Christmas Letter 2009

In difficult and frightening times, it is often helpful to return to first principles. How are we to live? How shall we act toward our neighbors—those who are next door, and those who, in a world of instant communication, are thousands of miles away?
Few have answered these questions more compellingly than the prophet Micah. We are required, he wrote, to do justice; to love mercy; and to walk humbly with our god.
This simple teaching grows more complex and rewarding as we reflect on it. We must do justice, but justice without mercy can become mere vengeance. We must love mercy, but mercy without justice cannot heal the world. And we must be humble. We must guard against the arrogance that can undercut both our justice and our mercy and lead us toward disaster.
Of the prophet’s three virtues, humility may be the most important today. Arrogance—the sense that we could control events without limitations—helped tempt the United States into Iraq and Afghanistan. The attempt to eliminate financial risk with accounting tricks helped bring about our economic crisis. We assumed that the earth was there for our convenience, when in fact we were destroying it. We did not practice humility, and that has cost us.
This year, let us resolve to do justice; to temper justice with mercy; and to walk humbly with our neighbors and on the earth.

Strategy and the Planet

Climate change, with its disruption of traditional farming and living patterns, its effects on food and water supplies, and its economic repercussions, has always posed a strategic threat to all nations. The world's dependence on fossil fuels has also been a problem in its own right, regardless of its effects on the environment. Commentators, including some in the Pentagon, agree that ignoring climate change for business as usual is not just morally wrong, but strategically foolhardy.

A group of retired military officers has now formed Operation FREE, a campaign to present the strategic importance of sustainable energy policy and work toward cleaner energy policies.

In a country where too many members of Congress still talk as if global warming were a minor problem that threatens jobs and may be a hoax, a campaign like this is a significant development. Those who don't listen to the scientific consensus may pay attention to hard-nosed, well-reasoned strategic arguments. Even if they do not, it is good for the rest of us to remember that a sustainable economy is not only the right direction, but the smart direction.

Three Modest Proposals

Buildings and transportation are the sectors of the U.S. economy that generate the most greenhouse gases. Refitting our houses, public buildings, and neighborhoods to make them sustainable will take time. It will create new industries and jobs, but it is a long-term, not a short-term solution.

Transportation is both a long-term and a short-term problem. The Cash for Clunkers program, which recently concluded, was touted partly as a way to cut fuel use, and therefore greenhouse gases. Most reports showed that it effectively cleared auto dealers' inventory but did little for fuel use or the environment.

Cash for Clunkers was a camel—a horse designed by a committee—but it is not too late for other ideas that could, if implemented, have more impact on fuel use and greenhouse gas emissions.

Herewith, three such ideas. They are simple in principle and easy to understand. They would help lower fuel use and emissions. They are not, however, camels, and because they are not, they may never make it through Congress. I present them in the order of likelihood.

• Delivering the Goods: Driving to a store and back uses fuel. Multiply this by tens of thousands of cars, and it uses a lot of fuel. If more stores offered free delivery service, more people could avoid driving to the store and back, which in turn would economize on fuel because one delivery truck on a well-planned route uses less fuel than hundreds of cars driving to the store and back. Free delivery would also allow small businesses to compete with big box stores, which generally do not deliver. To encourage delivery services, why not offer businesses below a certain size an up-front tax credit if they provide free delivery? This would be simple to do; it would be a tax cut for the sector that generates more new jobs than any other; and it would economize on fuel.
  
• Cap and Reward: Why not create a voluntary fuel-saving program for households? Households which enrolled in the program would receive a fuel card based on their annual use of fossil fuels. They would present the card each time they paid for fuel, and it would be debited according to how much fuel they used. At the end of the year a household that used less fuel than the previous year would get a tax credit for economical fuel use. There would be no penalty for going over the previous year's usage—just a strong incentive to economize. The program would be voluntary, and hence not intrusive. It would be popular—who doesn't want a tax credit? And it would almost certainly save fuel and help to cut emissions.
  
• Rides for Clunkers: The original Cash for Clunkers program was designed to move cars off dealers' lots. Rides for Clunkers would try to cut fuel usage and move people to public transit. A family which traded in a high-fuel-use car for one that was more economical would, instead of cash, receive a transit card worth, say, $3000 in free rides on public ground transit, including trains, buses, and light rail. Transit riders who commute often pay less than half of this amount in a year, so the card might provide as much as two years in free rides. Those who abandoned their cars entirely and sold them for scrap would receive $6,000 in free rides. This program would require some setup, and Congress doesn't really like public transit very much, so it has the least chance of being implemented. Still, it is worth presenting for discussion.

In the long run, cutting fuel usage and emissions will become so important that, if we don't find alternatives based on incentives and attractive voluntary programs, we will almost certainly have to resort to rationing in some form. Starting now, with programs that encourage economy without coercing it, is the best way to go in a free society. Whether Congress and state legislatures will see that is quite another matter. One can only hope.

Cash for Clunkers: Not Very Green

The City Fix has a good roundup of reporting on the environmental effects of the popular "Cash for Clunkers" program. The conclusion? That the program will have little or no effect on overall emissions.

The clearest presentation of the arguments is in a Washington Post article by Lee Schipper, founder of EMBARQ, and his colleagues.

On the evidence so far, the program is helping car dealerships a lot. The environment, not so much.

The Best, the Worst, and the Good

The climate change bill that passed the House earlier this month is predictably full of compromises. Climate change deniers, of whom Congress has more than its full share, wanted no bill at all. House members who supported the bill were under pressure from energy companies, mining interests, and car manufacturers to preserve jobs and industries. The result was a cap and trade approach to controlling greenhouse gases, with givebacks to polluters, that was far from the best it could be.

Cap and trade systems are more complex than the alternative—a tax on carbon—favored by many environmentalists. They are harder to administer fairly and far more difficult to understand. Cap and trade, even without the givebacks in the House bill, is not the best approach to curbing emissions.

With all its faults, however, the bill is an important step forward, assuming the Senate passes it as well. For the first time, at least in the United States, it sets a price on greenhouse gas emissions. Imperfect as its price mechanism is, it will force businesses to consider environmental costs when setting prices, purchasing supplies, replacing equipment, and choosing shipping methods. It will not make as much difference as a more perfect approach, but it will make a difference.

The key here is to recognize that the good is not always the enemy of the best, and to avoid making the best the enemy of the good. The House bill becomes a problem only if we see it as a final policy rather than a step toward a better policy. It can also become a problem if we reject it because it is not the ideal bill. It is better than having no policy, as long as the nation follows it with more efficient and more stringent systems. If there is no followup, then, by encouraging complacency, the good has become the enemy of the best; but it is still better than doing nothing.

This general principle—that we should not let the best become the enemy of the good, and vice versa—applies in many areas. And in all these areas, the worst is usually the enemy of both the good and the best.

Consider land use planning. Better land use is essential to any program to control greenhouse gases. If shops, services, and jobs are not accessible without a car, then Americans will depend on their cars and use them all the time. They will have no choice. The best planning encourages walkable shopping districts, jobs that are within a short walk of home, and public transit connections to shopping and work located further away.

The picture at the head of this article shows the worst, both in design and in environmental impact. The fast food restaurants, each surrounded by its own parking lot, are far from where their customers live. The parking lots complicate and pollute water runoff. There is no public transit in the picture, and probably none for miles (if there is any at all). The highway that leads to these eateries is dangerous for walking and biking. This little complex is a disaster in almost every way: it is a threat to the environment and an affront to the eye, and the food is pretty bad as well (not to mention its own impact on the environment).

The best solution to the problems posed by this complex is to change the incentives so that locating a restaurant in the middle of nowhere makes no economic sense. This is unlikely all at once, but a good first step would be zoning reform to allow mixed land use (shops and offices located near, or even among, houses where people live). This will not satisfy those who think fast food complexes should all be torn down, but in the long run, well-judged zoning reform could rebuild communities and transform them. Zoning reform would begin to change the incentives, even if it did not immediately reshape the community.

The worst, however, is in this case the enemy of the good and the best. In the long run, if we do nothing about places like this fast-food complex—or worse, continue to build more of them—both our good proposals and our best proposals will no longer matter. Climate change and the damage that comes with it will be impossible to reverse or control.

Many people see nothing wrong with miles of stand-alone, plastic eateries surrounded by parking lots. No one considers environmental costs in locating a new MacDonald's or Burger King—or no one has until recently. These attitudes are deeply imbedded in our culture, and they must change. By putting a price on carbon emissions, even a flawed cap and trade system will encourage corporations to ask themselves hard questions about location, food production, and nearly every aspect of their operation. Walkable locations and smaller parking lots will become more attractive, as will locally-produced food products.

This will not be ideal—the ideal would include radical changes in the American diet, for example—but it would be a step toward lower carbon emissions. That is not the best, but it would help us to move in the right direction.

Car Sharing Reaches a New Milestone

The City Fix reports that Zazcar, a Brazilian company,has launched a car-sharing service in Sao Paulo. Sao Paulo thus becomes the 1,000th city in the world to have a car-sharing service, and the first in Latin America.

Fixing Transit, Creating Jobs

The City Fix reports that a Portland, Oregon, firm has begun producing streetcars—a type of transit vehicle not produced in the U.S. for 60 years, yet common in many other developed countries.

The posting includes links to United Streetcar, the manufacturer, and its parent company, the Oregon Iron Works. Also included is a link to a history of streetcars in the U.S.

Those who think the bankruptcy of General Motors and Chrysler spells the end of transportation-oriented manufacturing jobs in the United States should consult this posting. Converting the U.S. transportation system to a more sustainable model will generate thousands of new jobs to help replace those lost as the older, car-centric model becomes less viable.