The virtuous cycle – a repeat

The following post was written about six years ago. Since that time the production cost of renewable energy has fallen to be competitive and, in some cases, lower than fossil fuel energy costs. And, that is without the residual costs of fossil fuel acquisition, transport, litigation, and maintenance.

The virtuous cycle is a nice term, but what in the heck does it mean? In the context under which I most recently saw it used is with one of two ultimate rationales why the move to renewable energy will begin to accelerate and replace fossil fuel energy sources.

Of course, renewable energy has many benefits and as the cost of production continues to fall, it will be on par with current fossil fuel energy production costs. This does not even consider the other costs that can be avoided which are inherent in the fossil fuel process. And, a key rationale for the migration will be the avoidance of the significant water loss that occurs in the fossil fuel and nuclear power production process through dissipated steam and loss of water to retrieve natural gas and oil through fracking.

But, the virtuous cycle will be one that will join water as the key reason for the accelerated migration to renewable energy. In essence, in fossil fuel energy production, energy has to be used to create energy. For example, to create electricity with fossil fuel, we have to burn coal or natural gas to boil water into steam to turn the turbines which turn the electromagnet generators. We have to exhaust energy to make more energy.

With renewable energy, we need not exhaust energy to make energy. The sun will shine and the wind will blow. They are doing this already, so we are merely harnessing that energy to produce electricity thereby creating a virtuous cycle. Using monetary terms, we do not need to spend money to make money, once the solar panels or windmills are created. Yes, we need to maintain them, but we do not have to spend energy to create new energy.

This matters now as energy companies look to build new energy production facilities. As a company considers the building over years of a natural gas-fired plant, the virtuous cycle of renewable energy may render that natural gas investment obsolete before a return on investment can be achieved. Companies will migrate to cost-effective and environmentally friendly energy sources. The fossil fuel industry is big on focusing on the cost and jobs as reasons to do more of the status quo, yet the production cost will flip the other way and will become more favorable for renewables. The jobs are already there and growing rapidly with double-digit increases.

So, when  people say we cannot afford to move to renewable energy, that is actually a very short-sighted argument. When you factor all of the added costs on environment and health of fossil fuel acquisition, use, and future maintenance, the costs are already in the favor of renewables. The virtuous cycle will accelerate the move even more.

American Winter – what poverty looks like (a reprise from 2013)

The following post was written eight years ago, but unfortunately still applies today. Our situation has been exacerbated by the COVID-19 pandemic, where too many small employers had to close their doors. Some of the observations come from my volunteer work to help homeless working families. If you only have a minute, read the next to last two paragraphs, which speak volumes of why we should help.

There is an excellent documentary on HBO called “American Winter” by Joe Gantz which tracks eight Portland families who are struggling in this economy. Please check it out at www.hbo.com/documentaries/american-winter. This documentary puts a face on poverty and shows what these families are dealing with during the economic crisis. Since I volunteer with an agency that helps homeless families, I can assure you the problems portrayed in Portland are in evidence in North Carolina and elsewhere in the United States. For example, the median family income of the homeless families we help at the agency is $9 per hour. With a living wage in NC of $17.68 for a one adult/ one child family, you can see how people are having a hard time.

These people are living paycheck to paycheck and it takes only one thing to cause them to lose their house. It could be the loss of one job or the cutback on hours worked. Or, it could be a healthcare crisis.  We have people in America who are struggling and even dying because of lack of healthcare. According to The American Journal of Medicine in 2009: 62% of bankruptcies in the US are due to medical costs and 75% of the people whose illnesses caused bankruptcy were not insured or were under insured. This is the key reason we need the Affordable Care Act and for states to permit the expansion of Medicaid to cover them.

Yet, rather than make this about healthcare, I want to focus on why we have people in such crisis. I addressed many of these issues in two companion posts last fall based on Tavis Smiley and Cornel West’s book “The Rich and the Rest of Us.” The first post was written on October 20, 2012 and the second on October 29, 2012. We are not talking enough about our poverty problem in the US. The middle class problem is referenced often, but where did they go? Only a few moved up in ranks, where as the significant majority fell into poverty or near poverty.

As organizations have taken efforts to improve their profit margins dating back to the 1980s, we have seen a continuous downsizing and outsourcing of jobs. Since the early 1980s, the disparity between haves and have-nots became even more pronounced with the trickle down economics which has been proven to be unsuccessful, unless you were viewing it from the higher vantage point. As a result, there were multiple pressures on the middle class, which has led to its decline.  It only got worse when the economy went south. While there has been some repatriation of outsourced manufacturing jobs to the US, they have remained overseas for the most part.

So, if the worker did not stay up to speed with new technologies and, even if he did, there are fewer jobs for those without a college education. And, with the economic crisis, we have seen even having a college education is not enough these days. These unemployed did what they must, so where they could, started getting service jobs in retail, restaurant and hospitality industries. These jobs are near or at minimum wage and make you beholden to the number of hours you are permitted to work. Unfortunately, these jobs perpetuate poverty. You cannot afford healthcare and better food options and can barely afford rent. So, if something happens to your hours or job, you may lose your home.

The homeless families I have worked with work their fannies off. There are some I speak with in churches , who believe these families are homeless because they are less moral or virtuous and that is not it at all. Per Smiley and West’s book, poverty is the absence of money. Nothing more, nothing less. A few national stats to chew on:

– 40% of all homeless families in the US are mothers with children, the fastest growing segment;

– 75% of homeless children never graduate which perpetuates an ongoing cycle of homelessness; and

– 90% of homeless children suffer extreme stress; some worse than PTSD that former military face.

I mention these last two items, as even with all I say to the contrary, some people do not want to help the adults, who these obstinate people feel are totally responsible for their plight or are lazy. They see a chronic homeless panhandler on the street and paint all homeless people with that brush. That is a small, small subset of our homeless problem and, while we should help the chronic homeless people, there is a significant majority of homeless people who work hard, but cannot make it. Yet, I try to sell the concept of helping the kids. They did not sign up for being homeless and if we can help them, we can break the cycle of homelessness, the cost of caretaking is less, we gain a taxpaying citizen and we may be untapping a huge potential. The second place Intel Science Award winner in 2012 was a homeless girl, e.g.

We need to help these folks climb a ladder out of the hole they are in. It will be more beneficial to them and our society. And, we must provide educational paths forward, whether it be getting a GED, community or tech college schooling to learn new or improved skills. There have been some amazing things going in community colleges which can provide some paths forward. And, we need to pay people more. We have to improve the minimum wage to get at least to a living wage for an individual. It needs to be more, but if we can make that statement (making the minimum wage = a living wage) it speaks volumes and will help.

One of our dilemmas as a society is we must have a vibrant middle class to flourish. Unfortunately, the American Dream is a myth for many. We have one of the least upwardly mobile countries in the world. So, unless we make changes to our societal investments, we are destined to have only two economic classes of people. If you do not believe me, please check out my blogging friend Amaya’s website at www.thebrabblerabble.wordpress.com and check out the short video on economic disparity in our country. It is atrocious and unforgivable that this can happen in the US.

This is our collective crisis. Please watch “American Winter” or check out the above posts or Amaya’s. While “American Winter” highlights eight families, let me add a couple of more for you. One of our new Board members who works for a large bank was touring the homeless shelter and she came upon a colleague who was employed by the bank who was homeless. This stunned her that someone who worked at reasonable pay could end up homeless. Many live paycheck to paycheck in our country and it only takes a nudge for some to lose their home.

The other person I want to mention was living in a tent with her parents and younger siblings. Her dad was a construction worker and got some handy man jobs, but neither he nor his wife made enough to prevent losing their home. I highlight this teenager, as she would volunteer at a food bank to help others in need. Let me repeat this for emphasis. This homeless girl would volunteer to help people in poverty working at a food bank. We have helped this family get housed and they are climbing the ladder out of poverty. And, this young lady is now in college.

Let me shout this from the rooftops. Please help me become more vocal. We have a poverty problem in the US. We have a homeless problem in the US. We must help our neighbors and by helping them, we will help ourselves and country. Let’s help them climb these ladders. Let’s give them opportunities to succeed. If we don’t then we all will suffer.

Lessons from Sully Sullenberger and Paul O’Neill – a review

The following post was written seven years ago when GM was having some issues that did not get communicated upward and were left to fester. This is not an uncommon problem, nor is knowing about problems and choosing not to act.

I have written before that organizations take on the personality of its leaders. Earlier this week, CEO Mary Barra of General Motors (GM), reported on the findings of an internal audit of why they did not have an earlier recall when problems arose on some cars. Many heard a lot of blame down the ladder, but we did not hear much about culpability at the top. The key question asked, but not answered, is why did people not share their concerns with management that something was amiss? The unstated answer is it is in the culture of the organization, where people at the top did not want to hear of failings or heads would roll. An analyst who covers the car industry noted there was a modus operandi of “don’t mess with the launch of new line.”

I have written before about two leaders, Captain Sully Sullenberger and Paul O’Neill, who was the CEO who turned around Alcoa and later became Secretary of the Treasury under President George W. Bush. They have some good lessons that GM should emulate  going forward. Sullenberger was the right person at the right time as captain of US Airways Flight 1549 that he safely landed in the Hudson River. He not only studied accidents for airlines, he was on task forces to go to crash sites and help ascertain why the planes went down. So, he knew from his research and experience, what he needed to do to safely land in the Hudson.

He also knew what GM failed to remember. He was the leader of the crew, but he understood all to well that each member of the team has a role in the safety of the flight, including the flight tower personnel. His research showed that many accidents occurred because navigators and co-pilots did not feel comfortable offering input to the pilot or tower. A couple of examples might help. A plane crashed in Japan, because the co-pilot had to acquiesce to the pilot due to seniority. In this case, the co-pilot was on record as being correct that the plane was off course, but the pilot’s judgment could not be overturned. In another, the Brazilian flight crew of a doomed flight did not have confidence to disagree with an American flight tower and the plane crashed.

Sullenberger was aware of other examples that had been noted and improved over time. But, what he did every time he had a new flight crew (even one new member), was get them all together to get to know them and encourage them to speak up if they saw something amiss. Anything, even if small. He noted in his book, what gave him great comfort during these few seconds on Flight 1549, was he could hear everyone doing their job. He got quick advice from the tower, his co-pilot and navigator. He shared his thoughts quickly and made sure everyone knew what was going to transpire. When he concluded that getting nearby Teterboro Airport was not possible, he offered up and concluded, “it looks like we will be in the Hudson” which allowed rescue crews to be alerted.

O’Neill joined Alcoa which was struggling. And, his first public comments were “we are going to make Alcoa the safest company possible.” This was an odd mission to start out with and many analysts were not impressed. One analyst told his investors to sell Alcoa stock, which he later added, was the worst advice he had ever given. O’Neill knew that the only thing he could get management and union leaders to agree on was safety. So, that is where he started. He also knew that for safety to be important, managers had to talk to floor personnel to understand better the problems, so that a plan to fix them could be developed. So, communication got better up and down the line. The empowered employees starting sharing ideas on how to improve not only safety, but process as well. The company performance and stock price took off.

Both Sullenberger and O’Neill knew that they were part of a team. They also knew the best ideas can come from anywhere, but especially from those closest to the action. So, it is not only vital, but imperative, that management create a culture where ideas can be shared. Otherwise, you would be flying in the dark. It should be noted at the same time GM was having these troubles, they missed a huge market opportunity. Why? Because they were not listening.

GM piloted the first electric car called the EV-1 in California in the early 2000’s. They did not sell them or market them, but a cult-like following was growing as people who wanted to make a difference started leasing them by the thousands. Eventually, the EV-1 was killed as the result of an alleged collusive effort chronicled in the documentary “Who Killed the Electric Car?” which can be accessed by the link below. The drivers wanted to buy the cars, but GM collected them and shredded them. They wanted no evidence. The Board of Directors of GM asked why the EV-1 pilot was being shelved at the same time they were building Hummers, and management said this is the direction America car buyers want. Hummers are no longer made as they were gas guzzlers.

Here in 2014, GM could have been the predominant player in the electric car market, which will grow as more power stations and better batteries become available. Yet, they chose a short-lived strategy, made other bad decisions and had to be bailed out and only now are seeing the failure of not having an open culture to communication. The lesson that was not said by Barra is we did not have an environment where people could offer input and we would listen to them. She needs to talk to Sully Sullenberger and Paul O’Neill and set a more open path for the future. It is not ironic, that both are known for safety. And, communication.

Walking in those other shoes

The old proverb that you don’t know what someone else is going through until you walk around in his or her shoes is routinely and historically pertinent. Yet, one of the challenges we face is we wear those shoes with our own biases and context. In other words, the socks we wear will give those shoes a different feel.

Too often, I read letters to the editor and posted comments or listen to conversation that bias the experience. It is something we must guard against. The same goes when we extrapolate personal or second-hand anecdotes to paint all circumstances with a broad-brush. In other words, the person believes every situation must be this way, as this is what I experienced on one occasion.

As a white man in his sixties, I have a context that is different from an African-American teen male. For the most part, I can go anywhere I want without repercussions. I can walk into a hotel or gathering and go unquestioned. When I am stopped by law enforcement, I am less worried that the next move I make may be my last. An African-American man dressed for church, does not have that same level of trust. And, an African-American teen is in even more in jeopardy if he acts rashly.

I also know I have that white privilege thing. The more common example of white privilege is not overt; it is people who look like me who do not know they benefit from it. It is not the blatant, in your face, white privilege seen on the news by white supremacists. It is the everyday lack of awareness.

It also can spill over into white victimization. This “I am being held down because African-Americans and other minority groups are getting more than a fair break” belief exists and is fed by more strident media and white supremacist groups. It is a way the latter groups recruit to their folds. I experienced this yesterday in a troubling conversation with an old friend. He painted too many woes with the broad brush of this white victimization. I kept thinking “really?”

There is a reason African-Americans and other minority groups feel threatened or feel their rights matter less or not at all. They have been disenfranchised for centuries, sometimes in violent or suppressive ways. We must do our best to guard against this happening, but it is still going on. . People of color are too often the victims of police shootings. It is debilitating and dispiriting. No one deserves to be treated like that.

On the flip side, we must acknowledge that some whites do feel victimized. Life has dealt them some tough hands or fewer opportunities. Yet, it is dwarfed by those who benefit from white privilege. In my opinion, a white person can feel both and not realize it. What concerns me is when these examples are used with a broad brush in an effort to paint over the benefits of white privilege.

With that said, we need to step back and look at why things happen without the lens of biased sources. There often are a multitude of factors that cause things to happen, but race clearly is one of those factors. Poverty is an American problem we must deal with better. Pretending it does not exist won’t make it go away. Limited and limiting opportunities in various communities are a factor. Crime and drug use can fill this void and send a community into a death spiral. Predatory lending or rental practices are an issue. Lack of educational advancement is an issue. Food deserts and hunger are issues. Family size is an issue as poverty is correlated with larger families.

These issues affect people of all colors. They impact urban as well as rural settings. Many may not realize that the largest numbers of American people in poverty are white. The propensity of poverty is higher for non-whites, but I want to make a point that poverty knows no racial boundaries. Fear is used to sell influence and recruit votes. Yet, most issues are complex and blaming other groups is not the answer. It also gets in the way of understanding challenges others may be going through and vice-versa.

I fully recognize my own anecdotes and context have flavored my opinions. In my view, we should acknowledge we have those biases and do our best to look beyond them as well. It will help as we walk around in those other shoes.

An American Hero to France – Anne Morgan

Last night, my wife and I watched a PBS documentary about the youngest daughter of J.P. Morgan, called “Anne Morgan’s War.” A link to the documentary is below. Quite simply, this already strong advocate for human rights, helped rebuild a northern France devastated by The Great War (World War I). Surprisingly, her efforts started even before the war was over as the Germans pulled back.

She was reported as the first philanthropist who married a financial acumen with her efforts to help. She allowed her good friend and colleague Anne Murray Dike be the Executive Director, while she took care of raising and managing the money. And, as women, both had uphill battles to help people.

For example, she recruited a brigade of 350 women, many nurses and doctors to help this war torn area, but female doctors could not practice as doctors in France at the time. Nonetheless, her team impressed everyone with their education, experience, acumen and ability to drive and fix vehicles. It should be noted, she wanted to give back to France who had helped America during its revolution.

Yet, her story is largely a secret in America, even though she is heralded in France. In fact, many of the speakers in the documentary are French historians. I must confess, I was totally unaware of her many contributions, which pre-date and follow her heroic actions in France.

From Wikipedia:

Anne Tracy Morgan (July 25, 1873 – January 29, 1952) was an Americanphilanthropist who provided relief efforts in aid to France during and after World War I and World War II.[2] Morgan was educated privately, traveled frequently and grew up amongst the wealth her father, banker J. P. Morgan, had amassed. She was awarded a medal from the National Institute of Social Science in 1915, the same year she published the story The American Girl. In 1932 she became the first American woman appointed a commander of the French Legion of Honor.

From 1917 to 1921, Morgan took residence near the French front, not far from both Soissons and the “Chemin des Dames” at Blérancourt, and ran a formidable help organisation, The American Friends of France (it employed several hundred people at a time, volunteers from abroad and locally recruited staff), financed partly out of her own deep pockets, partly with the help of an active network in the States.[13] The AFF (aka American Committee for Devastated France) was active in succoring noncombatants, organizing a health service that still exists in Soissons, a workshop to provide basic furniture to bombed-out families, a holiday camp for children, and a mobile library that was taken over by the library in Soissons, and so on. She returned in 1939 to help the Soissons evacuees.Anne Morgan and Anne Murray Dike, ca. 1915

Anne Murray Dike, a doctor, joined Anne Morgan in France. The estate of Blérancourt was transformed into a museum and inaugurated in 1930, one year after the death of Anne Murray Dike. The two were rewarded for their services, and they later developed a romantic relationship.[14] Dike is buried in the village cemetery at Blérancourt.[15]

The documentary is about 55 minutes in length, so it is worth the effort of your time.

SCETV Presents | Anne Morgan’s War | PBS

Class Matters – Socio-economic class that is (a reprise from 2012)

The following post was written almost nine years ago, but still applies today. I wrote recently how America has fallen in the global rankings on socio-economic mobility This story will shed some light as to why.

When you read this title, there are several interpretations that come to mind. While I am a firm believer in acting in a classy way, treating others like you want to be treated, the “class” I am referring to here is socio-economic class. There is a body of work spawned by research conducted by the New York Times, which led to the publishing of a book under this same title – “Class Matters.” It also led to a revolution of thought and I would encourage you to visit “www.classmatters.org for more information.

In essence, the term class matters refers to the tenet that your socio-economic class is a key factor in your ability to ask questions of those who are trying to serve you. The higher strata of socio-economic class is highly correlated with better education and more confidence. This translates into the greater ability and lesser reluctance to question things. On the converse, those in lower socio-economic classes tend to have lesser education and more self-esteem issues. They have a greater inability and lack of confidence to question those in power or who are trying to serve them.  As a result, those in the lower classes often make poorly informed decisions as they are:

  • too scared to ask questions,
  • feel threatened if they do so,
  • feel they will show their ignorance if they do,
  • do not know the right questions to ask, and/or
  • fall into a trusting mode, whether legitimate or not, that the person serving them knows what they are doing as they are wearing a doctor’s coat or suit and tie.

To illustrate this concept using a real life occurrence, the current housing crisis we are facing has many areas of cause from the lenders to rating agencies to investment managers to developers to buyers. At the heart of the problem, we had too many developers and realtors selling houses to people who could not afford that price of house and mortgage lenders providing mortgages to people who should not have that level of mortgage or who did not fully understand the terms of the loan. The buyers did not understand what a variable mortgage is or, using one of the lender’s terms, what a “pick-a-payment” or flexible payment mortgage entailed. The concept of negative amortization is term that was not well-explained or fully understood. In “House of Cards” a line that resonates with me is lenders were providing money to people who could “fog a mirror.” Then, they packaged up all of these poor risks in collateralized debt obligations (CDOs) and sold them to investors who thought they were buying a less risky product. The rating agencies did not help by stamping these CDOs with a AAA rating.

There are some who firmly believe in the concept of “let the buyer beware.” In their minds, the people who bought these houses and took out these loans should have been more aware “like I would have been.”  As a consequence, they believe the buyers should be held entirely responsible for the housing crisis. This school of thought has some merit, but misses two greater issues. First, if you have ever bought a house, you are asked to sign more papers than in any other transaction. I would wager that an exceedingly high percentage of buyers do not read every word of what they are signing. The legalese is too complex. More often than  not, they will ask the attorneys to explain simply what they are signing. I would also wager that in these transactions people actually sign papers they do not fully understand.

Second, with that context, people in a lower socio-economic class will be even more trusting of those in suits and ties. They would ask even fewer questions and understand even less of what they are signing. When the American Dream is to own a home and people in suits and ties paint a picture that you can afford this home, the buyers believed them more times than they should have. In some cases, the seller put “perfume on a pig” to dress up the sale as best as possible. Individuals were shown monthly payment numbers and did not realize those numbers could dramatically change every two years. In some cases, their income and wealth numbers were inflated to show they could afford a house and mortgage they otherwise would not. The buyers trusted people showing these numbers and signed on the many dotted lines.

Two true stories will embellish these points. The poster child for one extreme end of what happened was a builder based in Atlanta. The CEO and CFO were convicted of criminal and unethical actions they helped perpetuate with home buyers. In essence, the company-realtors representing  new developments did not represent they would make an extra bonus if you bought in this new neighborhood. They did not represent the inspector was being paid off to inflate the price of the house and show no problems existed. They did not represent that the mortgage lender they recommended was affiliated with the developer. So, along comes the buyer who does not know this, does not know to ask these questions and who sees a financial representation that they can afford this house. Even people above the lower socio-economic classes were taken in by this criminal behavior, yet the lower class people did not stand a chance.

The other anecdote took down a bank of which I was shareholder. This bank bought  a mortgage bank who had developed the concept of the “pick-a-payment” mortgage. This flexible payment mortgage concept was geared for a very astute buyer, not the masses of people who bought it. Mortgage people at this bank wondered why the CEO of the acquirer was pushing these mortgages even up to six months before the bank was destined to fail.  A mortgage person for that bank said we are having “pick-a-payment parties” to promote the sale of these mortgages. We are selling these mortgages to people who do not know what they are buying. They do not understand when they do not pay enough, their mortgage principal increases. Like with the above example, the lower socio-economic class buyers did not stand a chance. The people in higher classes suffered as well.

Yet, the class matters concept goes beyond these examples. It happens in everyday life, whether it is visiting the doctor, buying a car or something on credit or being served by the bank on other issues. We have people who will go into debt as they do not know the exposure they are adding with each purchase. In today’s world, there is a dearth of customer service. You have to be the navigator of your own customer service experience. Many people do not realize this as the case and tend to delegate the responsibility to the customer service person. We don’t ask enough questions of doctors seeking alternative treatments or payment plans. We accept the terms of a store credit card without knowing that if we fail to make one of the 30-60-90 day payments, we will pay back interest to the point of sale. We do not understand that we need to pay more than the minimum credit card payment as it will take 30 years to pay off a washer and dryer purchase. We do not ask the question, do I really need yet another credit card? We do not realize we have the power to say “no.”

I tell my children “people want your money, so you need to understand that.” Sometimes, they want it by legitimate means. Sometimes they have enticing commercials which are too good to be true. And, sometimes they will try to steal it from you online or by lying to you in person. You have to guard against this. With this backdrop, someone in a  lower socio-economic class will not ask enough questions to be served. They will take that extra credit card that arrives in the mail. They will sign up for the 30-60-90 day store plan to get a 10% discount not knowing the full ramifications of the transaction. I have also witnessed in helping homeless families, budgeting skills could be improved and asking questions about “must have” purchases are not done often enough. Sometimes these “needs” are actually “wants” and could be postponed. They do not know how to zealously navigate the use of coupons or the best times to buy products. They do not ask for the manager or supervisor when being ill-served.

This week I read a series on the inability of hospitals to uniformly offer reduction or the abatement in cost to those without health insurance and in an impoverished state. Someone wrote in that they successfully navigated payment options from one of the studied hospitals asking why couldn’t others have done that. When I read the letter critical of the people short-changed, the concept of class matters entered into my head. The people in need did not navigate the system as they did not know or have the confidence to ask the right questions. They did not relentlessly pursue options. This is exacerbated by the lack of transparency of the payment system, so it takes a concerted effort to understand what is happening even for people in higher classes. There are other examples in our society where you have to make a concerted effort to understand the details.

In closing, my hope is for more people to understand that class matters in getting proper help and service. We have to make it easier for people to ask questions, search for answers and be better served or, at least avoid being ill-served. It is OK to ask questions. As the teachers often say “the only dumb question is the one not asked.”  Please help others remember that. Offer to go with someone to the doctor to help ask the right questions. Or, encourage people to write their questions down beforehand. Encourage people to not get into credit exposure beyond their means.  Share your wisdom of purchasing or not purchasing items. Sources like Consumer Reports, BBB , Angie’s List,  http://www.cars.com are vital tools, e.g. Yet, I guess the big take away is to not assume people are like you. You may have avoided stepping  in the hole, but you would have asked more questions. Not everyone will. Offer them your help and understanding.

Pay me now or pay me later

Seeing what is transpiring in Texas with the lack of advance planning, it reminds me of painful history lessons. There is an age old problem in governing and public service. When things hit the fan, it is often due to problems that were not fixed due to budgets and were left to linger.

Politicians are good at blaming others and asking how can you let that happen? They tend to overlook their role in the process. Here are a few real life examples:

When some one in a social worker’s care has a horrible episode, the fact the social worker is serving 160 people versus the best practice 16 to one does not get enough consideration as a root cause. Think about it, due to budget cuts, one social worker is serving 10X the number of people which is ideal. That is drive by social work, not counseling.

When a train wrecks on an old trestle bridge, the fact the bridge has never been fixed and is only patched up does not get enough consideration as a root cause. When the next train derails, read the fall out from politicians and dig beneath the finger pointing at the actual causes, not who did what.

When Katrina devastated New Orleans, people forget the Army Corp of Engineers said the levees could not stand a direct hurricane hit a few years before. Nothing was done about it and the levees failed. We should also remember the Houston area has flooded twice with one-hundred year hurricanes that were four years apart.

And, In Texas, the vulnerability of their independent electricity system is a festering problem. So, when the system is overwhelmed like it has been with the icy storms, it fails.

Avoiding disasters by planning is a rare commodity in governance. No one wants to pay for it. Plus, so-called leaders do not get sufficient credit for pre-planning like they should. They get more credit for fixing a problem later after the fall out, if they ever get around to it.

As we speak, we have thousands of car and train bridges in need of repair, we have antiquated electrical grids, we have poor water piping (think Flint), etc. When the Olympics was not awarded to Chicago a few years ago, it was due to our aging infrastructure, even then.

A good example of pre-planning occurred in my home city of Charlotte. The city built an Intermodal distribution facility which was placed on the property of the international airport. Easily accessible to this facility are train and truck distribution centers and highways for trucks. They took advantage of shipping in/ out by plane, train and truck.

This is the kind of planning that is needed with infrastructure improvements. The fixes have to be holistic in evaluating the problems and hopefully make the process better in the end.

Ice on Fire – a reprise

Note, the following post was written two years ago, but still serves as a reminder of the progress we have made and need to make to address our climate change problem.

I encourage people to watch the excellent HBO documentary called “Ice on Fire” on concerns over climate change and remedial actions underway that should and can be leveraged. The documentary is produced and narrated by Leonardo DiCaprio, but the most impactful voices are the scientists, inventors and trendsetters who are seeing dividends from their actions and investments.

To sum up, we have two major problems facing us – too much carbon in the air along with a growing concern over methane as it is released from beneath melting ice caps and frozen tundra, on top of the venting from natural gas sites. The title comes from researchers lighting methane leaks on fire as it is released from melting ice covered waters. The scientists note with data that it is quite clear man is causing the hastened uptick in temperatures as we leave our carbon fingerprints in the atmosphere.

These are major concerns, but we are not sitting still. Significant efforts are underway. They can be categorized as putting less carbon in the air and capturing more carbon from the air. To avoid a novel, I will touch on some of the ideas, but please do deeper dives and watch the documentary airing now.

Stop putting carbon in the air

We must hasten the move to renewable energy. The costs are more on par and less, in some cases, than fossil fuel energy production. Wind and solar energy are growing at accelerated rates. One CEO noted, the technology is here to make this happen even more than it already is. Here in the US, California gets 25% of its electricity from solar and Texas gets 16% of its electricity from wind energy.

Yet, a very promising start-up off Scotland is tapping tidal energy. There is a company producing electricity today with an offshore platform with two turbines turned by the tides to generate electricity. I have written before about this group as they use existing technologies to harness the sea. Their success is gaining notoriety around the world, as it appears to be replicable.

Two other ideas also help with both recapture and restricting release. The first is reusing depleting biowaste (such as dying trees, plants and compost) in the soils to grow crops and future trees and foliage. The biowaste holds water better, maintains top soil and is straight out of nature’s guidebook.

The other is growing more kelp offshore as it captures carbon like sequoia trees and can also be used as a food source for livestock. Feeding cattle kelp is not a new approach. Feeding cattle is important as it greatly reduces the gases released by animals and preserves more carbon capturing grassland.

Capture more carbon from the air

The documentary spells out several natural ways to capture carbon and a few technological ways. On the former, here are a few ideas:

Maintain forests, especially those with large sequoias, which are huge carbon eaters. There are several places that are nurturing huge forests, but they note we need more of these efforts. We need to be mindful to replace what we cut, but keep some protected forests off limits to cutting.

Another example is to replenish mangroves that offer buffers to oceans. In addition to offering protection against storms, they also are natural born carbon eaters.

Another effort is to grow more urban farms. These farms are usually more organic, but in addition to absorbing carbon in urban areas, they perpetuate a farm to table concept that reduces transportation fumes. Reducing auto fumes is a huge concern of cities around the globe.

The next idea is more compex, but it requires the growing of more shells in the ocean. The dusts off the shells creates “ocean snow” that settles to the bottom and absorbs carbon. The idea is to spread a very small amount of iron in the ocean to cause more shells to grow.

The more technological solutions are designed to pull carbon out of the air. There are two approaches – one is to extract carbon and store it safely underground. The other is to pull it out and reuse it through artificial photosynthesis. Both of these options need more description than I am giving them. I prefer the more natural ways, but all of the above, is a necessary strategy at this late hour.

The scientists have concerns, but they do offer hope. The uncertainty of the ice-covered methane release gives them pause. They did note the methane release from accidental leaks from fossil fuel is visible from space and reduceable with some effort.

Another concern is the well-funded activity behind climate change deniers. A Wyoming rancher scientist standing in front of a visible, leaky methane cap said it plainly – they know this stuffs hurts kids more than adults. If someone came into my home to hurt my kids, it would be over my dead body. So, why is it OK to allow this?

Another scientist was less colorful, but equally plainspoken. He said fossil fuel executives perpetuating climate change denial should be tried in The Hague for crimes against humanity. Yet, as the costs have declined, the profit of creating carbon is becoming less palatable than the profit of reducing carbon in the air. People need to know these market forces exist today and not stand for future unhealthy energy creation.

Finally, if you cannot convince a climate change denier that we have a problem, ask them a simple question – if costs were not an issue, would you rather your children and grandchildren breathe methane from vented natural gas or drink coal ash polluted water or have carbon and methane neutral solar, wind or tidal energy? Guess what – costs are not much of an issue anymore and, in an increasing number of cases, less for renewables.

The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters (a reprise from 2014)

The following piece is a reprise from a post in 2014. It is important to read the concerns of six years ago about this industry. Fortunately, the renewable energy industry continues to make huge strides.

I recently completed a very interesting book written by Gregory Zuckerman, a Wall Street Journal reporter called “The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters,” published by Portfolio/ Penguin Press in 2013. Zuckerman is also author of “The Greatest Trade Ever.” I highly recommend this book as it is as entertaining as it is informative, in multiple ways. It gives you a clearer picture of the risks and rewards of fracking, but also shows how hard it is to both glean the fossil fuel you are seeking and to be so highly leveraged in debt as you do.

The successful fracking companies, usually bucked the odds and the more measured risk takers in the larger companies who had much more capital to withstand some of the risk. As a result, even the ones who had success, usually failed before, after and sometimes during their success, due to the need to be land rich which came at a highly collaterized cost of debt. When some went public, they also had to contend with impatient shareholders. These wildcat developers made and lost huge sums of money, oftentimes with their egos getting in the way of knowing when to stop.

Zuckerman does an excellent job of telling the story of people like George Mitchell, who has been called the “father of shale fracking,” Aubrey McClendon, Tom Ward, Harold Hamm, Charif Souki, Robert Hauptfurher and Mark Papa, among countless others who were key to the success of gleaning natural gas and oil from places that were perceived too difficult to crack. He also defines why methods and strategies are so secretive, as companies will follow suit to leverage off your success. These men and their companies, Mitchell Energy, Oryx Energy, Chesapeake Energy, Continental Resources, Chenier Energy and EOG Resources, were truly the path finders in this process called fracking. They led the US to become more energy independent, yet in so doing, understated or overlooked the risks that came with those rewards.

As I read this entertaining book, I found myself convinced of a preconceived notion, that the main mission of these guys was to make a lot of money, as well as proving others wrong. Some even took delight that their hypothesis was true, even if they had not benefitted as greatly as the company that bought out their rights. Yet, what I also found this lust for money also was an Achilles Heel, and there seemed to be less consideration of what fracking was doing to the environment. They were more content to let the problems be handled by someone else and often belittled the complaints and complainers.

Zuckerman addresses these concerns from the frackers viewpoint earlier in the book, yet does devote an Afterword to the environmental risks that are real. But, before doing so, he notes that George Mitchell, late in life continued to buck convention. Per Zuckerman, Mitchell “gave millions to research clean energy even as he, along with his son and Joe Greenberg, invested in a new shale formation in Canada.” But the quote that interests me most, is by Mitchell who responds to those who contend how safe fracking is:

“Fracking can be handled if they watch and patrol the wildcat guys. They don’t give a damn about anything; the industry has to band together to stop isolated incidents.”

This dovetails nicely with a well-worn phrase I gleaned early on. Even if fracking were safe, it is only as safe as its worst operator. Mitchell, the father of fracking is more than acknowledging the bad operators. His son Todd, who was also in business with his father, said “his father’s work will have had a negative impact on the world if it forestalls progress on renewable energy, instead of giving innovators time to improve wind, solar and other cleaner energy sources.”

Let me close with an even-handed quote from Zuckerman, which frames the issue, yet also notes a caution. He answers the question “Is fracking as bad as activists say, and what will its impact be as drillers continue to pursue energy from shale and other rock formations?” His conclusion is as follows:

“The short answer: Fracking has created less harm than the most vociferous critics claim, but more damage than the energy industry contends. And, it may be years before the full consequences of the drilling and fracking are clear.”

With my reading I would agree with both of these sentences, yet not place the fulcrum in the middle of the scale. I would be more on the side of vociferous critics as the evidence continues to mount and as non-industry scientists are revealing issues. The massive water usage, the seepage of the poisonous slickwater fracking fluid into the environment, the particles that are blasted into the atmosphere which are causing breathing difficulty, and the degradation to the surrounding environment just to get vehicles and equipment into frack are compelling arguments by themselves.

But, the great caution in his last sentence is where we need to focus. “And, it may be years before the full consequences of the drilling and fracking are clear.”This is the bane of any environmental group fighting for people and the environment. Oftentimes, it takes years for the true damage to be seen and felt. Some show up in shorter order, yet when the companies making the money do not want to stop a mission, they can afford to fight people who cannot clearly make a connection. The developers want to settle with each complaint at minimal outlay and move on. Unfortunately, the people exposed to the problem, remain in harm’s way.

Class matters, socio-economic class that is – a revisit to an old post that remains pertinent

The following post was written in 2012, but it still remains pertinent. When I hear people chastise people in poverty for not working their way out, I think of this topic.

When you read this title, there are several interpretations that come to mind. While I am a firm believer in acting in a classy way, treating others like you want to be treated, the “class” I am referring to here is socio-economic class. There is a body of work spawned by research conducted by the New York Times, which led to the publishing of a book under this same title – “Class Matters.” It also led to a revolution of thought and I would encourage you to visit “www.classmatters.org for more information.

In essence, the term class matters refers to the tenet that your socio-economic class is a key factor in your ability to ask questions of those who are trying to serve you. The higher strata of socio-economic class is highly correlated with better education and more confidence. This translates into the greater ability and lesser reluctance to question things. On the converse, those in lower socio-economic classes tend to have lesser education and more self-esteem issues. They have a greater inability and lack of confidence to question those in power or who are trying to serve them.  As a result, those in the lower classes often make poorly informed decisions as they are:

  • too scared to ask questions,
  • feel threatened if they do so,
  • feel they will show their ignorance if they do,
  • do not know the right questions to ask, and/or
  • fall into a trusting mode, whether legitimate or not, that the person serving them knows what they are doing as they are wearing a doctor’s coat or suit and tie.

To illustrate this concept using a real life occurrence, the current housing crisis we are facing has many areas of cause from the lenders to rating agencies to investment managers to developers to buyers. At the heart of the problem, we had too many developers and realtors selling houses to people who could not afford that price of house and mortgage lenders providing mortgages to people who should not have that level of mortgage or who did not fully understand the terms of the loan. The buyers did not understand what a variable mortgage is or, using one of the lender’s terms, what a “pick-a-payment” or flexible payment mortgage entailed. The concept of negative amortization is term that was not well-explained or fully understood. In “House of Cards” a line that resonates with me is lenders were providing money to people who could “fog a mirror.” Then, they packaged up all of these poor risks in collateralized debt obligations (CDOs) and sold them to investors who thought they were buying a less risky product. The rating agencies did not help by stamping these CDOs with a AAA rating.

There are some who firmly believe in the concept of “let the buyer beware.” In their minds, the people who bought these houses and took out these loans should have been more aware “like I would have been.”  As a consequence, they believe the buyers should be held entirely responsible for the housing crisis. This school of thought has some merit, but misses two greater issues. First, if you have ever bought a house, you are asked to sign more papers than in any other transaction. I would wager that an exceedingly high percentage of buyers do not read every word of what they are signing. The legalese is too complex. More often than  not, they will ask the attorneys to explain simply what they are signing. I would also wager that in these transactions people actually sign papers they do not fully understand.

Second, with that context, people in a lower socio-economic class will be even more trusting of those in suits and ties. They would ask even fewer questions and understand even less of what they are signing. When the American Dream is to own a home and people in suits and ties paint a picture that you can afford this home, the buyers believed them more times than they should have. In some cases, the seller put “perfume on a pig” to dress up the sale as best as possible. Individuals were shown monthly payment numbers and did not realize those numbers could dramatically change every two years. In some cases, their income and wealth numbers were inflated to show they could afford a house and mortgage they otherwise would not. The buyers trusted people showing these numbers and signed on the many dotted lines.

Two true stories will embellish these points. The poster child for one extreme end of what happened was a builder based in Atlanta. The CEO and CFO were convicted of criminal and unethical actions they helped perpetuate with home buyers. In essence, the company-realtors representing  new developments did not represent they would make an extra bonus if you bought in this new neighborhood. They did not represent the inspector was being paid off to inflate the price of the house and show no problems existed. They did not represent that the mortgage lender they recommended was affiliated with the developer. So, along comes the buyer who does not know this, does not know to ask these questions and who sees a financial representation that they can afford this house. Even people above the lower socio-economic classes were taken in by this criminal behavior, yet the lower class people did not stand a chance.

The other anecdote took down a bank of which I was shareholder. This bank bought  a mortgage bank who had developed the concept of the “pick-a-payment” mortgage. This flexible payment mortgage concept was geared for a very astute buyer, not the masses of people who bought it. Mortgage people at this bank wondered why the CEO of the acquirer was pushing these mortgages even up to six months before the bank was destined to fail.  A mortgage person for that bank said we are having “pick-a-payment parties” to promote the sale of these mortgages. We are selling these mortgages to people who do not know what they are buying. They do not understand when they do not pay enough, their mortgage principal increases. Like with the above example, the lower socio-economic class buyers did not stand a chance. The people in higher classes suffered as well.

Yet, the class matters concept goes beyond these examples. It happens in everyday life, whether it is visiting the doctor, buying a car or something on credit or being served by the bank on other issues. We have people who will go into debt as they do not know the exposure they are adding with each purchase. In today’s world, there is a dearth of customer service. You have to be the navigator of your own customer service experience. Many people do not realize this as the case and tend to delegate the responsibility to the customer service person. We don’t ask enough questions of doctors seeking alternative treatments or payment plans. We accept the terms of a store credit card without knowing that if we fail to make one of the 30-60-90 day payments, we will pay back interest to the point of sale. We do not understand that we need to pay more than the minimum credit card payment as it will take 30 years to pay off a washer and dryer purchase. We do not ask the question, do I really need yet another credit card? We do not realize we have the power to say “no.”

I tell my children “people want your money, so you need to understand that.” Sometimes, they want it by legitimate means. Sometimes they have enticing commercials which are too good to be true. And, sometimes they will try to steal it from you online or by lying to you in person. You have to guard against this. With this backdrop, someone in a  lower socio-economic class will not ask enough questions to be served. They will take that extra credit card that arrives in the mail. They will sign up for the 30-60-90 day store plan to get a 10% discount not knowing the full ramifications of the transaction. I have also witnessed in helping homeless families, budgeting skills could be improved and asking questions about “must have” purchases are not done often enough. Sometimes these “needs” are actually “wants” and could be postponed. They do not know how to zealously navigate the use of coupons or the best times to buy products. They do not ask for the manager or supervisor when being ill-served.

This week I read a series on the inability of hospitals to uniformly offer reduction or the abatement in cost to those without health insurance and in an impoverished state. Someone wrote in that they successfully navigated payment options from one of the studied hospitals asking why couldn’t others have done that. When I read the letter critical of the people short-changed, the concept of class matters entered into my head. The people in need did not navigate the system as they did not know or have the confidence to ask the right questions. They did not relentlessly pursue options. This is exacerbated by the lack of transparency of the payment system, so it takes a concerted effort to understand what is happening even for people in higher classes. There are other examples in our society where you have to make a concerted effort to understand the details.

In closing, my hope is for more people to understand that class matters in getting proper help and service. We have to make it easier for people to ask questions, search for answers and be better served or, at least avoid being ill-served. It is OK to ask questions. As the teachers often say “the only dumb question is the one not asked.”  Please help others remember that. Offer to go with someone to the doctor to help ask the right questions. Or, encourage people to write their questions down beforehand. Encourage people to not get into credit exposure beyond their means.  Share your wisdom of purchasing or not purchasing items. Sources like Consumer Reports, BBB , Angie’s List,  http://www.cars.com are vital tools, e.g. Yet, I guess the big take away is to not assume people are like you. You may have avoided stepping  in the hole, but you would have asked more questions. Not everyone will. Offer them your help and understanding.