Seeking Alpha

Hazel Henderson's  Instablog

Hazel Henderson
Send Message
Hazel Henderson is author of Ethical Markets: Growing The Green Economy (2007) and co-creator with the Calvert Group of the Calvert-Henderson Quality of Life Indicators regularly updated at www.Calvert-Henderson.com (http://www.Calvert-Henderson.com). She can be reached at www.EthicalMarkets.com... More
My company:
Ethical Markets Media
My blog:
EthicalMarkets.com
My book:
Ethical Markets: Growing the Green Economy
  • Review Of BREAKING NEW GROUND And Of LAST STAND

    Review of BREAKING NEW GROUND by Lester R. Brown (Norton, 2013) and of LAST STAND by Todd Wilkinson (Lyons Press, 2013)

    By Hazel Henderson (c) 2013

    Conventional politics and governance, even in so-called advanced democracies are failing to manage human affairs. In our 21st century of global problems that cannot be addressed by any single nation, civic leaders arise in business, finance, academia, cities, media and from the grassroots.

    Two such leaders are Lester R. Brown, public intellectual extraordinaire, and Ted Turner, media mogul and social innovator. Both learned to transcend the artificial conceptual and institutional boundaries that prevent progress in developing coherent policies and governance needed for human development on our crowded polluted planet. For full disclosure, I know and admire both Lester Brown and Ted Turner and share their lifelong concern for the future of our human species and the viability of our planetary life-support system. Both see the future of human society as I do: no longer powered by digging fossil fuels and uranium out of the Earth, but instead looking up and harvesting the free daily shower of photons from the sun. Plants learned to do this millions of years ago, developing the technology of photosynthesis - which provides the daily food humans consume. The global shift beyond fossil fuels toward this next Solar Age is well underway as Ethical Markets tracks in our Green Transition Scoreboard® with $5.2 trillion privately invested in green companies since 2007.

    Lester Brown learned these truths growing up on a farm in New Jersey and became an agricultural expert in many countries. Ted Turner learned of these realities of human survival as the founder of CNN, seeing through his global TV network and reporters all the challenges humanity faces: from overcoming ignorance, disease and conflict to evolving new energy and economic systems in harmony with Nature and the success of life forms for the past 3.8 billion years.

    Lester Brown recounts in his memoir Breaking New Ground how he sidestepped Washington bureaucracies and traditions to launch the Worldwatch Institute in 1975 which rapidly became the most respected think tank, heeded by politicians, business leaders, academics and citizens worldwide. Brown recruited me and a small group led by former US Secretary of Agriculture Orville Freeman to serve on the Worldwatch board, on which I continued until 2002. I saw how Brown's intellectual power and modest low-key management style drove Worldwatch to its rapid success. Brown shifted debates in Washington and other capitals beyond petty power politics to address urgent global issues of widening poverty gaps, growing desertification, pollution and the underlying unsustainability of our economic and financial models. I remember the debate in Worldwatch's boardroom in 1983 about Brown's idea of producing an annual State of the World report, which the Rockefeller Foundation executive Bill Dietel had promised to help underwrite. I applauded this bold initiative and the first State of the World report in 1984 largely written by Brown appeared and became a global best-seller, as a series, part of his 51 book production line published in 42 languages.

    Ted Turner read the first State of the World report, declared it the most important book he had ever read. He proceeded to carry boxes of them to deliver to his CNN reporters - eventually sending the report out annually to every head of state, political, business and NGO leader around the world. Ted Turner and Lester Brown became lifelong friends.

    During these early years, I witnessed the unfolding debate worldwide on the state of our planet's life-supporting biosphere, as an advisor to the US Office of Technology Assessment, the National Science Foundation and the National Academy of Engineering from 1975 to 1980. This led to my own lifelong focus on the failure of economics and its financial models in my The Politics of the Solar Age (1981, 1988) on which I still treasure Lester Brown's comment: "Hazel Henderson is the original thinker of our generation She breaks new ground and plants the seeds. The rest of us follow to do the cultivating and harvesting."

    Ted Turner's life has been driven by these concerns, documented in the Last Stand by author Todd Wilkinson. This book follows Turner's fascinating life from his success in building CNN to his concern with peace-building in his Goodwill Games in Moscow and friendship with Mikhail Gorbachev. Wilkinson recounts Turner's well-founded support of the United Nations (NYSE:UN) and the Earth Summit in Brazil in 1992, headed by Canadian Maurice Strong, which I also attended as a journalist. Author Wilkinson recounts Turner's growing interest in land conservation and his gradual acquisition of tracts in the USA and Latin America to become the largest private landowner in the world. Wilkinson also describes how Turner's interest in the UN culminated in his largest-ever private donation of $ 1 billion, setting up the UN Foundation still run today by his friend, former Senator Tim Wirth of Colorado.

    Both these books document two outstanding global citizens, a new breed of human sorely needed in our 21st century. Ted Turner and Lester Brown are role models for millions in their bold grasp of our human history and future options for further evolution. Their relevance will continue to grow as we face the breakdown of traditional politics and governance as well as of conventional economics and finance - now driving ecological destruction and disrupting human security in many local countries worldwide.

    Both these books are enthralling, illuminating our times and widening our perception of our own options in our lives. It has been my own personal privilege to know Lester Brown and Ted Turner, and I continue to be inspired by their exemplary lives.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Nov 04 12:38 PM | Link | Comment!
  • Review Of The Entrepreneurial State By Mariana Mazzucato

    Review of The Entrepreneurial State By Mariana Mazzucato, Anthem Press, London, 2013

    By Hazel Henderson © 2013

    The Entrepreneurial State by Mariana Mazzucato could help move the global policy debate beyond the binary options of "austerity" versus "stimulus." Both these macroeconomic policies have caused untold harm to millions and produced dangerous policy stalemates in the USA, Europe, Japan and other countries. The experiments in Europe to impose austerity have not only caused unemployment, falling growth rates and quality of life but also rising extremism and political polarization. Europeans have learned that debts can't be paid by more borrowing.

    The lessons of stimulus are equally dire. Monetary expansion loses effectiveness with each new round of money-printing, whether as bond-buying by the European Central Bank or "quantitative easing": QEs I, II, and III by the US Fed. Pumping up stock markets in the textbook theory that this financial prosperity will trickle down to the real economies of "Main Street" becomes less and less effective. Asset bubbles reappear, along with angry retirees and savers, rising inequality, extremist political parties and legislative deadlock. Central bankers in emerging markets complain that all this monetary stimulus destabilizes their own currencies and economies. Fiscal stimulus causes similar political responses with predictable conflicts about where funds will be directed, who will win and who will lose. Popular tax cuts rarely target those whose need will spend them and often end up in more saving by rich recipients. While spending on public services and infrastructure is a larger multiplier, it is too often spent on roads or bridges to nowhere.

    The question arises: are either austerity or stimulus the only two options, as macroeconomic theories insist? Increasingly, those "TINA" leaders who declare, "there is no alternative" are in disrepute. Even the grandees of the economics profession, including those of the George Soros-backed think tank INET, are now looking for alternatives, some even pronouncing macroeconomics as defunct.

    Enter Mariana Mazzucato, a paradigm-buster, who cuts through this narrow debate within the conventional box of economics, forcing us to look at the bigger picture through wider lenses of science policy and the evolution of technologies in the real world. As a former science-policy wonk at the US Office of Technology Assessment, the National Academy of Engineering, I deeply enjoyed Mazzucato's slaying of so many defunct sacred cows of macroeconomics. She begins by debunking the narrow public v. private sector framework and its most dysfunctional myths. She challenges the myth that private business and entrepreneurs are smarter and more successful than governments in the key process of innovation. She uncovers the embarrassing truth that economics has studied the innovation process and its drivers, since Robert Solow's admission in 1957 that no theory has yet emerged to fully explain. She recounts that engineering and technology often precede science and theory; the Wright brothers flew before aerodynamics and the steam engine was invented prior to knowledge of the laws of thermodynamics. This slays many sacred cows of tax policy and that it and R&D funds and investments are drivers of innovation, which is a systemic product of many social, historical, geographical and cultural factors.

    Then Mazzucato takes on the myth that venture capital (NYSE:VC) is risk-taking, with massive evidence that actually governments in many countries are the primary risk-takers with VCs surfing the waves created by tax-payers. She cites research showing that governments provide twice to eight times more venture funding than VCs. Her chapter on Apple documents how Apple obtained early help with a $500,000 loan from the US government's Small Business Investment Company (SBIC) and that every one of its 12 key technologies in its iphone were funded by government research grants including: the microprocessor and CPU, the DRAM, hard-drive storage (HDD); liquid crystal displays (LCDs), the li-pol and li-ion batteries, HTTP, HTML, GPS, click-wheel and multi-touch screens, as well as the internet itself.

    Not to pick on Apple, Mazzucato shows that the Fourier Transform algorithm (FFT), the basis of Google's success, was also funded by government research. She adds research showing that the entire myth of Silicon Valley's entrepreneurship and brilliance was based on military funding and Cold War R&D which continues to this day. Special pleaders like the American Energy Innovation Council (AEIC) of which Bill Gates of MicroSoft is a member began calling in 2010 for tripling government funds for clean energy - about which Silicon Valley is demonstrably ignorant (p. 140).

    All this upends the economics of stimulus versus austerity and its deeper basis on the myth that governments are bureaucratic and stupid at "picking winners" while the private sector is smart and creates the innovation engine that produces our jobs and economic growth. Over 20 million jobs in the USA are created by governments at all levels (BLS.gov). Starving government does not help economies recover as shown in Europe. It may not "revive the animal spirits of private enterprise" or lead to the "magic of marketplace" recoveries.

    We are led with mountains of careful research to the conclusion that all these economic bromides are nonsense and it is time to go beyond economics and look at the real processes of technological and social innovation through new spectacles and other scientific research. All this is music to my ears and reflects my own research over the years since I wrote The Politics of the Solar Age (1981, 1988) looking at the evolution of human societies from the age of agriculture, the use of energy from wood and waterwheels to whale oil, fossil fuels to the next stage of innovation: the green economies of today's emerging Solar Age.

    Mazzucato also sees green technologies as the next great waves of human innovation, and she shows us that to fully exploit all these vast new opportunities, we must drop old economic categories and see the world anew. Only this can end the current stalemates and gridlocks endlessly fighting over how to allocate resources to incumbent 20th century industries like fossil fuels and between competing legacy interests groups by trying more austerity or stimulus, deflating or inflating the decaying old pie! The new goals for human development are to invest in the technologies of the future, not to bail out old industries and past mistakes.

    Mazzucato's chapters on China, Germany, Korea, Denmark show how they have used government risk-taking policies to invest in the rapid growth of their green sectors and companies providing insights into their paradigms beyond economics. China's leadership, for example, consists largely of engineers and scientists while the US is dominated by economists and lawyers. Market fundamentalism seems only to lead to political gridlock, shutting down government services, mindless "sequestration" and loss of international prestige and competitiveness. A clearer vision of our next human stage of development and policies articulating goals to achieve them is now vital - particularly in the USA.

    Interestingly, Mazzucato's own economics background leads to her own blind spots. She uses quaint dogmas of "econospeak" such as parroting such mystifications cherished by her profession as "Knightian uncertainty" instead of clearer, plain English, i.e., immeasurable risk. This kind of "economism" is to obfuscate the profession's ignorance while backscratching colleagues, as in "Pigovian externalities" (rather than theories of Vilfredo Pigou about distribution and social costs) or the recent fad of criticizing efforts to increase energy efficiency by citing the 200-year old theory of coal use by Stanley Jevons as "Jevonian." This elevates economists' theories as if of comparable importance to Newton's Laws of Motion!

    All this attests to the bankruptcy of economics, its cognitive biases toward individualism, zero sum games and against collective win-win action - even on our small, polluted planet, as I described in Building a Win-Win World (1996, e-book 2008). The Economist actually apologized for some of these biases in Herbert Spencer's coining in its pages in 1864 the phrase "survival of the fittest," as I noted in Ethical Markets: Growing the Green Economy (2006, p. 230). This helped spawn the ugly philosophy of Social Darwinism - thus high jacking Charles Darwin's actual thesis that the survival of the human species is more in our genius for bonding and cooperating than in competing (darwinproject.com).

    Mazzucato has not yet found all her allies in brain science, endocrinology, anthropology, psychology, thermodynamics, biology, ecology and earth systems science, now laying out all the rich banquet of alternative policies and potentials that await us as we move further into the Solar Age we track in our Green Transitions Scoreboard® (greentransitionscoreboard.com). She will also find opportunities to present her book in new courses we are designing to retrain asset managers in how to move beyond their failed formulas: "efficient markets," rational actors, modern portfolio theory (MPT), options pricing models, capital asset pricing (CAPM), Value-at-Risk (NYSE:VAR). We can now take in all the new scientific information available from NASA's 12 geosynchronous satellites for better knowledge of our planet, deeper due diligence and more accurate metrics and risk-management, as I describe in my "Mapping the Global Transition to the Solar Age: From Economism to Earth Systems Science" (2013). The Entrepreneurial State is a must for pension fund trustees, venture and private investors and all institutional asset managers.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 08 12:42 PM | Link | Comment!
  • PUBLIC BACKING FOR GOING BEYOND GDP REMAINS STRONG: GLOBAL POLL

    Investors, asset managers and business leaders take note! The public around the world remains strongly in favor of replacing GDP with a broader way of reporting national progress, according to the new global poll conducted in eleven countries by GlobeScan on behalf of my company Ethical Markets, together with UK-based business think tank Tomorrow's Company and the accounting institute ICAEW. The poll shows that more than two-thirds - 68 percent of citizens on average - in the countries surveyed favor replacing GDP with a broader indicator embracing health, social and environmental statistics as well as economic ones. Twenty-three percent would rather retain a focus on money-based economic statistics. These findings are in line with World Bank President Jim Yong Kim, M.D., who wrote in his book Dying For Growth (2002) that "the quest for growth in GDP" had "worsened the lives of millions of women and men" (quoted in The Economist, Stand up for Doing Business, May 25 , 2013).

    The Beyond GDP survey was previously conducted in 2010 and 2007 for the European Commission (www.beyond-gdp.eu). This year's results show that while globally the proportion favoring going 'beyond GDP' has not changed since 2010, there were some significant shifts in individual countries. The proportion of the public favoring measuring national progress using non-economic factors grew significantly in China (up by 12 points to 80%), the UK (up 11 points to 81%) and Australia (up 10 points to 81%). China's new 5-year plan acknowledges GDP losses from pollution, shown as 3% in its earlier Green GDP. These three countries now have the largest proportions favoring a 'beyond GDP' approach. India (where 44% want to see a new system), Kenya (43%) and Germany (57%) are the most skeptical of change.

    (click to enlarge)

    In 2010 Germany and Brazil were with the countries with the largest margins favoring a new system of measuring national progress. But this year public opinion there has swung significantly in favor of a traditional money-based approach. Thirty-four percent in Germany and 32 percent in Brazil now prefer keeping a focus on money-based statistics, perhaps due to media coverage of the recession, unemployment and austerity.

    Thus, in these eleven countries, the public is still ahead of politicians, economists and financial analysts in seeing how GDP and money-based statistics short-change other important aspects of progress in health, education, environment and overall quality of life. Claire Jones, Sustainability and Economics Manager at ICAEW, commented: "ICAEW supports the use of a broad range of indicators to assess national performance, rather than a narrow focus on GDP, and the survey confirms significant public support for this approach."

    Tony Manwaring, Chief Executive at Tomorrow's Company added "At Tomorrow's Company we believe that the future success of business lies in recognizing how value is created. Value creation has changed fundamentally in the Age of Sustainability. It must now integrate economic, social and environmental factors in order to deliver in the long-term. If this is true for companies and investors, then it is even truer for countries. The way we currently measure value is no longer fit for purpose."

    The issue is, of course, externalities at both the level of national accounts and company balance sheets, capital asset pricing models and price discovery. Financial markets still mis-price company assets as revealed by Carbon Tracker and Trucost, and sovereign bonds tied to GDP, which ignore the value of efficient infrastructure, educated work forces and productive ecosystems.

    As co-founder of the NGO Citizens for Clean Air in the 1960s, we took our then Senator Robert Kennedy on a helicopter ride to view New York's air pollution - counted as useful "product" in GDP. Kennedy supported our effort to have these pollution "bads" deducted from GDP which he said "measures everything, in short, except that which makes life worthwhile." We at Ethical Markets welcome these findings as further confirmation for measuring what matters for our common future as we update our Ethical Markets Quality of Life Indicators - which I originally developed with the Calvert Group of socially responsible mutual funds in 2000.

    A total of 10,845 citizens across 11 countries were interviewed face-to-face or by telephone between January and March 2013. The margin of error per country ranges from x to y, 19 times out of 20.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    May 30 4:59 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.