor might want to consider Europe the next Japan which has proceeded to have entered their second lost decade.

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European Debt Crisis – Next Country?

Posted on December 6th, 2011

The European debt drama continues bouncing between a Greek and Shakespearean tragedy.

Pain has finally gotten the upper hand and provoked change in Italy.  Rising interest rates for bonds did what scandal and corruption revelations couldn’t; Prime Minister Silvio Berlusconi of Italy has been deposed.  He has been replaced by Mr. Mario Monti a former EU Commissioner and technocrat who has launched plans to convince the markets that Italy will mend its spendthrift habits and not default on its debts.

Greek and Spanish governments have been overturned by the debt crisis also.  Are bond rates the new revolutionary or anarchist that can overthrow governments?

Italy Makes a Move

On Dec. 4th Mr. Monti announced a three-year package of fiscal adjustments to shrink spending by $ 40 Billion.  These measures include real pain for Italians:

  • There will be a major drive to tackle tax evasion, including a ban on cash transactions in excess of 1,000 euros, down from a current limit of 2,500 euros.
  • Local housing tax reintroduced (3.5bn euros per year)
  • VAT rises
  • Property sales (5bn euros per year)
  • Utility sales
  • Health spending cuts (5bn euros from 2013)
  • Pension ages will rise to 62 for women and 66 for men, and most payments will be unlinked from inflation. The pension age for women will rise to 66 from 2018.

A day later, the Italy’s 10-year bond yield had fallen to about 5.95%, from 6.66% at Friday’s close.

Anticipation of more good news from later this week from European leaders has caused bond interest rates to drop for other European nations.  Only time will tell whether European leaders will deliver on their promises for a permanent fix to the European debt crisis and investors will agree by lowering the interest rates they demand for wayward countries.

Bond Rate Comparative (Dec 5, 2012)

A comparison of country bond yield rates and national debt provides a view of the future.  The countries with low interest rates today are not that far from the abyss.

Country Bond% Debt GDP %

Greece          32.5%        116%  (Bailout)

Portugal      12.8             93%  (Bailout)

Italy               5.8           118%

Spain              5.1           61%

Belgium        4.3           96%

France          3.3           82%

Netherlands 2.6           63%

U.K.               2.3           47%

Germany       2.2           63%

U.S.                2.1           60%

Sweden         1.8           40%

Investors are evidently apolitical and are voting for socialist Sweden!  It would be fun to have the Republican Presidential candidates explain why socialist Sweden is loved by investors.

Safe Haven – It is all Relative

As the table illustrates the US is not much different from other near crisis countries like Spain with 60% debt to GDP. And like Spain, our national debt is climbing rapidly caused by our slow economic growth, low tax income, high government spending and Congressional gridlock.

For the moment the US is a safe haven.  One investment analyst referred to the US as “cleanest dirty shirt”. Global investment funds started flowing to the US in the fall of 2011 seeking to avoid the higher risks in Europe and Japan.  Recently US banks and money funds were pulling their funds out of European banks to reduce their risk as well as European bonds. The fear of debt disaster in Europe is keeping our interest rates low.

  • When will investors start looking at the US and other countries that have high debt and increasing their interest rate demand?
  • What if Europe fails to act and drags itself into a recession, with nasty implications for our weak economic recovery?
  • When will investors get tired of Congressional gridlock as they have with European leader inaction and bandaids?

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Procrastination and the European Financial Crisis

Posted on October 26th, 2011

Procrastination, especially when it involves a painful solution to a looming problem, is a common human affliction.  For example we find it very difficult to decide to sell something at a loss even in a falling market.  Procrastination many times ends only when an urgent crisis is on the doorstep.

The European debt crisis is a good example of how millions of humans banded together as countries collectively exhibit this basic human foible.  European leaders have made several attempts to fix the debt crisis only to have fallen short with their solutions.

This Bloomberg story form Oct. 26, 2011 captures the essence of the cycle very well:

European leaders “have risen to the challenge,” German Chancellor Angela Merkel said. French President Nicolas Sarkozy proclaimed their July 21 summit a “historic turning point” and Luxembourg Prime Minister Jean Claude-Juncker called it the “final package, of course,” to extinguish the debt inferno.

Then they went on vacation. Before they returned to work, the deal fizzled.

This cycle has happened several times now and seems poised to happen again.  Given the complexity of the European Union they need all the countries (leaders and voters) to be ready to make a painful choice to fix the debt problem.  Some prefer to endure the minimal pain of today and put off a painful solution.  The most likely outcome is a final solution when a real crisis is much nearer and leaders and voters are peering over the edge of the abyss.  Examples of enough pain to precipitate a full solution might be – Greece going bankrupt, French bond prices rising rapidly or a run on a big European bank.  Looming financial contagion would be a reminder of the 2007-8 financial crisis that brought on global meltdown and the Great Recession and drive a real solution.

27 European leaders are meeting now at the 14th crisis summit in the last 21 months.

One of the interesting features of this crisis is the role that financial markets play.  Bonds sold by banks, bank stock prices and other financial instruments are sold in the free market place.  The prices on these financial instruments are set by investors who make their own evaluation of value – risk and reward.  For example, regardless of what European leaders say, buyers and sellers of Greek bonds decide what they believe the risk of a Greek default is and therefore what a Greek bond is worth to them.  Investors vote every day on whether they believe the European debt crisis has been solved.

At the end of the day financial markets and investors will decide whether European leaders have truly solved the debt crisis or not.  Politicians may be able to sway voters and the media with emotional appeals, spinnning the message and slick TV ads, but investors have many choices and will decide what European bonds and stocks are worth to them.

A former IMF banker provides a good assessment of this tension:

Europe is finally moving in the right direction but there is a sense that the remedies will fall short of the shock and awe response that is required to stabilize market expectations.

Hopefully my pessimism is wrong and European leaders and voters will address their debt crisis this time and remove the cloud that is stalling economic recovery.

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Financial Reform and American Politics

Posted on April 29th, 2010

The final stages of financial reform is being conducted as a giant game of chicken. Who will blink first? Will it be President Obama and the Democratic leaders controlling Congress? Or, will it be Senate Minority Leader McConnell and his Republican troops? As a lay student of history and politics I find the current political drama over financial reform fascinating and emblematic of our political system.

The financial reform debate in Congress is framed by some interesting backdrop.

President Obama is coming off a sweet and sour victory of winning national health care reform, something that eluded the last hundred years of Presidents. Due to the damaging political controversy the majority of Americans are not totally on board with health reform. Obama’s support has waned from election day until now with slightly less than half of Americans supporting him. But, importantly two-thirds of Americans see him as a strong President. American’s love a winner! (Can Tiger Woods rehabilitate himself by winning golf tournaments?)

Americans whether Tea Party members, Main Street merchants or the vast middle class share a disgust with Wall Street, the financial and industrial titan bailouts and their anger over seeing their houses and retirement accounts shrunk in value. Fifteen Americans that don’t have a job are even more upset and cynical. Confidence in Congress in general is down in the low 20’s nearing a historical all time low point.

Congress and the media have been dragging Goldman Sachs executives and other white collar millionaires from Wall Street who toppled the global economy and helped create the “Great Recession” in a pathetic melodrama. Both Republicans and Democrats berate the titans of Wall Street. The finely dressed dandies of Hedge Funds and Investment Banking firms who send them campaign donations say, “don’t blame us and point the finger at others..” It is clear that greed, double dealing and short term profit taking brought our economy down and are still in play today on Wall Street. There is also plenty of evidence that Wall Street Captains seduced our government into changing the rules over the last twenty years to make it easier for them to make more and more money. The few government regulators left with power to prevent damaging abuses were asleep, told to look the other way or as now revealed watching porno.

The collapse started in 2007 and beyond the bailouts nothing has changed. Our President and Congress know they must do something before the November 2010 elections.

Who will blink? Is this really about policy differences? Will the Republican Minority which can block the vote in the US Senate use their leverage to demand policy changes? Will Obama and Senate Democrats hang tough? Is either side willing to continue the bluff and walk away with no bill?

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The American Divergence

Posted on March 20th, 2010

America is splitting into two diverging economic cultures. Cities of a million people date back two thousand years and the dominance of the urban center over the country is not a new trend. Urban culture is being redefined by the advent of the knowledge worker. The role and importance of rural America is changing as redefined by the new urban wealth, dominance and viewpoint of the knowledge worker.

The old America of previous economic engines; resource extraction – mining, energy, forestry, fishing, agriculture and 20th century manufacturing are being muscled aside by the new titans and new majority. Technology has allowed all old industries to modernize and reduce the amount of workforce. Agriculture is the most extreme with the American food basket producing enough to feed Americans and 22% more for export with only 1.9% of the workforce (this volume results in .7% of national GDP). Robots, hi-tech machines and computer technology have aided manufacturing to reduce its work force also. With the reduced size of the workforce in the old economic engines, the societal directions become increasingly under the direction of the urban knowledge dweller. (For comparison, US gross agriculture revenues are 246 B, WalMart $ 288 B and Exxon $ 270 B)

A secondary force, as a result of American economic success and global supremacy, is also reducing the power and role of the old economic engines in America. Changing economics have altered the American production and consumption balance. The strong US dollar means the US finds it harder to export goods and easier to import goods – a two edged sword for manufacturing based in the continental US. Free trade promotion thru NAFTA, GATT, Favored nation status for countries like China have done their share to promote more imports of finished goods for the US economy. US companies have invested overseas to produce goods for both US markets and foreign markets.

A US company that moves its manufacturing offshore still retains its “knowledge workers” in the US, but not its production personnel. The employees retained in the US are college-educated staff for management, finance, marketing, administration, accounting, R&D and other office functions. The brains stay here and the brawn is located in a low cost economy offshore.

To the urban knowledge worker the world looks different. Life is good. Pay is great and benefits are good. Education has stimulated awareness and knowledge about the environment. Time off has generated demand for recreation areas, travel and playgrounds. The urban dweller yearns and looks forward to the playground of rural America. (Obviously there are many low paying service jobs in urban areas, but these workers are not driving the redefinition of US culture; they just try to survive in an expensive urban setting.)

The urban IT worker lives in a very gentile world. The work environment is clean and neat. Many work in what are called “campuses”. This is an orderly and clean world where things are done “right”. Gardens and greenbelt adorn modern buildings in both government and private urban settings. Tax revenues are available in urban centers to implement progressive social, economic and environmental policies.

These urban IT dwellers find it increasingly hard to understand and tolerate the old world economy. Mines, cutting forests, tilling the land for farms, damming rivers make little sense to a Microsoft campus dweller or someone raised in Silicon Valley, Hollywood, Wall St corridors or the Boston’s collegial world.

There are many knowledge workers – education institutions; health care; hi-tech, bio-tech, professionals; financial; management and consultant companies, entertainment, government management types, researchers. Education, computer, information, travel, working with idea and information are all characteristics shared by knowledge workers. These people are very distant, maybe even a generation distant from the old life. Less and less people know how to fix a flat tire on a bicycle, plant a vegetable garden, can food for the cellar or butcher a chicken. Urban workers are more and more removed from what seems a dirty, grubby world.

A perverse economic spiral plays out in rural America. Farmers, loggers, miners and other resource workers of rural America work hard as all Americans do to send their children to college to get ahead in a competitive world. The best job opportunities for college graduates are in the growing job markets of the cities. The majority of educated children have no desire to return with their college education to run the family farm. On the flipside, Ted Turner, Charles Schwab and others of the super wealthy urban class can afford to buy up farms and forest in rural areas for playgrounds. Ted Turner alone owns 110,000 acres of land in Montana and administers it grandly as a private park, replete with his own biologists. The wealth of the cities at least returns to allow the retirement and exit of the family that sent their children off to college.

Those urbanites less wealthy than Ted Turner may simply be able to afford a second home, a cabin or vacation time in rural America.

It is little wonder that two different mentalities are developing between rural and urban dwellers. Their economic fortunes are quite different and life is seen through a different prism. The economy and employment that sustained rural America are shrinking and in some cases dying. Employment is booming, population increasing and housing prices are skyrocketing in urban America. In many cases, the replacement industry in rural America is a service industry to care for the leisure needs of urban knowledge workers that are wealthy enough to recreate in rural areas.

Farmers still have enough economic clout in the US Congress to maintain billions in annual subsidies. Studies have shown that these subsidies equal 50% of the profitability of US farmers. There are significant pressures on farm subsidies from those that desire to reduce the federal deficit and global World Trade Organization pressures. It is very likely in coming decades that farm subsidies will erode and foreign food products imports will increase. Farmers will seek mechanization and other methods to reduce labor. Meanwhile industries like high tech, biotech, financial services and professional services that are the engines of urban economies will continue to grow. The gap between urban and rural pay scales will widen and the new jobs will continue to be in the cities.

What will be the disparities in another two decades? How will the evolving attitudes conflict and congeal in the two Americas?

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