Climate of Hope

One of the positives of the US President pulling out of the Paris Climate Change Accord is it has galvanized the many who see the need to act to save our planet. Coupling the US exit with the President placing climate change deniers and fossil fuel supporters in key cabinet roles, he has placed the US government at the kids table, while the adults talk about solving the world’s problems.

Fortunately, even the President’s actions cannot stop the momentum as a tipping point on renewable energy and other efforts have been reached. As reported in the book “Climate of Hope,” by former New York City Mayor Michael Bloomberg and former Executive Director of the Sierra Club Carl Pope, cities, businesses and citizens have been leading the way. This is important as cities are significant contributors to climate change and can therefore make a huge dent in ameliorating its effect. And, they are sharing their successes formally and informally.

Some of these efforts include:

– Restoring and renovating older buildings into green buildings. Bloomberg touts the renovation of the 1931 built Empire State as a key example.

– Building new structures with an even greener footprint. In India they deploy white rooftops to reflect away the sun to minimize cooling costs, e.g,

– Building more pedestrian areas which provide safer and eco-friendly access to shops, restaurants and businesses. These car free zones actually are part of a solution to reroute traffic to reduce carbon polluting stoppage.

– Building with buffers to allow nature to do its jobs to absorb the pounding of the ocean, since,  so many large cities are coastal cities with some below sea level. We should use nature to provide defenses that stand the test of time.

– Developing master traffic plans embracing car sharing, ride sharing, bike sharing, pedestrian pathways, electric vehicles from buses to taxis, and the elegant use of mass transit based on capital needs and restrictions. Bloomberg is big on measuring things, so installing GPS in New York taxis allowed them to measure success and make modifications to their plans as executed.

– Planting more carbon saving trees in cities and other areas, as well as using other plants such as mangroves in coastal areas as they suck carbon out of the air.

– Conserving food and reducing wastage. We waste huge amounts of food, both before and after it is cooked. Imperfect fruits and vegetables go straight to the dumps unless concentrated efforts prevent it and guide distribution to other users. Buying local saves on transportation costs and emissions, as well.

– Challenging manufacturers for efficient production and distribution. For example, a significant amount of wood goes to pallets that are tossed after one use. Look to more durable pallets that can be reused. Plus, the US does an excellent job of distributing products by rail and can do even better, as the rest of the world improves their efforts. These transmodal distribution centers that marry the efforts of ships, planes, trains and trucks provide huge efficiences and enhance trade.

– Dissuading the building of new coal plants. Active efforts have reduced coal from over 53% market share in 1990 to 30% market share of energy in 2016. Market forces are reducing this further as natural gas became cheaper and renewable energy cost fell to become more on par with coal. If new coal plants must be built, do it in concert with retiring older, less efficient plants.

– Making investment funds available to pay for upfront costs for renewable energy in countries that have fewer capital funding sources. India could do even more with available funding, especially as they electrify more of the country.

The great news is these things are happening. And, they are being shared. Please read this book. It is brief and optimistic. Also, watch the soon to be released sequel to Al Gore’s “An Inconvenient Truth.” Then spread the news about what is happening.

To be frank, these actions are positive and smart irrespective of one’s stance on climate change. And, a final note from Bloomberg is the millennials are paying attention. They want to work in places that are doing their part to fight climate change. Think about that as you plan.

Are you sure you want to double down on fossil fuels?

The United Kingdom just announced it will ban sales of combustible engine cars in 2040. Australia announced the same week the planned development of a super highway for electric cars, complete with charging stations.

These announcements come a month after France made a similar decision to the more recent UK one to ban combustible cars and Volvo said they would no longer make combustible cars after 2019. And, not to be outdone, several cities like Paris, Mexico City, Madrid et al, want to ban combustible cars much sooner by 2025.

In fact, as reported in the book “Climate of Hope” by former NYC Mayor Michael Bloomberg and former Sierra Club ED Carl Pope, cities around the world are leading the way on the climate change fight. They are making huge strides in making buildings more green, improving the time for taxis and cars to move across the city which produces less exhaust, developing more pedestrian and bike areas that improve safety and Eco footprint and migrating to hybrid and electric vehicles among other things. Bloomberg cites large buildings as a huge impact on carbon emissions, so improvements like NYC made with the 1931 built Empire State Building pays dividends.

Lastly, the shareholders of three energy companies – ExxonMobil, Occidental Petroleum and PPL – voted in May to require management to report their climate change impact and plans to reduce such impact to the shareholders. It is not ironic that ExxonMobil is being investigated by three state attorney generals for alleged past misrepresentation to shareholders of the impact of climate change on its business, which would be a securities crime.

So, back to my question in the title which is addressed to the US President, EPA Director and DOE Director, are you sure you want to double down on fossil fuels? Or, would you rather acknowledge the significant movement toward renewable energy and conservation in your own country and invest in the true growth industries and our environment?

Ides of July – the heat is on

Summer is in full force here in the Northern Hemisphere. If I don’t get my yard work started before Noon, it is not happening. I worked through 12:30 pm today and am a worn out camper.

Speaking of heat, the Senior and Junior Donald are feeling the heat right now. More than a few conservative reporters, pundits and legislators are concerned over Junior’s zeal to collude with Russia and his evasive storytelling. As Charles Krauthammer noted in his column, the ability for Senior to claim this is a media and Democrat witchhunt is now over.

Continuing with the theme of heat, a large chunk of Antarctica sea ice fell into the ocean. The fact that it was the size of Rhode Island should be a wake up call. Melting sea ice won’t directly increase sea level, but the buffer it provided to land ice is gone. And, as land ice melts, it will become a problem for sea levels. The best description I heard is the sea ice melting is like losing the white edge of your finger nail exposing the more painful parts.

Finally, please provide more heat on Republican Senators before they pass one of the more unpopular and damaging pieces of legislation to repeal and replace the ACA. Not only will the CBO score this poorly, but it is opposed by the National Governors Association, the American Hospital Association, Blue Cross and Blue Shield, the American Cancer Society and AARP to name a few. I encourage these Senators to work with Democrats to improve the ACA, which is the preferred choice of the American public.

If the Republicans pass this into law, they have not seen the heat it will bring on their party. This law will harm Americans and the party who passes it.

Thursday needs a song and a few other thoughts

Off the top of my head, I am having a hard time thinking of a song with Thursday in the title or chorus. As I write this, I can remember a few songs for the other days of the week, with Wednesday being the hardest one to recall. So, with a special shout out to Thursday, here are a few odds and ends.

I mentioned in a comment earlier this week that Tesla is on target for rolling out 250,000 of its new affordable electric car. The car sells for US$35,000, is fun to drive and can go 215 miles on a charge. It should be noted that Elon Musk’s Tesla is one of the leading edge innovators on advanced battery storage.

I read yesterday in Reuters that Geely Volvo will only produce electric and hybrid cars after 2019. Let that statement sink in a little. Volvo will not produce combustible engine cars after 2019. I want you to think about that as the President wants to increase fossil fuel production. Apparently, Geely Volvo sees a different future.

At the same time these articles appeared, Scott Pruitt, who heads the EPA decided to spend our tax money in delving further into the climate change is a hoax theory. This is after the EPA removed various research links to papers and work on climate science from its website at Pruitt’s order. This alternative research flies in the face of peer reviewed science that questions the veracity of findings. Apparently “making America great again” means to throw away our advantage and let the world pass us by.

Finally, just to further this point, ice floes off of Antarctica are melting at a faster pace than expected. Now, we should note that when floating ice melts, it does not by itself contribute to sea level rise. But, these ice floes protect the land ice and, once gone, the land ice will melt at a faster pace and that will impact sea level rise.

So, Messers. Trump and Pruitt, are you quite sure we want to leave the Paris Climate Change Accord, focus on climate change denial and invest more heavily in fossil fuels? Yes, this is about the environment, but is also about jobs. The jobs are growing much faster in renewable energy and related industries.

Undoing how we make decisions

Best-selling author Michael Lewis’ latest book is called “The Undoing Project – A Friendship that Changed our Minds” which focuses on how we make decisions. Two transplanted Israeli psychologists named Daniel Kahneman and Amos Tversky partnered together for years and were acclaimed for their work in showing we are less rational decision-makers than we think we are, especially where risk is involved.

In short, we include our biases in how we interpret data and probabilities, so we do not all see the issue the same way. But, even more telling is we can be influenced by how the question is posed to us. Their analysis eventually led to a Nobel Prize in Economics, which was awarded to Kahneman after Tversky had passed away. The reason is their work created a new breed of economics called “Behavioral Economics.” But, their work had converts using it in the practice of medicine, setting public policy and even in making NBA draft picks. They ask that people step back and question things. Your bias may lead you to pick the most improbable cause or choice, so if you question yourself and others you may find the best probable path forward.

The other key takeaway is the tremendous partnership these two had over the years. They were very different personalities, yet it was difficult for them to know who had more input into their work. They often flipped a coin to decide whose name should go first in a paper. Their partnership was so constructive, it was difficult on people in the US who tend to believe one of the partners was a greater contributor. Tversky, being more outgoing and confident, was more easily and incorrectly thought of as the lead. Kahneman questioned everything even when he was far more right than wrong, so he came across as less confident. Ironically, it was his questioning things that challenged Tversky to reconsider strong positions. They yin and yanged like an old married couple.

It would be difficult for me to define their work in such a short piece, so let me share some of their examples which may be illustrative. Their most famous piece is called “Prospect Theory: An Analysis of Decision under Risk.” If you were given two options where (1) gave you a 50% chance to win $1,000 and (2) provided a gift of $500, most people would pick (2) as a sure thing. Yet, if the question is reframed and the two options were (3) which gave you 50% chance to lose $1,000 and (4) which provided a sure loss of $500, most everyone would pick (3) the gamble.

As they dived further into questions like this, they discovered that people would regret losing the sure thing as they did not have the money, yet were more risky with money they did not have. When they altered the probability of winning or losing, the same result would occur, even when the odds were much more in your favor to win (or not lose). But, they also learned how the questions were framed made a huge difference.

If an Asian disease was expected to kill 600 people and you could take one of the following actions, which one would you choose where Option (1) would save 200 people and (2) had a 1/3 chance of saving all 600 and a 2/3 chance of saving none? Most people chose Option (1) to save 200 people. Yet, if the question is framed as Option (3) where 400 people would die and (4) where there is a 1/3 chance none would die and 2/3 chance all would die, most people chose Option (4). Yet, it is the same question.

Another key concept they introduced through study is “representativeness.” If you added information to a question, people would believe the greater accuracy meant they should choose that option. This would even be true if the information added was irrelevant or unimportant. In other words, if something is described in more detail than other options, it creates an information bias. They illustrated this to be true with experts in a field, as well as with laypersons.

Lewis uses the example of medical doctor who embraced Kahneman and Tversky’s work named Don Redelmeier. Redelmeier would question quick conclusions by doctors made under stress, where they would use information bias. A good example came when a car accident left a woman with an irregular heartbeat after they treated her. The doctors hung their hat on the fact she had a medical history of excess thyroid hormones and just assumed that was causing the irregularity.

Yet, this was a remote probability. They were led down this path because of the extra piece of information. Redelmeier had them question this remote idea and look further. It turned out the more likely cause was indeed the reason for the irregular heartbeat – a collapsed lung from the accident. Because they had more information on a condition, they stopped looking for other causes that did not obviously surface.

I encourage you to read the book for the two reasons Lewis wrote it. It is more than just the work of Kahneman and Tversky on making decisions. It is also about how two different people can collaborate so successfully and be far more together than they were separately. They valued this partnership and made it work well for them and us.

Note: Lewis also wrote “The Blind Side,” “Moneyball,” “Liar’s Poker” and “The Big Short,” to name a few.


A few suggestions on ACA Reform

Since the House and 13 Senate Republicans have decided not to listen to the American majority or review actual data, here are a few suggestions on reforming the ACA. The ACA is imperfect and seeing higher premiums than expected in some places, but critics overlook three key things. It has dramatically reduced the number of uninsured, it has introduced positive benefit requirements to all plans including employer sponsored ones and its premiums are even higher due to Republican Senators stiffing insurers.

What should we do about improving the ACA? First, do not pass any variation of the ill-conceived AHCA bill passed by the House. It is obvious the gang of thirteen GOP male Senators are not listening to the American majority. For what it is worth, here is what this retired benefit consultant, actuary and manager suggests for consideration.

– Pay insurers for the amounts promised them under the ACA to take on initial adverse risk (as was done when Medicare Part D was rolled out) and invite them to stay or return to the exchanges. Part and parcel with this change is to restore the risk corridor funding for adverse selection going forward. This will bring premiums down.

– Fully expand Medicaid in the remaining 19 states. The National Governors Association advocates the positives of Medicaid expansion with Ohio Governor and former Presidential candidate John Kasich calling it a “no brainer.” This will help rural hospitals, economies and residents as well as others in more urban settings.

– Reduce eligibility to Medicare to age 62. This will reduce the overall risk profile under the exchanges and Medicare since the added Medicare population is older than the average exchange population it would leave and younger than the Medicare population it would be joining.

– Where competition in the exchanges is nonexistent with only one provider, offer a public option through Medicare or a variation therefrom. The pricing needs to be fair when contrasted to the lone offering as you want provide viable choice, but not drive the lone insurer away

– Finally, I would suggest we evaluate the efficacy of all fee arrangements under the ACA. Which ones make sense to continue, which ones make sense to alter, and which ones should be shelved or replaced?

It would also be helpful for naysaying for the sake of a party position to cease. Some impressionable people have refused to consider the ACA because a politician told them not to saying it was horrible or in a death spiral. People need to be mindful that health care and insurance are complex and politicians are offering advice in areas for which they are not licensed or knowledgeable to do so.

To be frank, I would rather see us go down the path of a national health insurance model. Yet, that is s tough sell in this country. So, improving the ACA is the better course versus what is being discussed. Plus, the strategic expansion of Medicare noted above will permit us to study this option and expand or contract it based on its measured veracity.




Musings at the start of summer

The longest day in the Northern Hemisphere is upon us. Maybe with this extra daylight we can have more illumination on issues. It seems we have a bad habit in our country of governing off rhetoric rather real information.

Saying it more basically, we believe our own BS. It is puzzling why we would make decisions off stuff we made up. Yet, that gets to the heart of the matter. The authors of change don’t necessarily want to solve the problems. They just want to win the election game of optics.

A good example is the secretive Senate effort to develop a repeal and replacement bill for the ACA. The effort has several of the remaining Republican and all of the Democrat Senators up in arms. What is missing is open and honest debate. What is missing is open acknowledgement of Republican efforts to strangle the imperfect law by withholding money from insurance companies promised them to take on adverse selection (higher risk).

Another good example is withdrawing from the Paris Climate Change Accord where America abdicated a global leadership role. While the President and EPA Director tell us there is not consensus on man’s influence on climate change, they fail to tell us that there is an overwhelming consensus from the scientific community. They also fail to heed the recommendations of countless companies, cities and states to remain, including ExxonMobil and Royal Dutch Shell. The sad part is the job growth and investment in renewable energy is growing rapidly and large companies like Amazon. Google, IKEA, Walmart et al are leading the way.

Let’s hope our myopic leaders will use today’s extra sunshine to see the light.