Entrepreneurship and the Role of Policy: A Framework (via The Entrepreneurialist)

If you are an evolutionist, now is the time to consider what traits our governments should seek out to adapt to the changing environment.

With a shift towards creating the entrepreneurial economy, and increased calls for public-private partnerships to achieve this goal, what is the specific role of the government in create an environment which favours and creates incentives for entrepreneurial activity? What makes an economy entrepreneurial, and which policy instruments can be used to form part of what is now known as 'entrepreneurship policy?' Are traditional economic paradigms 'o … Read More

via The Entrepreneurialist

When Governance does not mean Government

Any word that begins with “govern…” pretty much conveys that we are referring to our legislators and bureaucrats and “We the People” is reserved for rhetoric and the constitution.  But the word “governance” is broader than “government” and it helps us to step out of the government arena to visualize this interaction between “We the People” and our elected officials and public employees.  Governance, is what “We the People” and the Government does to address a social issue and it also explains the ratio of who does what and how, on any particular issue.  Our nation’s effort to improve watershed issues, such as the Chesapeake Bay and the Gulf of Mexico, is causing a shift or an expansion in the governance framework toward land owners, operators, foresters and farmers.  This expansion is directly related to the interests of food processors, bio-energy industries, food retailers, and ecoservice financial markets, that combined, are larger and more influential than the government.  This expansion of “governance” directly influences those that interact economically with the land and will soon cause them to accept some of the governance responsibilities to achieve the nation’s ecological goals.  Achieving these ecological goals have, naturally, been as elusive to the government in the narrow scope of governance as one would expect if just the government was responsible for achieving the economic goals of land management.

The Ecology: An economic system in its own Right

Upon returning to farming in the mid-1990’s, it was apparent that ecological capital (soil, water, etc) was not included in the economic equation of agriculture.  It was not that farmers were causing wanton waste upon the land, but more so, that the lands were treated like most of the natural capital we have access to; that is was unlimited and here for the taking by takers here today.

After a decade or so thought, I realized that the ecological system was an economic system in its own right and that to account for this wealth-producing capital, this economic system must be integrated within our rather crude, man-made economic system.  The necessity to add this ecological dimension to our economy bore EcoCommerce 101.

I’m sorry to say, but you are already rich

The globalization of our economy has generated great wealth for most of us; to the point that most of us are now rich.  Congratulations.  So rich, in fact, that you are probably in the top 1 or 2% of the world’s richest people.  (Find your “exact” ranking at  http://www.globalrichlist.com/ )  So what does that mean for your ever present desire to climb the income ladder?  It means that many of us will need to grasp a global perspective on the way up.  Many of us still mentally live in the world that we grew up in and that we are competing with the Jones.  But we all know about India, China, and other emerging economies that now have access to that same economic ladder.  Pretty soon, being in that top 1 or 2% is going to really mean we are in the top 1 or 2% and going further up the ladder so we can consume more will consume our entire livelihoods.  And if we decide we don’t care if it consumes our livelihood, it will consume our resources.  And I am betting on that happening in the short-term, because when I ask the question, “Are you willing to have a lower standard of living in exchange for a higher quality of life?”, I have yet to get a “yes”.  We have not yet figured out how to be happy in the 21st century global economy.

Who is the Economy for?

We consistently hear messages about what is good for the economy and what is bad, as if it is one giant boat that we all float around in.  That same thinking sounds illogical when applied to the natural economic system; aka ecology.  Much like the economy, the ecology responds to energy and other inputs, allocates resources and creates stuff.  In our man-made economy we add up the amount of stuff that is produced and if it is a lot we say “very good”.  Our people-developed economy is still stuck on quantity, not quality.  In the natural economy, we understand that is it about quality and quantity.  Take for example, a lake economy.  It is provided with a dose of nutrients (currency) and energy (energy) and its final product can either be 10,000 tons of algae, or 10,000 tons of fish, or somewhere between – depending on how that lake economy is set up.  But its GDP is 10,000 tons.  We could report that number and then go to the next lake.  Same with our economy.  As long as we are generating stuff, regardless of consequences we shoot for the biggest number.  When we do ask “who is the lake for?” we are able to manage the lake and its surroundings so that its benefits are available for many people in the long-term.  As we transition from economic quantity to economic quality we need to begin to ask “who is the economy for?”  That unasked question begins to guide us to manage the communities and their surroundings so that the benefits are available to many, long-term.

‘EcoCommerce’ – to pay farmers for their environmental good works

‘EcoCommerce’ – to pay farmers for their environmental good works.

One thing scarier than a Big Problem is a Solution to that Problem

One of the activities of getting ready for the release of EcoCommerce 101 is to gather the perspectives from several individuals from diverse sectors of the bio-economy on what they think of EcoCommerce.  First, of course, is you generally have to nudge people to read it since most people are quite busy making a living and do not have the need to pursue new economic paradigms to create wealth for themselves.  But people are generous and many will spend the time to read a book you gave them and write a review for you.  In reading the reviews I was pleased with the positive responses and pleasantly surprised at the uniformity of the reviews.  Regardless if the review came from an organic dairy farmer, a agro-chemical manufacturer, a policy analyst, a financial trader or scientist, the review bascially had the same message; that EcoCommerce was a valid concept and a means for each of them to demonstrate their sustainability in an economic manner.  It was comforting to feel that I was able to articulate a solution to one of today’s biggest problems; moving the agricultural community toward a solution in a unified manner.  But as I get closer to the release of the book, I am getting a sense that one thing people fear more than a big problem is a solution to that big problem.

The end of the 5th Power

A December 31st column written by Darin Newsom, The Progressive Farmer DTN Senior Analyst  explains that December 31, 2010 is the end of the 5th Power.  He says that means in market terms, Friday’s holiday-shortened session marks the end of the week, the end of the month, the end of the quarter, the end of the year, and the end of decade. Or as he stated, the “end of” to the fifth power.  He then asks for you to think about where you were on New Year’s Eve, 2000. “Celebrating that night, how many of you thought that the next ten years would see commodities become — and this is still difficult for me to write — a much respected, long-term investment opportunity?”

If I take this perspective and apply it to EcoCommerce, I would have to say that when you were celebrating on New Year’s Eve on December 31, 2010, how many of you thought that the next ten years we would see ecoservices become commodities that are much respected by agricultural producers and are considered a long-term investment by both government and capitalists.

It’s now about Climate Adaptation

The controversial industry has found the near perfect product in the climate change discussion – it is a “who dunnit” of global and biblical proportions with a jury of several million self-appointed jurists.

Let’s face it, we, they, them or us will never procure enough facts and proof that the addition of carbon dioxide and other so-called green house gases is causing or is not causing any changes to our climate.  The Earth Experiment is big, not reproducible, and can only be run once – a great bunker for any opinion.

But if we change the conversation from “who dunnit” and how are we going to reverse it, to how are we going to adapt to it, then more players may come to that side.  This approach is not about throwing in the towel and burn, baby, burn, but recognizing that many of the same activities that help us adapt actually are the same activities that are touted as reversing the trend.  And regardless of the cause, we need to begin to adapt to the changing climate as that is what successful species do.

If our climate now has the ability to produce extreme events of weather, then we must being to manage the surface of the earth in a manner than is more resilient to these relatively new forces.  Farmers that manage the agro-ecosystems must provide a higher level of management so that intense rain events, high heat or wind do not cause a rapid degradation to the soils.  Farmers, of course, can not stand on their own, but must be supported by an economic system that recognizes that the farmer’s natural capital is the nation’s and world’s natural capital.  Foresters and Fishers also need these market signals. 

The discussion today is at a stalemate and soon we will realize that the enemy of our goals carries our solution.

Adding an Ecological Dimension to the Economy

Although I was not alive to witness it, the conservation movement in the early 20th century must have made sense to many.  Part of my reasoning is that the movement accelerated and grew at a fairly fast pace.  The Soil Conservation Service was written into law in 1935 and in a decade or so, local government responded by chartering conservation districts across the United States.  What I have witnessed is the landscape 35,000 feet below that still vividely illustrates the result of that social, political and economic movement.

What seems less tangible for today’s citizens is the environmental movement that brought us to the climate change discussion.  Although it is less tangible the discussion and participation is quite extensive.  During the last decade and then the last couple of years the stream of publications on climate change, natural capital and ecosystem services continues to grow.  As recently as 2009 the political climate seemed riped for a solution to emerge, yet it never did materialize.

This left many climate change hopefuls in angst.  I, personally, felt the result was the correct result as something didn’t feel quite right.  I could not imagine a fluid structure emerging from the centrally planned approach.  It was expected that people and entities would track sequestered carbon from the time timber was felled to decades later as it still resided within a building, box, or bassinette.  No one could afford it.  It needed to be more natural.  And there are few things more natural than an economic system.  Natural, because it is engrained within us, our self-interests are self-evident.  No one need explain our economic interests.

The unnatural aspect of the economy is that it does not have the ability to recognize that ecological components have economic value.  This is the part that we know isn’t right.  Many feel so strong about it that they are willing to add those values into the economy at all cost or demand that others feel very strong about it.  But adding anything to an economic system without regard to cost is going to make any economic system regurgitate.

An economic system must be able to digest the costs and values and then grow toward them.  So this brings us to today.  Hugh Bennett recognized in 1907 that soil erosion was an economic issue.  This began the conservation movement in the 1930 and carried it to the 1970s where the enviromental movement began.  Our government guided us toward better management of our waters and airs.  But it can not carry this forward any longer as witnessed on the global scale at Copenhagen.  Our next step is to create an economic movement than can grasp the situation that we are nearing.  It seems ironic that the economic system will provide the means to salvage our ecological system, but is the only means by which to do it.  The task is to add an ecological dimension to the economic system so that the billions of people that engage in the economic system also engage in supporting the ecological system in the most natural way possible; economically.

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