The 2011 Academy Awards, hosted this year by acting ingénues James Franco and Anne Hathaway, was an attempt by the Academy of Arts and Sciences to reach out to a new, younger audience. By that measure, the Academy failed miserably, reaching 12% less viewers in the 18-49-age bracket. Ultimately, the Academy’s strategy, to reach all audiences at once, was baldly transparent and ineffective. The projected image of Bob Hope, who produced the funniest lines of the night, represented the Academy jumping the shark.
While The King’s Speech, a film about a British monarch overcoming a speech impediment, took the biggest honors of the night, the most competitive and interesting race was for Best Documentary. Presenter Oprah Winfrey said that, “It has never been more important for us to see these stories to help us try to make some sense of the world we live in.” Five strong films entered, including Sebastian Junger’s Restrepo and Josh Fox’s Gasland. Inside Job, Charles Ferguson’s searing inquiry into the roots of the financial crisis, took the Oscar. As Ferguson accepted his Oscar, he started by saying, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong,”
One can’t help but think that JP Morgan Chase (JPMC) foresaw Inside Job’s victory and the speech by Ferguson, as no less than four times during the Oscar broadcast, their “New Way Forward” commercial appeared, promoting JPMC as a key driver of our ‘recovery:’
Conveniently, JPMC released their annual 10-K financial statement one day after the Oscars, so we can put their claims in perspective. In 2010, JPMC held just over $50 Billion in wholesale commercial loans to United States businesses, a significant drop from their commercial commitments in 2007 and 2008. While they are committed to making $10 Billion available to small businesses, that doesn’t mean that they will actually make the loans. Additionally, their offer of a second review seems reminiscent of the situation when you aren’t getting the assistance you need on the phone and ask to speak with a customer service representative’s manager. Why is this process necessary, and what does it actually offer to the small businessperson? More importantly, why are small businesses having trouble getting access to money in the first place?
The quandary over small business loans goes to a larger question: what did the bailout of our financial institutions, through the Troubled Asset Relief Program (TARP) and FED actions, accomplish, if we don’t yet have a strong recovery? After the financial crisis the Federal Reserve and the Treasury Department bailed out many of our largest banks, including investment banks, through funds from TARP and through access to cheap money from the discount window at the FED. Many of the banks were overleveraged, and these programs allowed them to recapitalize. In essence, the government allowed these banks to repair their balance sheet by printing money, and forcing the public to take the loss through devalued currency. The actions in late 2008 and early 2009 by Hank Paulson, Ben Bernanke, and Tim Geithner certainly prevented a collapse of our banking sector. The TARP program remains universally unpopular, despite reports that even losses from loans to AIG won’t top $14 Billion, a significant drop from earlier estimates.
During the last few years, banks like JPMC and Goldman Sachs have made tidy profits and made tidy bonus payments, but that hasn’t necessarily translated into an economic recovery. We have stronger banks, but not a stronger recovery. The Excess Reserves of Depository Institutions (EXCRESNS) is a valuable lens with which to view this quandary. In 2009, after nearly 50 years of being near zero, meaning that banks lent out as much as they could based on their reserves, the data jumps to hockey stick proportions. You don’t have to believe me, you can see the data yourself on the FED’s website. Many banks are standing pat on reserves that they could be lending.
While JPMC isn’t actually saying much in their Oscar ad, they do sound earnest and committed to a recovery. I wonder how much that ad cost? JPMC paid to lobbyists $6.2 Million in 2009 to help make the Dodd-Frank Financial Reform Bill to their liking. What if JPMC lent that money out to small businesses in 2009, instead? In retrospect, I think the Oscar voters missed out on an award-winning acting performance by JPMC.
What can key an economic recovery? Lets look at the stimulus efforts to date, made up of both tax cuts and direct government expenditures. John Maynard Keynes argued that both tax cuts and government spending would help to increase the GDP, but that government investments were far more effective, driving a more powerful Keynesian multiplier. In essence, the expenditures recycle themselves more directly into the economy and have a larger impact, whereas tax cuts are often put into savings or used to pay off debt meaning that less money gets recycled back into the economy.
Republicans often argue that tax cuts ‘pay for themselves,’ relying on the unsubstantiated and discredited ‘Laffer curve;’ for example, the Republican House does not require tax cuts to be paid for in regards to the deficit. With Republican governors continuing to reject direct government stimulus, as Wisconsin and Florida governors recently did with high-speed rail money, this means that our efforts to stimulate the economy will still hurt the deficit, but they will not be very effective.
However, the recent ‘Obama’ tax cuts, the extension of the Bush tax cuts including those on the top 2% of wage earners, amounts to Supply Side economics redux. Capital gains cuts are similar in their effect to tax cuts, as the windfalls go to wealthy taxpayers who won’t spend the money immediately. Supply Side economists argue that by reducing tax rates and eliminating regulation, businesses will be able to hire more workers, and increase the GDP. To date, after many rounds of tax cuts for businesses, unemployment (and more importantly, underemployment) remains high. Looking at the big picture, the actions of our government in response to the financial crisis is a bit like the Academy – trying to please a lot of different audiences at once, without delivering a clear, concise, and effective message.
Paul Greenberg’s fascinating new book Four Fish: The Future of the Last Wild Food, examines the reasons why humans chose to seek out salmon, tuna, bass, and cod, the four staples of our seafood diet, and questions the sustainability of our efforts to continue doing so. I recently lived in Japan for three years, and had my fair share of Toro sashimi, fatty blue fin tuna, along with other delicacies. Having lived in that seafood-based culture, and having fished for salmon myself, I understand the appeal of the current staples of seafood. I was really impressed with the background and the framework with which Greenberg examines these fisheries.
Greenberg grew in Connecticut, fishing along its namesake river (Connecticut comes from the Algonquin word quonehtacut, or ‘long coastal river’), and developed a love of fishing from an early age. He understands fisheries management and aquaculture, and deftly explains how our fisheries came to be in their current state. At root, the book is examining four fish, “Or rather four archetypes of fish flesh which humanity is trying to master in one way or another, either through the management of a wild system, through the domestication and farming of individual species, or through the outright substitution of one species for another.” In fact that is where Four Fish is particularly insightful – Greenberg identifies some potential sustainable aquaculture candidates that are efficient and safe (for both humans and the marine environment), that you probably never heard of, like barramundi and Kona Kampachi.
I recently attended a public hearing about proposed fisheries regulations in Rhode Island, and what became immediately apparent to me was that most of the audience, stakeholders in the fisheries industry, spoke an entirely different language than the fisheries scientists, employees of the Rhode Island Department of Environmental Management (DEM). There were both commercial and recreational fishers of a wide range of aquatic species, ranging from soft-shell clams to cod, stripers to monkfish. Their individual economic incentives often conflicted with each other; party boat captains relied on a large bag limit of tautog, because the state regulations were more liberal than in neighboring states; divers and waders for shellfish fought for different season opening dates, to get an advantage on each other. The fisheries scientists spoke of maintaining sustainable fisheries through regulation, while the fishermen complained they would be unable to make a profit with ‘micromanagement.’
Greenberg’s Four Fish examines the economic aspects of fisheries as well, and he recommends that artisan fishers replace factory trawlers; subsidized fishing fleets should go away and in their place, respectful fishermen-herders who will steward the species as well as catch them. He also argues that blue fin tuna and other species that travel across oceans are unmanageable, and should be protected like tigers and whales. Having seen the Japanese fish markets, I know how difficult that will be, but mercury-laden tuna is simply not sustainable or manageable. Here in Rhode Island, fishermen at the hearing spoke of resources and jobs; while they may sometimes disagree with the fisheries scientists, both will need to work together in the long term to create sustainable fisheries, sustainable jobs, and sustainable seafood. Ultimately, that will require “a profound reduction in fishing effort,” and open-minded consumers.
Last night I attended a public comment hearing on some proposed fishing management regulations, and I could hear the tension that exists between our economy, reliant on steady growth, and our diminishing resources. The proposals, presented by RI Department of Environmental Management (DEM) administrators, were framed by scientific assessments of the health of fisheries. The fish were referred to mainly as biomass and resources. The hearing was attended by 50 people, mainly fishermen and women, but also citizens concerned about sustainable fisheries.
Critics of DEM regulation presented arguments about the rising cost of fuel, and the need to maintain a high harvest in order to make a profit; many of them did not agree with the DEM about their fishery assessments. Ultimately, the administrators and the fishermen seemed to be speaking two languages, much like our national political discourse. When the DEM administrator chairing the hearing referred to ‘management,’ fisherman recoiled as if the word meant ‘closure.’ The DEM assessed fishery populations scientifically, whereas the fishermen offered anecdotal evidence about days when the fish come and days when they don’t. One shellfisherman asked a DEM scientist to explain where the evidence of soft-shell clam underpopulation was.
The hearing was an exercise in democracy, one that both sides seemed familiar with. The DEM administrator chairing the hearing knew many of the fishermen by name, including several leaders of trade associations. Those trade associations take different positions on DEM regulation, but the word ‘micromanagement’ came up many times. Several members of an Advisory Panel, which worked prior to the hearing to offer recommendations to the DEM on the proposals, spoke of the long hours spent trying to identify the best path forward. Several veterans, involved with RI fisheries and regulation going back to the 1970s, spoke of the ‘give-and-take’ that happens with these regulations over time. The process itself offered by the hearing gave me some hope about the ability of our system of government to work ‘for the people and by the people.’ Ultimately, that is the only way we can move forward, especially with the great challenges we will face in coming years.
Nadav Savio, a Google engineer, wrote this insightful post about Apple, Google, and blind spots:
“It’s been said that Google doesn’t get ‘social’ and, though I think that is vastly overstated, there is truth there. Similarly, I’d say that Apple doesn’t understand the internet. Well I have a simple theory about it. There’s a cliché that everyone’s greatest strength is also their greatest weakness, and I believe that applies as well to organizations as to people. Take Apple. They make amazing, holistic products and services and one of their primary tools is control. Fanatical, centralized control. Control over the design, over the hardware, over the experience. And that’s exactly the opposite of the internet, which is about decentralization and messy, unfiltered chaos. Google, on the other hand, gets the internet, but has trouble with humans. And I’d say it’s not so much because it’s an engineering-heavy organization or that Google doesn’t know how to have fun (both reasons I’ve seen stated publicly). I think it’s that one of Google’s biggest strengths is in search, which is largely about things like precision and recall, about stitching the chaos of the internet into some semblance of order. But social interactions happen in the variance, in the messy spaces that seem meaningless. Much social meaning is carried by phatic communication and that is exactly opposite to what Google does, which is to optimize signal vs. noise, looking for the meaning and discarding the meaningless. Presumably, we can find the undoing of other organizations in their strengths. What, for example, is Microsoft really, really good at? Or Facebook?”
This is a brilliant analysis of two great companies, who are really good at certain things; somehow that greatness meets its limits. This is a good lesson for all of us. We know what we know, and we know what we know we don’t know. However, what we don’t know we don’t know is what kills us. This is our blind spot. Unfortunately, unless you question your assumptions, you will bump into your blind spots, often when you least expect it. It really pays to be open to the possibility that a colleague, a friend, an associate, a supplier, or a stranger might have the insight to open your eyes. Sometimes, when we make mistakes, we wonder why we didn’t recognize it earlier; it may be that we actually could have recognized the error, if only we had been open enough to understand the insight.
I was born in a trailer park, and my family did not have resources to provide me with the latest technology, or to travel to exotic destinations around the world. In fact, while I have since travelled to several ends of the Earth, to this day I have still not set foot in Europe, I have not gazed upon the fine art in The Louvre. However, my family did impart upon me an affinity with the Natural world, apart from human civilization.
As a child, in Northwest Pennsylvania and Western New York, I spent summers in the woods, in hills and preserves named after Iroquois tribes, gaining an understanding of the interconnectedness of life. I was raised in the Episcopal Church, but my church introduced me to the wonder and spectacle of landscapes like Death Valley and Joshua Tree National Park. To this day, I consider those deserts to be the most sacred space I have encountered.
The human technological construct is a bubble that we lose our selves in, that we tend to divorce our actions from their consequences. I spent several uninterrupted weeks in Death Valley, and that experience was the first that burst that bubble, that construct, and made clear the extent of which we fool ourselves. The scale of humanity becomes clear in a landscape as grand as that one.
In the last ten years I was fortunate enough to travel across the Pacific and Indian Oceans; once again the bubble was popped, because the bubble of our vessel was so insignificant and vulnerable as compared to the massive oceans, and yet the crystal clear sky, with its infinite stars, made clear the vulnerability of all life on Earth. These spaces, apart from human civilization, wild and open, I hold to be sacred. While I don’t get to travel to them as often as I would like, these spaces hold more spirituality for me than any church or human construct. Despite all the trappings of our technology, I cannot forget them.
Well, once again I am off to Vermont for the weekend, to Brattleboro, where snow and Nordic ski jumps are normal happenings. Stay frosty, friends, I’ll be back next week.
You may have missed it last week, but there was an excellent piece on the opposition to smart meters in California in the New York Times. PG&E has installed 7 million smart meters in California since 2006; they transmit real time data on consumers’ electricity use to the utility, helping them to allocate power more efficiently. The goal is to give consumers information about how they use power, and incentivize them to use less of it. However, opposition to the smart meters comes largely from two different constituencies: Tea Party conservatives and consumers afraid of EMF. Initially, you may remember, opposition to smart meters came when electricity bills increased; critics first charged that the meters were inaccurate, but it soon became apparent that the old meters were undercharging. Now, opposition from Tea Party conservatives to smart meters is predictable; doubtlessly PG&E is just the latest Big Brother out to destroy their lives. However, the anti-EMF opponents are a constituency that PG&E can work with, and should have worked with. After all, it would be easy enough to find a way to connect these meters to broadband lines.
However, if we step back and examine this problem, a lot of the fuss comes down to stakeholder engagement. Both Santa Cruz and Marin Counties put up obstacles to these meters because PG&E did not effectively engage with them beforehand. Ultimately, we are going to have difficulties adapting to our warming climate; as we make policy changes, it will be more important than ever to properly engage and address concerns before and during rollout. Unanimous consent is probably an unrealistic goal, but acknowledging and working with people is a must.