Monday, January 28, 2008

Tata Nano and Global Warming

I have been hearing about the $2,500 Tata Nano for a few years now with a sense of unease. The idea of a car that affordably just seems like an unmitigated disaster. With the Nano's unveiling on the 10th of January that unease has expanded into a sense of doom and forboding. However, despite my fear I think that this is an excellent opportunity for us to confront ourselves and look at the underlying logic of our patterns of consumption. By thinking about what the world looks like with Indians moving toward our standard of living we can more clearly see that our society is unsustainable.

Deep down most of us would rather middle class Indians not own a car but we all pretty much understand that this is not a sensible position to take. Why should your average Indian who produces 1.2 tonnes of carbon not enjoy the same priviledges as North Americans who produce 20.0? It amuses me to hear people scorn Tata motors over this. They are producing cars that as a proportion of total income cost the average India much more than what GM or Ford charge your average North America but I do not see people jumping on the local manufacturers when they introduce a new model.

To tell Indians that they should take the bus while we happily cruise around in our oversized SUVs would be ridiculous. Maybe we should start by looking at our own overconsumption before getting into the business of countires like India and China. No doubt India and China represent a massive number of people and have the potential to cause huge issues as they reach toward North American consumption but we have no moral authority to tell them not to aspire to our level of affluence. The answer to the problem posed by the Nano has to be to reduce our own impact while maintain a dialog with other nations about their activities.

A carbon tax would be a good start. This does not need to mean higher taxes. In Canada the Green Party proposes tax shifting where we move tax from income (which is arguably a good thing that we want to encourage) to CO2 emmission which we most definitely want to curtail. People's financial interest would then be aligned with our environmental objective as they worked to minimize taxes and CO2 at the same time. Why this is not happening I really do not understand. I can see some concerns with how this would impact certain industries and the poor but surely getting around these would be no more difficult than under our society current income tax system. It comes down to a lack of political will and creativity.

Carbon tax or no the world cannot survive if India and China come even remotely close to our consumption levels but left to their own devices they are more than capable of doing so in less time than we think. The ingenuity of Tata Group has brought the ultimate embelem of North America society to within reach of a massive number of people inside and outside of India. This needs to be a wakeup call. We look at ourselves in the mirror and make the changes neccessary to cut back on consumption so as to offset the increases that the Chinese, Indians and others are entittled to.

Per Capital CO2 emissions are 2004 numbers from United Nations study.

Saturday, January 19, 2008

Who is ignored by the economic system?

In my time as an executive at a tech company I have come to learn that you cannot improve (at least not systematically) what you cannot measure. In corporate terms this means measuring revenue and expense but also things like call center response times and staff utilization rates. By moving to measure more stuff I have been able to rapidly expand revenue and the value of my division.

But something is missing. In business we pay lip service to stakeholders (customers, employees, community) but we never measure impact on them unless it can be clearly linked to shareholder value. We do not for example celebrate how much we paid in taxes, or what we did for the community or what we paid our staff. These items are seen as bads but are as important (if not more so) than what we give back to shareholders. If I were to report back to my bosses about how I had maximized taxes or staff compensation they would send me to the asylum (otherwise known to my bosses as the non-profit world.) But is that not an important part of any citizens roll in society?

The measurement system has been created by the owners and as such it works for them at the expense of the other stakeholders in society. Who cares about people, community, spotted owls? If we cannot show how caring for these things benefits our owners directly then let someone else worry about them (by the way, don't do that. Please go kill off the unions and pesky environmentalists that try to impede our ability to turn a profit.) Our entire society is built on an economic system that completely disregards (or views as bad) all stakeholders with the exception of owners. Worse, we never talk about it. All political discourse in our society takes this economic system as given and never investigates the premises and systems that underline it.

To take an example I often think about the basic system of private ownership that we have created. Our system does not effectively allow for or understand collective ownership. Nothing can be wholistically owned by a group of people and everything must be parsed out into individual alloments that can be bought, sold and transfered. True collective ownership would entail something owned jointly by a group where no individual could sell out. This type of ownership fosters the longer term thinking and the incluesion of indirect costs to the community rather than current status quo where the only question with what to do with an "asset" is what provides the owner with the most value the quickest. Why is this type of ownership absent from the system? It is not as efficient at creating the value we care about even if it is a much better structure for the community as a whole. Our measurement system precludes collective owernship.

There are some that are working on making our current system more palatable without touching the underlying structure or measurement systems. I think that this is admirable work and needs to be done but it is not enough on its own. New business initiatives such corporate social responsibility (CSR) and socially responsible investing (SRI) while positive moves are at best incremental and at worst a smokescreen for continuing down the same destructive path. Our economic program and underlying system of measurement is blind to the needs of human and nonhuman communities. Without a fundamental shift in thinking we are doomed to half measures and continued social and environmental destruction.

You cannot change what you cannot (do not, will not) measure. If we want a world that cares about 'externalities' like community, environment and general social welfare we need to reinvent ways to measure and value this. Until we take that step corporate managers will continue on their death march toward higher profits and endless growth.