real people, real pain

With Wall Street grabbing all the headlines we often forget how the turmoil in the financial markets hurts real life people. Take Annette Pucci, a New York retail manager, for example. We read in the WSJ today that Mrs. Pucci had planned a $15,000 face lift for her 50th birthday. She had to settle for a $1,200 botox treatment instead. "It was a very big disappointment," Mrs. Pucci is quoted as saying.

Or take Mr. Provost, 53, who lost his job and will have to foreclose on his $2.5 million villa with its own boat dock in Sarasota, FL. "A foreclosure would be devastating," he says. "My wife and I would have to start from scratch."

Our heart goes out to these unfortunate victims of tragedy. To those who will have to forgo caviar, face lifts, nose jobs, servants, expensive vacations, hummers, and suffer endless unimaginable hardships. These innocent victims of a crisis deserve our sympathy. And they are not alone. Their pain will spread to hard working retailers selling luxury yachts, SUVs, Rolexes, Prada shoes, and other vital necessities of life.

I guess the world is just too unfair.

King of Greed wants to be a White Knight

According to the Wall Street Journal, Bill Gates, the king of greed, will issue a call for "kinder capitalism" in Davos this week. The man the journal calls "famously competitive" suddenly wants to stop bankrupting people and aid the poor. Mr. Gates whose practices were, if not illegal, then at the very least unethical, is ready to teach us how to be kinder and gentler towards our fellow human beings. It reminds me of these cartoons showing Bill and his cronies waterboarding would-be competitors. Now Darth Vader himself reveals his soft touch. Surely he must think it is just another episode of Star Wars ?

Gates has won praise as an innovator despite the fact that neither he nor his company ever innovated anywhere. Everything they marketed they got from somewhere else. If anything, Gates and Microsoft have smothered nearly all innovation and done everything they could to stand in the way of industry cooperation. Now "The Man" will show us how to work together to "find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well."

Maybe he should start by cleaning up Guiyu, the e-waste capital of the world. That would only be proper since a large part of the mess is his doing. By colluding with Intel to make PC's obsolete in the shortest possible time, he helped create a mountain of trash that is polluting a huge region and poisoning its people. And what for ? Is your new excel any better than the 1990's version ? It is certainly a lot more bloated.

And when it comes to creating quality, I always remember the words of an auto-industry CEO who said that if they made cars that crash as often as Windows, they would be out of business. More than anything Microsoft took to heart the lesson that Henry Ford so famously put forth when he sent his engineers to junkyards to find left-over parts of the Model T. Anything that survived longer than the duty cycle of the car was obviously over-engineered and could be replaced by something of lesser quality. It is one lesson Mr. Gates never forgot.

Gates the man whose company asks "where do you want to go today," which really means "where do WE want you to go today," is going to take us on a humanitarian mission into Africa. He has put aside some of his billions in a foundation named after him and his wife Melinda. With assets in excess of $30B they are going to save the world and spread a kinder capitalism. The billion points of light, anyone ?

Here is a good fix: "companies should create businesses that focus on building products and services for the poor." Products like Internet Explorer no doubt ? That is probably the real reason Microsoft gave it away for free. To save the world from the evil doers at Netscape who only wanted to extort the poor. Or Windows for PDAs and cell phones, so the poor can use the internet and GPS and locate the nearest supermarket and not waste any unnecessary driving.

If Bill Gates really wants to save the world he should start at home. Rather than riding into Africa as a white knight in shiny armor, he could try plugging the ever widening gap between the rich and poor at home. He could start by paying more taxes, rather than using every loophole to sequester money so he can dole it out himself. Isn't that the real reason for philanthropy ? To stroke his already super-inflated ego.

He could move out of his $50 million palace and start living in a more environmentally sustainable home. No doubt his mansion could house most if not all of Seattle's poor and provide them shelter and warmth. He could sell his cars and ride a bicycle to work. He could refrain from flying and adding carbon dioxide to the atmosphere. He could use his wealth to set aside part of the Amazon rain forest and help protect biodiversity.

If Mr. Gates really wants to lead, let him lead by example and not by words. Talk is cheap, even when you happen to be a billionaire.

efficiency is irrelevant

Often when talking about climate change, people will bring up energy efficiency as a solution. Unfortunately, energy efficiency does not matter and increased efficiency is frequently counterproductive. To see why that is, take a good look at the problem. What matters is how much greenhouse gas we put in the atmosphere and how quickly it can get absorbed, scavenged, or otherwise removed. What is not removed stays there and that leads to increased heat retention and warming.

The same applies to resource depletion. What matters is how many trees we cut down and how quickly they can re-grow. Again, how efficiently we use the wood from those trees is irrelevant. You could argue that a very efficient process may provide wood to more people, and that is certainly true, but since there is no rule that says how much wood people need, it is not relevant.

In all cases, the total amount matters, not how efficient or inefficient the process is. There are no brownie points for efficiency. The same is true for all other forms of pollution or resource depletion that are threatening us. Global warming is but one effect or symptom of a much larger problem. Apart from climate change there are many other symptoms and signs of trouble. Resource depletion is another key issue we will have to deal with sooner or later.

The more wasteful we are, the faster we will deplete or poison our livelihood. It will take very drastic changes in our way of living to prevent major disasters. And these changes will need to be implemented soon, because the longer we talk, the more greenhouse gases accumulate, and the more natural resources that vanish. But let's go back to efficiency.

The trouble with efficiency is simple: it is driven by the wrong mindset. We get more for less and so we save money. That immediately makes the item affordable to more people and it compels us to use more. In the end the net effect is negative. Every time we look at an efficiency gain, and there have been many significant ones, we see the same pattern. First there are some savings, but very soon all gains are lost.

Airplanes are more efficient now and so flights are more affordable and more people fly more miles. In the end, air travel ends up polluting more than it did when planes were inefficient gas-guzzling machines. Car engines have become much more efficient over the past 30 years. The result is that more people can afford to drive and those who drive can afford bigger and heavier cars. In the end, more people end up driving more miles.

And that is just taking into account the use of the energy saving device. The real effect is bigger than that because it extends to our entire existence. When people spend less money on basics they have more disposable income. And disposable income is synonym with waste and overconsumption. Especially in the West, where few people actually save their money. Instead they spend it on vacations, larger homes, luxury items, amenities, electronic gadgets, etc. Each and every one of these uses involves more resource depletion and more energy use.

The more disposable income people have, the faster they deplete resources and add pollution. This activity is called "the economy," and we have come to think of it as positive. When "the economy" is good, life is good. When "the economy" goes into recession, life is bad. Unfortunately, when it comes to our long-term survival, the opposite is true. Recessions and depressions are good for us as a species. Good for our long term survival on this planet.

It is up to us really to decide to curtail this "economy," or replace it with something better. If we don't, nature will do it for us. And in a much more unpleasant way I should add. But for all of you efficiency-gurus out there, rest assured that it will happen in a much more efficient way.

a detroit marlboro man

And there it was for all to see, complete with cowboys on horseback and cattle running around in the corral. The latest gas-guzzler truck from Detroit, called the 2009 Dodge Ram. Another indication of how cars are sold. Not because they are practical or useful, but because they evoke images of the Old West, freedom and the range. Ironically enough these cars will do their part in destroying that sensitive ecosystem that was once the American West.

Not to be outdone, Ford had its own blue-jeans clad cowboy leaning on the new F-150, another gas guzzling monster. Take a look at the NY Times image, where you see the dressed for success corporate type explaining the benefits of a red F150, complete with the new "Marlboro man." And just like Marlboro, this one is bad for your lungs too.

To show that it has something for everyone, Detroit also showed the Hummer HX concept car. That one for people who get off on military style transportation. No cattle here, although one can wonder why there wasn't a fake IED to give it a more realistic touch. Ouch ! I can sense we are crossing a line that few want to cross. We prefer to stay on the Rambo side of things, lest too much reality intrudes and douses our buying appetite.

Looking at all these bright images one wonders what car shows are really all about. On the one hand we had a dozen or so, hybrid, fuel-cell, electric and other alternative fuel cars that won't hit the markets until years from now if ever. As if to say, look we do have conservation in mind. We realize how unsustainable our life-style really is. We too are citizens of the world and we want to do our part -as long as the profits roll in that is. For now let's just imagine how things could be.

On the other hand we have gas-guzzlers galore. Oversized, overpowered, "performance" cars to be featured in America's never ending traffic jams. 450 horsepower idling in traffic at 4.5 mph, but sure to impress the girls and the neighbors. And like the Marlboro man, shiny and healthy looking on the outside, but sick and cancerous on the inside.

I challenge the Hollywood crowds and the upper classes to forgo this madness. To buy a small car. To drive less than 10,000 miles a year. To stop flying unless there is an emergency. To go live in a smaller house and turn the lights off at night. It would make so much more sense. And it would do no small part in ensuring we all have a future on this planet.

paying for friendship

One side-effect of our oversized-everything life-style is that people are more isolated than ever. A great many live far away from their families, and some would argue that is a good thing. It certainly keeps arguments to a minimum, but it also deprives people of a bond they sorely need. Witness the urge many have to travel home during holiday season. Or the tendency of rich parents to shower their kids with goods. Solace for the guilt feelings no doubt.

Not everyone does well being away from family and childhood friends. And it isn't just the sprawl that breaks up relationships, although sprawl is a major contributor. The high-valued "mobility" is also to blame. The constant moving about destroys friendships and prevents the formation of deeper bonds. Unlike the nomads who travel with their immediate kin, modern nomads travel all alone. And they keep busy to fill the void.

While it is understandable that one may want to leave the family home to improve one's standard of living, such movement makes less sense in America, where living conditions are good to begin with. And that is where we get a little help from our friends in the media and the advertising industry. Luring us away with visions of paradise. El dorado.

There is no doubt that some people are forced to move. Big corporations constantly intrude on people's lives, and protections for the individual are few and far between. That in spite of America's worship of the individual. Corporations close down factories and uproot towns to save a few dollars here and there. Eminent domain can be used to oust entire communities. Farmers are driven from their land by debt and unscrupulous land sharks. But not all people move because they have to.

Many move because they want to live the American dream. The utopia of living in a large house with a big lawn in a gated community. A house that is so big you need an intercom to find people. And even if you do find them, chances are they are watching their own TV or they are on their own phone talking to some other lonely dreamers.

In the dream house everyone has their own playroom, bathroom, and in some cases their own bedroom. A his and hers. And while this too may reduce arguments, it is definitely not a healthy sign. But it is good for the economy. And it is our patriotic duty to consume. Lest the terrorists get the upper hand. The terrorists who are out to destroy our life-style. You heard it from our very own president.

The more you isolate people, the more items they need. If everyone huddles in a small house, they are not consuming to their full potential. The more space the individual has the more space they have to fill up. A five bedroom house requires five sets of furniture. And five bathrooms. And five TV sets with DVR. And five stereos. And iPods and cell phones for everyone.

It is not surprising that these lonely people need help. They need a coach or a trainer or a therapist or all of the above. Because what they need most of all is human contact. Human contact that is so sorely missing in their huge mansions far away from everyone and everything. Americans use more personal help than any other people on the planet. Some see this as a sign of progress, a sign of achievement. And one thing about paid friends is for sure: they are always nice to you.

Like your unnaturally green lawn in the desert, your manicured but empty suburban streets, your spotless museum quality living room, paid friends are nice to you. They always smile. They never use foul language and they always do what you want them to do. They are in one word as perfect as all the other perfect things you own.

And some can even prescribe you chemicals to cope with the hardships of your everyday life. And that too is good for the economy. Some would even say it is healthy. They do call it mental health, don't they?

war a la woodward

I heard Bob Woodward speak yesterday and it made me think about war and what motivates people to fight wars. Woodward is a great speaker, who is very funny and very serious at the same time. He certainly spent a great deal of time trying to figure out what was behind the war in Iraq. He is now in the process of writing his fourth book on Bush's war and I spent some time yesterday reading parts of volume three. I also read some reviews on that book earlier last summer.

It got me thinking about the causes of war. And especially about why it is so difficult for people to see what the real drivers are. That is because people are good at hiding their motives. "People lie," Woodward said, although he also said he thought Bush did not lie when he said there were weapons of mass destruction in Iraq. Weapons of mass deception would be a better term. For anyone to think WMD had something to do with the war is quite naive really. People fight wars for one reason and one reason only: resources.

No it is not ideology, beliefs, or religion that lead to war. These things have very little do with it. What drives people is resources and the key resource of the twentieth (and twenty-first) century is oil. I have already highlighted how important oil is. Oil not only gives us mobility, heating and cooling, but also materials like plastics and polymers. And perhaps even more important, oil is essential for food. We put in 9-10 calories of oil for every calorie of food we harvest. Without oil, lots of people would starve, and many others would have to settle for unappetizing foods -or at least food they consider unappetizing.

Ideologies, beliefs and religions do play a role in warfare but mostly to do one of the following: to band and group people together, to justify the cause, to stir emotions, and to make news headlines. I have no doubt Woodward is right when he said Bush felt it was "his duty to liberate people (or set them free)." This is a great American header. Freedom is the American religion of choice. In practice though it means very little and history has shown that the US has supported dictators and other adversaries of freedom at least as often as more democratically minded politicians.

The US supports democracies -even those that follow from free elections -only when it suits our needs. Many times the US has helped overthrow freely elected governments in favor of ruthless dictators. But the header let freedom ring is a big crowd pleaser nonetheless. And one all presidents in modern history have resorted to in times of need.

It seems obvious that there would have been no Iraq war if Iraq were an African country without oil. There have been scores of atrocities, genocide, and other problems in Africa in recent years. Yet we never intervened other than maybe condemn the situation. As a matter of fact, often we have used the statement to bury the matter and keep a lid on it. This is a great political ploy and one the current administration is very good at using: talk about issues or agree to talk about them at a later time. In the meantime, you can just forget about it. If Darfur comes to mind, you are with me. But Washington also used a similar tactic to silence the global warming crowd. And with great success I might add.

Whatever convictions or justifications Bush and his bedfellows may have, it seems more than obvious that Greenspan was right when he said, "I thought it was mostly about oil." And anyone who is honest will agree.

singing in the rain

California got hit by a major storm yesterday. The downpour was of biblical proportions, with the Northern part of the state being hardest hit. The storm, one in a series of three made all the news headlines. Downed trees and power-lines, overturned vehicles, customers without power, mudslides, flooding, you name it. It was all there. And while Californians should welcome the extra water, it is a shame how much of it goes to waste.

The waste is not just a loss, it is also responsible for most of the problems we have. Problems such as mudslides, flooding, traffic congestion and the like. Because in populated areas, much of the rain falls on roofs of buildings first. It is estimated that a single roof of 1,000 sq ft collects as much as 600 gallons of water for every inch of rainfall.

Yesterday some Bay Area counties saw more than 3 inches of rainfall. The average Bay Area roof is also well over 1,000 sq ft. That means an average home could have collected more than 1,200 gallons of water in that one day. At an average use of 100 gallons a day, that is enough water for 12 days.

Many people are probably unaware of the fact that California provides tax credits for rain water collection. In any event, it is quite surprising really that nearly all California homes come without a rain water collection system. Many homes in Western Europe, where drought is much less of a problem have collection systems. They have large in-ground cisterns that can collect thousands of gallons of rain water. Enough water to sustain a large lawn through a typical California summer. Not that I think lawns should be encouraged. They are, as I already pointed out, the number one environmental disaster in the country.

Surprisingly enough, in California, and much of the SouthWest, collection is seen as a weird idea or maybe even a bit old-fashioned. It is something the government and utilities should take care of for us. Why would anyone go through the trouble of collecting rain water when all you have to do is open the faucet and out comes clean water?

But collecting rain water has other benefits as well. Apart from conservation and reduced water bills for the home-owner, it can also have a major impact on runoffs, especially in hilly areas. And those are the areas where mudslides are common. Each year mudslides destroy hundreds of expensive homes. Something for your neighborhood or home-owners association to consider. Unfortunately though these folks are usually the ones who are the most opposed to any practical and reasonable solution. Because they see practical solutions as non esthetic and they think it would lower the value of the homes.

Many people equate luxury and well being with not having to work. And so they consider anything that reminds them of work as indicative of low class or lack of success. They should take a hint from Prince Charles. Here is a royal who is into compost piles and other conservation that the new rich despise. Maybe there is a role for monarchy after all?

new year's eve

Time to reflect on 2007 and all that happened. It seems political events are once again headlines. Unrest, killings, war, famine, genocide, and oil. Maybe a line here and there about the climate change and global warming. But very little really about what is really happening to us. The dwindling resources and ecological disasters that underly the unrest and the wars and the games people play. The real events.

As we drove by scores and scores of new housing developments on both sides of the border yesterday, I couldn't help but wondering who will buy all these houses. Apparently 30% or so of the current housing, that is the market affected by the subprime crisis, is investment properties and second homes. That "market" is already over in the sense that these house were bought before the crisis hit, and paid for by banks, that will now have to either foreclose them or take losses. It does not include all the new construction we saw. That construction got caught in the maelstrom when trouble hit. And there is plenty of it and very few buyers. For sale and Price reduced signs are everywhere.

Not to mention that most areas we travel to are lacking or short on water already. No worries for the Jack in the Box next to our hotel though, where the sprinklers were irrigating the roadway yesterday. Waste is everywhere.

When it comes to construction, Mexico is starting to look like Irvine. Housing tracts that look every bit as great as the ones that make up orange county are now coming up along Tijuana and Rosarito beaches. Homes everywhere, from the deserts around Palm Springs, the Coachella Valley, to the playas of Baja. Do people realize that the baby boomers are aging and that there are fewer people to replace them ? And especially, fewer people with money to buy such expensive stuff. The US most likely will not stop growing due to immigration and fertile immigrant families. But growth will slow down and the newcomers don't have the money that the baby boomers did.

Lest you worry about slowing growth, be assured there is not of it enough to mitigate the climate effects though. But enough to make turmoil and cause a serious economic downturn. Which will help somewhat with the climate issues ironically enough.

observations near the border

We spent an interesting day today. First we drove through Irvine, CA, supposedly the safest city in the country. It isn't much of a city however, more like an endless sprawl of suburbia. One tract of housing after another, with a few business districts in between and a few malls. The latter two can be recognized by the enormous parking lots that surround them. The whole area is so non-descript, it could be anywhere. You can find neighborhoods like it in Pleasanton, Walnut Creek, Sacramento, and all over the LA basin I am sure. Cookie cutter luxury would be the word for it. Neighborhoods that are very pedestrian or bike-unfriendly. Only suited for cars, preferably big suburban SUV type cars.

And shortly afterwards we drove through Mexico, a different kind of sprawl here, mostly the result of poverty and neglect. Equally unsustainable really, although living in Irvine is probably more pleasant. Being in Mexico felt like being in a prison camp. We drove several roads that ran parallel to the border, a kind of no-man's land with high voltage lighting, lookout towers and other features you associate with concentration camps. The road went up and down a lot and so one had great vistas of a line drawn in the sand, with a fence next to it. On the right was Mexico, with housing and roads leaning against the border. On the left was a cleared zone, a kind of DMZ, or a no-man's land reminiscent of the space between the trenches in world war I.

And to top it all of, we spend one hour standing in a line waiting to cross the border to paradise. With us were hundreds of other cars, all moving at a snails pace in 7 parallel lanes that stretched for nearly a mile. All full of oversized vehicles, spewing out greenhouse gases. The amount of pollution generated for doing nothing was just staggering. All these cars with their engines running, their air conditioners or heaters blowing, all sitting nearly frozen on the road, waiting for the homeland security folks to do their thing. And what is that thing you ask ? They look in the car, they look at your papers and they say, go or welcome home. Or they pull the car aside for a closer look. It is senseless pollution on a grand scale.

energy tips

I found some useful tips in "How to Fix Your Life in 2008," in today's Wall Street Journal. The energy section is particularly interesting. One thing they recommend is to go to the energystar website and see how your energy bill stacks up against similar homes across the country. You can find it at www.energystar.gov under Home Energy Yardstick. I just completed my audit for 2006 and found that we are in the bottom 1%. That means we are better than 99% of homes. I am happy to say that our 2007 energy bills are much lower.

To give you some background, we do live in an above average sized home in California. It definitely qualifies as a luxury home. We are not some hermits living in the desert. We do have and use the latest and greatest appliances including a home theater system with widescreen TV -no plasma though-, gaming consoles, several computers -that are used daily and nearly round the clock-, high speed internet access, and the like. And no, I do not feel like we had to cut back or restrict ourselves in 2007. And we still have a ways to go as most of our light bulbs are the conventional incandescent type. Not because we do not like CFL's, but why replace a perfectly good bulb? When it burns out we will replace it, but for now things are fine.

We do not have solar panels, wind mills, or any other energy producing device. We buy all our power from the utility and we pay regular prices for it. Apart from electricity our home uses natural gas to cook, to heat water and for the furnace. All other appliances are electric. In our area 2006 was a year with 2932 heating degree days and 1019 cooling degree days. You can find out more about that on energy star, but suffice it to say, a regular year.

Our key improvements over the last two years have been in removing all appliances that work in standby mode. You know these boxes that are plugged in and use electricity even when they are "off." Removing these is as simple as putting them on a powerstrip and turning the powerstrip off. It is actually easier than using the individual off buttons -even with remote- that do not turn things off. Our whole home theater system is on such a strip. When we are done using it, I get up and flip the switch, simple. When I need it I flip the switch again and all the boxes light up and are ready to go. We did the same for many kitchen appliances. We no longer have fifteen clocks that all read a different time and that all need to be reset several times a year (where we live the power goes out at least 5 times a year).

But most importantly we turn things off when we don't need them. Although the WSJ does not mention this trick, I believe it is the number one energy saving method, and the easiest one too. Turn things off. It isn't hard.

There are no extra lights here to brighten the sky, and even the always-on internet box goes off when it is not in use for more than 10 minutes (say during lunch). That too is easy. The computers sleep when they are idle for 5 minutes and their sleep modes are very efficient. They spin down the disk and turn off the displays. Both reboot very quickly and I never feel I have to wait. But our key improvement for 2007 has been to retire the clothes dryer. A huge savings and our clothes look better than before. Nothing like sun and wind to dry clothes. It is the cheapest solar power you can get. The $5.00 clothesline has already paid for itself several times over. It has the best return on investment so far this year. Even though my stocks did quite well, they did not come close.

hangover

Some statistics that may interest you. The average American spends $620 on holiday gifts. Quite a bit of it goes unused, gets returned to the store, perishes in the refrigerator, or sits around in the attic or basement. Some clever people will take your gift and wrap it up again to send it off to their relatives or distant friends. But much of it will follow the wrapping paper into the wastebasket. Americans generate an excess five million tons of garbage during the holiday season. Surely not all of it is packaging, even in this nation of wrap-crazies.

And that should not surprise anyone. After all, what do you give to people who already have everything or can easily buy everything they may like ? You'd have to really spend several thousands of dollars per recipient to buy something special. And that is beyond reach. So on we go, buying useless and unappreciated gifts to "save" the economy. Ever since 9-11 buying stuff that you don't need has become a patriotic duty.

That wasn't true fifty years ago, but things have changed. What hasn't changed are our habits. And that is why many people turned to gift cards. The most popular holiday item according to ABC news is the gift card. And it is a trend retailers love. Because the unspent money on the gift card amounts to nothing more than a donation to the retailer. After two years retailers can use the small amounts that everyone invariably leaves on their cards. Come January 1st that will no longer be true in California, where retailers will have to pay cash for these small left-overs.

The waste did not go unnoticed either. Officials in many cities are trying to do something about it. In the Seattle area, www. wastefreeholidays.com recommends people purchase discounted tickets and gift certificates for concerts, plays, sporting events, recreation and museums. They call it "Give Experiences Instead of Stuff." And that is a good idea for those who can't part with tradition and feel the need to spend. Apart from not generating waste, experiences leave better and longer lasting memories. If you really want to give something to your sports or rock fan friend, consider buying hard to get tickets instead of that commemorative poster or baseball hat.

But even better would be to stop wasteful spending altogether. Good luck trying to explain that to someone.

consumer economy

Here is how the US economy works. Consumer spending accounts for seventy percent of it. Housing, health care, education, travel, restaurants and other services totaled $4.6 trillion last year. Yes, you read that right, trillion. That is a million million or a one with 12 zeros. A mere $3.6 trillion went into food, gasoline, clothing, electronics, cars, and other goods.

To keep this economic engine running, we need more consumers and more spending per consumer. The US population is growing at less than 1% a year according to the latest estimate. The exact number given by the CIA is 0.894%. There are now 301 million people here with a median age of 36.6 years. The birth rate is 14.2 per 1,000 and the net immigration 3.1 per 1,000. That means we are adding 5.19 million individuals per year. We lose 2.5 million per year. From an economic perspective this rate of growth is worrisome.

So we need to resort to the second option: spend more per consumer. And there are two good ways to do that. One is to make sure things don't last all that long and the second is called fashion. Make it so consumers will want to ditch their old stuff for fear of looking out of date. A corollary option is to add new must-have features. The latter is extensively practiced by car manufacturers who have turned cars into driving living rooms with complementary office.

Common sense would tell you that most manufacturers will quickly combine both methods. They make goods that are not meant to last so they probably skimp on quality too. Why bother if consumers will dump items within a year or two anyways. And besides, it helps profit margins. Let's take a look.

First, what do you do with durable items such as housing ? You can get some "help" from natural disasters, and the US has its fair share of those, but unless global warming really delivers on its wildest predictions, natural disasters alone won't cut it. Fortunately, the country has a high housing turnover rate. Unlike other societies, Americans are constantly on the move. They may buy their homes but they rarely stay in them longer than renters do. That is why adjustable mortgages with a short fixed interest period are so popular. Most people figure they will move before the rate adjusts. Since they rarely pay down more than a few percent of their mortgage, they are in effect renters. And government subsided renters to boot, because they get a tax break on their payments.

And every time people move, they are highly susceptible to home improvements. Most upgrade as well, that is they buy ever bigger homes and so they need to buy more goodies to fill these homes. In 2004, the market for home improvements was $271 billion according to the Home Improvement Research Institute of Tampa, Florida. It was growing at better than 6% a year at the time. Housing turnover correlates with sales of furniture, appliances, home electronics, and other home related goodies. And these have been growing rapidly too. That is what worries economists when they look at the subprime crisis. Because we have overspent a bit of late.

We need not dwell too much on cars and electronics. Everyone knows these items rarely last more than a few years. High tech is especially beneficial. With its built-in obsolescence it is an economist's dream. As for food, the trend of eating out continues in full swing. Take a look at the obesity numbers here as obesity is strongly correlated with eating out.

Health care spending is another winner and one where the US clearly excels. In 2005, it rose nearly 7% to $2 trillion, or $6,700 per person. It now represents 16% of the gross domestic product and is expected to rise to $4 trillion or 20% of GDP by 2015. Although an aging population is often blamed, a fair chunk of it goes to elective procedures. It is fashion driven. The American Society of Plastic Surgeons reports that Americans spent $15.4 billion on plastic surgery fees, facility fees, and anesthesia fees in 2006. That is almost 10% as much as the total prescription drug market.

And what may surprise you even more is that Americans spent nearly as much on pet foods, services, and medicines. And those markets are growing even faster than human healthcare. Elective procedures for pets are now commonplace in some areas of the country. And while most of it is out of pocket, pet insurance grew at 25% last year. Some employers are starting to offer pet insurance as a benefit. That while the number of uninsured Americans is at an all time high of 46.6 million.

Education is another area where Americans like to send their cash. In 2002, the US government spent $732 billion on education, directly and indirectly. That averages to nearly $7,000 for every student in elementary and secondary education. To say nothing of private money. The US joins Denmark, Iceland and South Korea in spending nearly 7% of its GDP on education.

When it comes to both healthcare and education, many would agree that despite all the money we spend, we do not seem to get very good value for it. Nearly everyone would agree our education system is lacking. When it comes to healthcare though, opinions are more divided and there is a strong feeling that we are the best in the World. Objective measures tell otherwise.

As indicated before, common sense will tell you that high turnover leads to mediocre quality. Unfortunately, it also leads to high waste and pollution. This is the price we all pay to keep our economic engine alive and well.

vanishing trees

Only 8.8% of the planet's land surface remains covered in dense forest according to the latest study employing advanced satellite imaging. Less than 20% of the original forests remain in large tracts of undisturbed forest. More than 3/4 of those are in three countries, Russia, Canada, and Brazil. When it comes to biodiversity, intact tracts are more important than the same numbers of trees in small patches. That is because many animals and plants require large tracts to survive. Fragmentation, even as simple as cutting a few roads through the forest, is the main factor threatening plants and animals with extinction.

Forest devastation is especially pronounced in easily accessible and inhabitable regions. Temperate broadleaf forests are down to less than 4% of what they were a few centuries ago. Boreal forests in Russia, Canada, and Alaska are among the best preserved mainly because they are the hardest to reach and exploit. Not so with tropical forests. While these are still substantial today, they are shrinking incredibly fast. One estimate says tropical forests will last less than 50 years if present trends continue. One and a half acres disappear every second. Along with 137 species per day.

Just fourteen countries control over 90% of the world's remaining intact forest landscapes. Apart from Russia, Canada, and Brazil, nearly all of these are poor countries with weak or puppet governments that are easily persuaded to wreck havoc with resources in return for some hard cash. And the pressure is very high. Big multi-national corporations control the forest trade. Conservation is not on their agenda. Their CEOs are more worried about their oversized pay and retirement packages and the daily fluctuations of the stock price than about some patch of forest in a far away land.

But there would be no business without demand. Many areas are wiped out to make room for agriculture and cattle farming, read cheap fast food hamburgers. Others are removed to facilitate mining and drilling operations. Yet others are stripped for their exotic hardwoods used to decorate overstuffed McMansions. It is ironic to see how many people grossly overextended themselves to spruce up their homes and buy gadgets they could ill afford using cheap mortgages. Many of these are now about to lose their homes in foreclosures.

But the trouble is a world wide phenomenon. The new economies of China of India are bottomless pits that swallow everything whole. China for example, cuts down 25 million trees a year just for disposable chopsticks in restaurants. The country uses 45 billion pairs of disposable chopsticks each and every year. In the 1980s China became the second largest importer of forest products in the world. Earlier it exported wood but now it is so far down on its own resources that importing is easier.

Russia is its main supplier now, followed by Malaysia. Nearly 40% comes from Africa, Malaysia, Indonesia, and other South East Asian nations. 40% of imports are hardwood logs and another 25% are conifer logs. And what does China do with all this wood? It manufactures items for rich countries.

China exports wood products to the US, Japan, Hongkong and South Korea. Nearly all exports are processed wood. A large share is veneers and plywood, but the majority is items such as door, frames, carving products, wood toys and tools, etc. China's export trade is slightly larger than its imports but both have grown from less than $1B in the nineties to over $7B today. And there is no end in sight. As long as people insist on building more and larger homes, demand will continue. For another 50 years or so that is. Because then, there won't be anything left.

the club of rome revisited

Those of you part of the baby boomer generation may remember the Club of Rome. You may remember that the Report to the Club of Rome, a rather popular book, painted a dismal picture of the future. You probably also do remember that it turned out to be wrong. Or was it? Turns out you may be misinformed.

The report to the Club of Rome was published in 1972. It was based on an early computer model done at MIT and it predicted strict limits to future growth on the planet. However, given that it was based on a scientific approach it made certain assumptions and its true predictions were rather far out into the future. They were also not exact dates, but rather crude estimates, give or take 25-50 years. Too imprecise and too far out for any normal person's attention span. Nevertheless it caused a ripple.

Somehow the report got tangled up in the irrational fears and wild predictions surrounding the turn of the century. Many people quickly associated Y2K problems with the environmental and other disaster scenarios that were gaining widespread attention. When nothing happened around 2000, all these scenarios were decisively discarded as unfounded doomsday predictions.

But the report to the Club had already suffered heavy damage beforehand. It had already receded into the background. When it was announced it was quickly followed by several years of high inflation, oil crises, and other turmoil that many took to be early signs of the problem. When these issues were resolved and huge successes were scored, first in the bond markets and then later in the stock market bubble, everyone was convinced it had all been nothing but a false alarm. Decades later the Y2K debacle put the final nail in the coffin.

But what did the MIT model predict ? It basically said the following: if present trends continue, limits to growth will be reached sometime in the next 100 years. Notice that the target year is 2072, and even today that is still quite a ways off. The most probably scenario will then be a sudden and uncontrollable decline in both population and industrial capacity. Sort of like a new Middle Ages. The model was also ran with a set of very optimistic assumptions to see how sensitive it was to disturbances. These optimistic scenarios are often invoked today as solutions to our problems.

The first assumption was that nuclear energy would solve all energy resource problems. That a reduction in pollution from all sources would start in 1975. And that the yield per hectare (100 sq. m) would increase by a factor of 2 starting in 1975. Lastly there would be perfect birth control. Even given those very favorable assumptions growth would end before 2100. Notice that very little time is gained even under extreme measures.

The reasons for this decline were overuse of lands leading to erosion and drops in food production. Resource depletion by increasing prosperity worldwide -although still below current US levels, and the return of pollution causing a further drop in food production. We are actually seeing some of this today in India and China.

The model does not take into account any social adaptation. It assumes we all continue living the way we do now (or did back then). There is a strong implication that we would have to change to stave off disaster.

The model revealed a fundamental problem that cannot be solved with new technology or increases in productivity. New technology and better yields may postpone the inevitable but they cannot remove the problem of essentially exponential growth in a finite and complex space. Given that growth is exponential, any remedy will be increasingly ineffective and buy ever shorter time.

Much can be said about the Report and it is a rather crude approximation to be sure. That is understandable given the limited compute capabilities at the time. But it is for sure that we have not seen the end of the Club of Rome yet. And that burying it prematurely or laughing it away may ultimately prove very foolish indeed.

relativity and the mating dance

So you thought the size of your paycheck makes you happy? Wrong. Brain imagers now have definite proof of what we all knew to be true: what makes you happy is that you earn more than your peers. The study was published in Science magazine.

What is clearly shown is that the relative size of your pay compared to others is what matters. And that makes a great deal of sense. The money has little or no absolute value. There are only so many things you can buy that truly benefit you or that you can truly enjoy. No matter how rich you are, you can only sit in one chair at once.

But you can buy unlimited numbers of chairs to show off. You can engage in the never ending arms race to outdo your neighbors and friends with ever more and bigger gadgets. And in doing so you can imagine yourself ranking higher than them. And that should make you more desirable to the opposite sex, or at least so your brain is wired to respond.

There are various ranking systems that people employ. Being extraordinarily gifted in one area or another is usually a ticket to success. Although there are no guarantees, people with exceptional athletic and other skills have a high probability of getting there. But this method is limited to those lucky enough to have such skills. And the fall-off from the top is incredibly steep. 

Acquiring cool stuff is often seen as a method accessible to all. Although this method too requires special skills for great success, there are more winners here. The fall-off is not nearly as steep. And this is one method strongly encouraged in our society. We built what is in essence a big and complex Ponzi scheme although few recognize it as such. One reason may be that the ones who are left to hold the empty promises are usually living in another (poor) country. But that is another story.

While essentially adaptive, this ranking game has a huge unfortunate consequence. Millions are trapped into its addictive web, endlessly pressing levers for a brief moment of joy. And while they can't or won't ever stop, few of them seem really happy doing what they are doing. 

I am sure you have seen the pictures of long lines of people standing out in the cold waiting for the stores to open early on Black Friday. And the resulting pushing and shoving to get in the door. But what is inside that is really so attractive to them ? The chance to outdo the others and score a useless big bargain. And the unconscious gratification signal deep in their brains that results from thinking they moved up another notch. Pressing the lever one more time.

fine distinctions

Human sensory systems are amazingly powerful at detecting differences. Many studies have show our senses operate near the limit of what is physically possible.  The "just noticeable difference" for many parameters is incredibly small. Overall, the performance of our senses is superb and much better than would be expected from the inherently noisy components that make up our bodies.

For complex stimuli our performance is often so good that it is hard or near impossible to match with sophisticated instruments and computing devices. When so-called pattern recognition is involved, humans beat every system that is out there today. One could say biology is exquisitely sensitive.

Yet there is something humans are not very good at, and that is absolute measurements. Some will call these "objective" measurements. It is rather easy even for untrained individuals to tell you which of two objects is heavier, or which of two sounds is louder, or whether two foods taste the same, or two perfumes smell alike. But it is very hard even for well trained individuals to tell you how heavy something is, how bright the light is, how loud the sound is, or what the pitch is.

One reason for this discrepancy is adaptation. Much like everything else, our sensory systems adapt to stimuli. Even though we can detect a few molecules that foul up a room full of air, if we stay in a smelly room for a short time we don't notice the offending smell anymore. If the first sunlight is too bright in the morning, soon we move around comfortably in light that is a few orders of magnitude brighter. If background noise stays constant, we tune it out. And if we suddenly go somewhere quiet, the absence of noise may create a strange "loudness" sensation.

Thresholds also adjust with internal states. When we are hungry the smell of food will be stronger and we are more likely to see the food items in a complex scene. If we are dehydrated, salty items will taste better. Studies have shown that messenger molecules released in our blood stream affect not just the threshold of our senses but also the interpretation of the stimuli. If one takes morphine painful stimuli will no longer be painful. If no help is forthcoming pain may become intolerable.

Adaptation is but one part of the process. The other part is context dependent understanding. Humans interpret stimuli in the context they are in. They set expectations and match new experiences to these expectations. If you eat from a big plate you will eat more. If you drink from a big cup you will drink more. And you will judge how much you ate or drank by what is left over. And if others are around you will unconsciously compare your performance to theirs.

There is evidence for imprinting or at the very least for very strong associative memories. Things that remind you of your childhood will often taste or smell better. Drinking water tests have revealed that individuals like water with additives that remind them of their childhood, even if such additives taste horrible to others. And to some extent, even if those additives are harmful. If a certain food makes us ill, the smell of it will cause nausea, sometimes for months to come.

All this shows why humans are very poor at objective judgments. And that is why you should be very suspicious of the "great experts." Experts in food, wine, and fine sound systems. Experts in anything that has to do with luxury life-style items. Every time such great experts are subjected to blinded tests, they fail miserably. While they may be able to detect differences, they cannot tell which is which. And that is exactly what we expect. Because the great experts are human too.