Friday, October 31, 2008

The Challenges and Opportunities of Being Green

This is a crosspost from my blog
Posted Thursday, 2008-October-23

Being Green poses a huge challenge to most of us. It means changing what we do at a very basic level: how we think about ourselves.

In the 1970's "customers" were renamed "consumers," and we were told that we live in a "consumer society." That small change in our verbalization of the definition of ourselves changed how we acted.

The Consumer Mindset

It also changed how we think about the economics of what we do: We buy things. Bumper stickers reflect the trends of ours thoughts, and the quintessential 1990s bumper sticker read, "He who dies with the most toys wins."

In our consumer society, we really do "shop 'til we drop." We buy carloads of cheaply and poorly made goods so that we can buy more. For example, we buy dozens of toys for the children, grandchildren, and pets in our lives in fear that we will somehow slight them or betray our love of them if we buy one or two really high-quality gifts. We not only live-with we revel in planned obsolescence: "This will wear-out soon and I can get a new one." City dwellers rent storage lockers to hold the things we no longer use but cannot yet throw out. Most of our purchases enter our garbage stream to be preserved in our over-full sanitary landfills. A few side outlets such as yard sales, FreeCycle, eBay, and Craig's List postpone the landfill graveyard.

We are conditioned, perhaps addicted, to buying and consuming. In today's world, you cannot get further away from being Green.

Consumerism versus Production

The "shop 'til you drop" mindset has a name. In the United States, the consumer-oriented economic model that has dominated for three decades is called "consumerism". Consumerism emphasizes what is consumed by the population over what is produced by the population. The irony of this is that many large companies, and definitely the financial markets, have forgotten that workers, including their own workers, are their customers. They do that often, so this is not surprise.

Consumerism so overshadows production-based economic models as a basis for making policy decisions, especially in the past seven years, that production-based economic models have been rendered ineffectual. Even the much ballyhooed economic (mostly tax) model, "supply-side economics," introduced politically and in tax law in the early 1980s and reintroduced in 2001, failed. In this tax model, taxes on corporations and the nation's wealthiest are lowered to stimulate increased investment in production. Unfortunately for the United States, investors put this money in China, India, and other countries, weakening US production and worsening the national economy.

An Unintended Result

Manufacturing, clean and dirty, moved to those countries where those untaxed dollars flowed. The products of that manufacturing are shipped back to us to buy and dispose. The remaining manufacturing base in the United States complains that they cannot compete with foreign goods, which is true. In its October 1, 2008 nation report on manufacturing, September 2008 Manufacturing ISM Report On Business® PMI at 43.5% shows yet another step a disturbing trend of lower US domestic manufacturing resulting in more worker layoffs and fewer jobs created. This is the type of information that sinks the financial markets.

In our current economy, this is not a new phenomena as this article from 2002 U.S. Manufacturing's Decline Is Business as Usual for Bush Administration by William R. Hawkins demonstrates.

This result, forecast by many, while not intended was inevitable because the United States has been moving (at a tortoise pace) to being green for over four decades. Those who owned the dirty industries and old manufacturing plants that spewed pollutants saw no other way to continue than moving to countries without effective pollution laws. Our aging production plants needing to be replaced were replaced, just not here. This industry mindset is from a failure of vision not from a failure of technology or consumerism.

The Green Opportunity

Being Green presents a huge opportunity for manufacturers, workers, and consumers. With most of the dirtiest of our manufacturing offshore, we can begin again.

In production terms, some parts of the country, notably in the "Rust Belt" have extremely high unemployment rates, which means workers are available. In consumer terms, this means that there are a lot of people not buying all they want to buy, and many consumers prefer to buy green.

Jean-Baptiste Say (1767-1832, French, businessman and economist) observed that there can be no demand without supply. Essentially, Say's Law states that more money chasing the same amount of goods causes inflation, where more money chasing more goods creates economic growth, not just at the level of consumption, but at the level of production. (This is the root of Supply-side economics.)

John Maynard Keynes (1883-1946, British, economist), inverted Say's Law, stating that demand creates its own supply.

As a business owner, the reality that both of these statements are true hits me in the face. The fact that we sell CSA (Consumer Supported Agriculture) shares taps into a desire for fresh food (a very green idea) and availability inspires people to buy our CSA shares.

The economic and financial meltdown we are experiencing now is the best economic climate for the change to being Green. Green products produced locally in new green manufacturing plants will aid local economies while changing how people perceive of themselves.

An Old Economic Model for a New Economy

The Green Manufacturing (perhaps the whole Green Society) should lift an idea from Henry Ford. The story goes that on Jan. 5, 1914, during a recession much like ours today, Henry Ford etched his name in history by publicly creating consumers out of his workers. This economic view came to be called "Fordism."

David Leonhardt retells this story in his New York Times article of April 5, 2006

The Economics of Henry Ford May Be Passé
"Mr. Ford announced that he was doubling the pay of thousands of his employees, to at least $5 a day. With his company selling Model T's as fast as it could make them, his workers deserved to share in the profits, he said.
His rivals were horrified. The Wall Street Journal accused him of injecting "Biblical or spiritual principles into a field where they do not belong."

Green Economics

To be transformational, Green Practices, Green Products, and Green Consumers must meld into Green Economics. The same force that changed us into "consumers" can make us "Green." Every part of society has to be touched to create a Green Society. Creating green jobs that produce green products that green consumers buy is key to both the green movement, and the economic health of our communities. We cannot compete with the new dirty factories in China, India, and elsewhere. It is no longer economically possible or desirable.

Being Green is much more than buying Green. Instead of being Green Consumers, we should be simply a Green Society that both produces and consumes green products. It is an economic system that favors those who can see beyond where we are today. It favors those who act on their own, and become first, second, and third movers.

Green products can include energy, something that I am becoming quite passionate about (I am making notes on that blog right now), clothing, homes, office buildings, transportation - including private vehicles, and computers. Manufacture, distribution, sales, and purchase of all these things, anything you can imagine should be part of our Green Society. We have been change leaders often in the past 250 years, and there is no reason that we will veer from this path. Just as we lead the information technology revolution, we will lead the Green Revolution. It's just how we are built. We will compete with great success in the new arena of Being Green.

Marilyn Holt
Abundantly Green
Holt Capital

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