What does a sustainable retail space mean?

So in my last post (just a few hours ago) I talked a bit about how we might get more sustainable commercial spaces. What might such spaces look like, and what are some of the benefits? Some aspects might be obvious, while others are more subtle.

Energy Efficiency

This is likely the most obvious to most people, since human-released carbon dioxide is a major contributor to climate change. An energy efficient space in northern climates should be well-insulated - dual pane glass (when glass is necessary), thick, well-insulated walls, and even rotating doors when possible. A standalone, one-story retail building will be less efficient than a multi-story building, because there is more external surface area per square foot of interior space. Various building systems, especially geothermal heat exchangers and energy efficient lighting, can also reduce energy usage. Besides solar panels, other elements include natural lighting and solar heat gain in the winter - south-facing windows are excellent for this.

In tropical climates, many of these rules can be thrown out the window - it's all about protection from the sun and maximum air circulation, while desert and coastal climates will require different approaches. There's no one solution for all situations, which makes these interesting problems to solve!

Material Sourcing

A little less obvious (outside of BGI, that is) is the importance of where everything comes from. The stream is quite complex and involves workers at various stages, the environmental impacts from raw material harvesting, transportation, and many other inputs. Suffice it to say, this is no small part of making a space sustainable

Access

How do people get to the building? Do they drive? Walk? Take transit? Where are they traveling from? Is parking free (encouraging people to drive) or is it a hassle (which could deter customers?) Access has a big impact on a building's indirect environmental impacts.

Other aspects

Water use, waste streams, and direct impacts on the surrounding area all play a part. And the building's impact on its users is often forgotten. Is the building comfortable? Quiet? Does it provide a connection to nature? How about the aesthetics? Is it a pleasant place to be and work? Is the lighting designed for emotional well-being and calm concentration, or is it harsh and artificial? There's no triple bottom line without a focus on People.

What it comes down to is this: sustainable isn't so simple! There are many things to consider, and likely some low-hanging fruit in every situation. With the right rigor and tools, we should be able to easily discover the quick fixes as well as the more substantial changes that can happen to make commercial spaces work better for people and the environment.

What else do you see as important aspects of sustainable commercial spaces?

Foggy Windows

A major opportunity for energy savings, particularly in urban areas, is tenant improvements. In the last couple days I've spent time at businesses with drafty single-pane windows. Despite being attractive spaces, they were physically uncomfortable. My feet were cold, and I had to keep my down jacket on just to keep from shivering. The windows were foggy, and despite the heat running, all of the tables by the windows were freezing. Turning up the heat wouldn't do much except to bleed energy. 

This is similar to the 1900's era house I lived in for 5 years. We'd run the heat, and once the space hit the set temperature, it would only take a few minutes for the heat in the space to leak out. I imagine if the owners lived in the house they would replace or repair the windows and re-insulate the walls to save on heating bills and make the space more comfortable. But in a landlord's market like Seattle where the tenants usually pay their energy bills (and are often motivated to reduce energy use for ethical reasons), they don't have much motivation to make their properties more efficient.

What could be done to change this dynamic? How could landlords or tenants (or both, in conjunction) be motivated to choose better spaces or improve existing ones? 

One would simply be to enact laws mandating energy-saving improvements by landlords when tenants turn over. This isn't likely to be politically tenable in most places, as business owners would feel put upon. Voluntary action is more likely to be the way forward. 

Another idea would be to restructure lease agreements, whether through the legal system or on a case-by-case basis, so that the financial benefits, and costs, of energy-saving tenant improvements are shared between tenants and landlords. A third, which is already done to some extent, would be tax incentives or other government financial tools (residential tax incentives generally favor homeowners rather than renters or landlords).

What I'll be focusing on in the next few months is creating a tool to make the choice to go green for tenants obvious, by clearly showing the financial payoff of improvements, or of picking a space that is already suitable. The latter is important, as well-informed tenants can help push the real estate industry in the right direction. For instance, if a coffee shop owner wants to open a location in a new neighborhood, he can negotiate with landlords based on energy efficiency and other green design features - pushing landlords to at least consider these aspects as important elements of attracting tenants. The more tenants demand sustainable retail spaces, the more landlords will be pushed to improve their spaces.

Likewise, a tenant may decide to work with their existing landlord to improve their existing space based off the various benefits - monetary and otherwise - of doing so. 

So what tools already exist? The National Resource Defense Council already has a pilot project in the works. The key in the next two quarters will to be to build on this to develop a more robust tool to drive tenant and landlord decisions.

More to come!

The drawbacks of billable hours

During my time in the Organizational Leadership track I will be working with Integral Group, a mid-sized consulting firm specializing in deep green building design and engineering. Like most consulting firms (and law offices, where it's even more extreme), "billable hours" strongly influence the way Integral operates, making it a challenge to justify getting paid for the work I will be doing. In this post I'm going to examine some of the implications of this firmly entrenched method of accounting, and set the stage to perhaps find a new way forward.

During my year at a large architecture and engineering firm, I developed a distaste for billable hours. I found billable hours to be a strange practice that didn't seem to best serve the clients. While I was never at the negotiating table for a project proposal (and never put together a proposal) and therefore don't necessarily understand all of the inner workings, I can provide my impressions. Basically, we would build our proposals based on how much time we thought we would be able to bill to the client, and the client would pay us based on those hours and the going rate for the various people working on the project.

We'd have to record our time card with each hour classified by the project or task we were working on. Travel time was billable to clients. We needed to be billable a certain percent of our time - 80% on average if I remember correctly - the partners included. This left little time for innovation, mentorship, etc. It meant that when we were short on billable projects, our office wouldn't look so good to the Since partners could bill more than associates, who could bill more than staff professionals, they would often take the work that might otherwise be best delegated to others, and not include us in the big picture. We'd get the work that our superiors didn't have time to do. This legal affairs article even talks about lawyers billing one client for travel time and another for work performed en route, and it's quite common in the consulting world as well.

And looking at the big picture, it seemed to make the work more about money more than about doing the best possible work, and it took some of the joy out of doing good work. Since we were billing the clients based on the amount of time spent on the project, rather than the quality of work we were doing, it made for a strange double standard. There's that old saying: "Organizations are perfectly designed and operated to produce the results they get." And I believe the same applies to the way work is incentivized. A salaried salesperson is going to act differently than one working solely on commission - the former will likely have the customers' needs in mind while the latter will often work to sell them anything he can. A cab driver who meters by the minute would drive differently than one metering by the mile. The same must apply with consulting firms. If you make pay about how much time you spend working, well results might fall by the wayside.

So why have billable hours become the "gold" standard, and what might some alternatives be that could lead us to different outcomes? I'll start examining that in future blog posts!

Ecotourism

Note: I wrote this earlier in the term and forgot to post it. 

One of the fastest growing travel industries is ecotourism.

What is Ecotourism?

Is it simply an effort to make traditional tourism less damaging? Maybe just another case of greenwashing? Or is it something else all together?

Let's face it, traveling can have a huge impact. Air travel contributes to ummm... a shit ton of global warming, and many mega-resorts do a poor job of being sensitive to the local culture and ecology.
What's more, many of these resorts look like they could be in any number of tropical locations. They provide a highly generic experience designed to make tourists feel comfortable and safe in a new place, and many tourists don't even venture out of the confines of the resort.


Here's a typical resort in Cancun Mexico:

How are eco-resorts different?

First of all, these properties are usually designed with local culture, architecture, and ecology in mind, often with input from the people living nearby. Efforts are taken to use environmentally-friendly construction materials and to design buildings for maximum energy and water efficiency. Employees are paid living wages and some are even included as part-owners. Customers are treated to a highly customized experience, with regionally inspired food, interaction with locals, and low-impact outdoor adventures. Rather than being buffered from reality, ecotourists are encouraged to engage and learn about the prevalent environmental, social, and political issues in the places they are visiting.

One of my favorite experiences was an eight-day trek with Mountain Lodges of Peru. The trip began in the Incan capital of Cusco, and we were transported to an active trail in the Andes. We hiked a few miles to the first of four lodges where we were treated to local food and beverages and introduced to our guides, both of Quechua descent. Guides were careful to educate us on local etiquette and religious customs so that we could have the smallest negative impact possible. We continued to walk several miles a day for the next 6 days, through cloud forests, high alpine tundra, and deep jungle, making sure to pay our respects to Pachamama along the way.

The money brought in to many resorts is used for a wide variety of positive impacts, from education to species conservation, in addition to economic growth and voluntary wealth redistribution (yeah, i said it). Travelers often become invested in the places they visit and become voices for the oppressed and disadvantaged, with many even choosing to return and contribute in impactful ways. 

Not everything is perfect in eco-tourism. Many resorts are more talk than action when it comes to sustainable practices, and air travel still has a major impact. Some even exploit the locals in the name of ecotourism. But it's a start, and much less damaging than giant cruise ships and megaresorts, and many eco resorts are doing amazing work.

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Money

In previous posts I briefly wrote about money as a tool and happiness as an end goal. I spoke briefly with Alex and Rachel of Community Sourced Capital today about our relationship with money, and how a zero-interest loan to a familiar business helps establish the idea that a monetary investment need not be about generating a monetary return, as long as there is a tangible benefit.

Unfortunately our economic system has become one which is focused on producing the most monetary wealth possible, regardless of the impacts. We use measurements like GDP, GNP, the Dow index, and the national debt to tell us how healthy our economy is, but the problem is that these measure none of the things that really matter to happiness or wellbeing. Just as disturbingly, by focusing on these numbers we start to conflate a means with an end.

If we look at money at a basic level, it is simply a tool for satisfying human needs. On Wall street, CNBC, and in much of pop culture, however, money is seen as an end in and of itself, or as a tool to make more money. The idea is that money will somehow solve all of our problems (personal and national) if we can just get enough of it, and that government's job is to help create as much monetary wealth as possible, and to keep it safe.

The right wing would have us believe that the government is overstepping its bounds insofar as it prevents the rapid accumulation and protection of wealth, and the left argues that we should tax the rich because economics is a zero-sum game. What if we could develop a new (old) attitude that both sides could buy into, in which money is put in its rightful place as not good or evil, but a tool among tools?

Check out this video for a wonderful take on money:

A new way forward?

I would argue that we should begin to measure our country's success in other ways:

-Number of people with meaningful employment
-Crime rates
-Environmental health (air, water, ecology)
-Mental and physical health of the population
-Education levels
-Lack of household debt
-Equality

What if these were our national priorities? I would argue that some of the money that has been tied up for so long in wars, wall street, and company coffers might begin to flow toward meaningful purposes. I even think that many (but not all) of the wealthy might choose to start using their wealth for social good and even allow themselves to be taxed at a higher rate, if it were to satisfy important national priorities.

Is this possible, and what would it take? Are people so tied up in their own self-interest that we cannot get there, or could a concerted effort of propaganda, social networking, and relationship building take us in a new national direction, in which the common good is placed above abstract measures of wealth, without sabotaging individual freedom?

I'd love to hear your take!

To Kill Fast Fashion

The recent garment disaster in Bangladesh has brought to light the plight of garment workers in the way recent school shootings brought gun control to the forefront. Hundreds of people died in the collapse of a clothing factory that provided miserable wages and horrible conditions to workers producing cheap clothing for Walmart, Mango, Joe Fresh, and other major brands.

Something I was thinking about quite a bit before this disaster was the proliferation of "fast fashion" retailers. H&M, Zara, Uniqlo, Old Navy, Target and others design and sell low-cost clothing that is meant to be worn for a season and thrown away (or recycled) shortly thereafter (kind of like Ikea does for furniture). Vast amounts of clothing end up in landfills, having used huge amounts of water to produce. Styles change rapidly to respond to the latest runway trends and keep ahead of consumer tastes, so the quality doesn't really need to be high, since it will be out of fashion within a year. It seems ironic to me that a company like H&M which is devoted to high volume, low-cost fashion would claim to be sustainable.

I believe it is time for a return to high-quality, long-lasting clothing. Not to pat myself on the back too much, but right now I'm wearing a Banana Republic shirt I've owned for 6 years, a 3-year old pair of Sperry Topsiders, a ten year old leather jacket, and a pair of shrink-to-fit Levi's that I only need to wash every couple months, and I think I look pretty sharp! Admittedly, I'm not sure about the conditions in which these were produced, but at least I know I'm not contributing to poor working conditions and water-intensive production methods more often than I need to. I've certainly given into the temptation to binge at Zara, H&M and Target once or twice, only to be disappointed with the quality when the crotch blows out or my tie unravels, whereas when I've chosen to buy a high-end item or two it has generally lasted long enough to get a bit of money at a thrift store a few years later. What's somewhat ironic is that I probably end up spending less money in the long if I choose a few high-quality items that I really like.

Of course, I'm a dude, and I can get away with a small wardrobe (how many girls do you know who wear the same pair of jeans every day for months at a time?) But my point is that we need to apply the "reduce, reuse, recycle" ethos to our clothing, and that might mean paying a bit more for something that was ethically produced and of high quality, and wearing it for longer than a single season.

The big question is, what will it take to take this mainstream? Must we have international regulations on apparel production to kill the fast fashion lifestyle, or can it be consumer-led? I'm not sure, but I'm going to do my best to be conscious about my consumption habits, and the more of us doing this, the bigger impact we can make.

What you can do:
-Buy American when you can afford it (beware of Saipan-produced clothing though)
-Pay more for high quality, well made materials
-Wash clothes less often and hang dry when possible so they last longer
-Limit your purchases to items you'll actually wear, and that might stand a chance of staying in style for more than a month
-Get your clothes tailored or repaired before you give up on them
-Dress up quality staples with unique accessories from a thrift store
-Buy a pair of raw denim jeans and beat them to shit. This is the ultimate in slow fashion. They'll look better than anything off the shelf. Before and after pic of such a pair:

Triumphant return to the blog world

Hi everyone! 

After 8 or so weeks without a post I suppose it's time to catch up! I just spent the weekend at an amazing property in Astoria, Oregon, called Alderbrook Station. The owner, Daren, has been steadily fixing up an old fishermen's boathouse and netshed - where fishing nets were made, repaired, and stored for the vast fishing fleet based at the mouth of the Columbia in the 1800s and early 1900s. It's now a vacation home, event space, and all around great spot to refresh before the last couple weeks of school.

Should money be our priority in business?

Blogging has been hard this quarter because I haven't felt like I had much to say. Or nothing original to say at least, even though I've had plenty on my mind. However, Jill Bamburg's TEDxBGI talk touched on something I've been pondering lately: it's so easy to talk about the triple bottom line (people, planet, profits) and have the best of intentions, only to let profit rule by default. Because it's easy to measure money and, when push comes to shove, money is what so many of us want. In our society it is very easy to be ruled by money, rather than seeing money as a tool for a greater purpose.

Even as a BGI student, I often find myself slipping into that mindset: I need to make money and protect my money for money's sake! Too much time spent in finance and accounting spreadsheets can begin to skew our perception of money and build it up as something more important than it really is. How do we begin to adopt a new way of thinking?

Being honest with ourselves is a good start. Reminding ourselves that money is only a means to an end, not the end in and of itself, can keep us from getting greedy.

One destructive way of thinking is to focus on how our lives and businesses can increase our monetary resources. Instead, we ought to develop goals for the impact we want our businesses and lives to have, and then go about using our resources to accomplish them. Because really, this is what gives life meaning, not the endless pursuit of wealth, property, and leisure.

So what are some practical ways to keep money where it belongs on our list of priorities?

In Jill's talk, she spoke about using linear programming in building a business model. I won't get into the details, but it's basically using an excel function to determine various business decisions based on various goals and constraints. For instance, if we want to maximize profits while limiting our fuel use to a specific value, excel could easily tell us how many of which product to produce. However, this is the conventional approach and prioritizes money over all else. What if profit were simply a constraint in the service of a higher goal - that is, benefit to society?

For instance, what if the goal of our music business was to maximize the number of musical instruments in local schools, while still maintaining a profit margin of 8%? Instead of cutting costs or producing the most expensive instruments to meet the soul-killing goal of maximizing profits for their own sake, we could be having a great impact on the lives of children while still operating a healthy business, all the while increasing our own happiness because we are pursuing, and fulfilling, a worthwhile goal.

And really, many of the most successful businesses are those whose unique purpose is prioritized above simply making money.

Is Big Business evil? (Makeup post)

So here it is! Last day of the quarter and it turns out a blog post is a nice break from editing a 70-page paper. Who knew? I'm going to talk about something entirely unrelated to my team project.

Something I've pondered during my two quarters at BGI is the question of ideal business size. In the current economic and social climate, large businesses are often vilified for for their impersonal size, tendency to put small companies out of business due to economies of scale, and - let's face it - their incompatibility with the aesthetic sensibilities of the urban bohemian class. Retailers like Walmart, Home Depot, McDonald's and Safeway lose out on popularity points with the socially conscious, and oftentimes the main reason is they're "a national chain." Is this really fair? And what are some benefits of companies being large?

An article I read the other day (and I can't for the life of me remember where it was) argued the idea that, in some cases, big business is superior to small business in the contributions it can make to society. The most obvious is that products become cheaper and more accessible to the middle class (good or bad depending on your viewpoint). But more importantly, there are many products which would simply not be feasible if it weren't for large-scale business with huge R&D budgets.

For example:

• Electronics: Could you imagine if we only had small, local electronics makers? We'd probably just now be getting around to using cell phones, and there would be very little standardization. And I doubt we'd have anything affordable resembling an iPhone or LCD TV. Now, the infrastructure for using those products is a different story, and one might convincingly argue that this is better provided by a public utility.

• Food: I know this might be unpopular, but large-scale food distribution networks make it possible for us to get a steady, predictable supply of food and prevent the famines that were characteristic of early agrarian societies. Western Washington simply couldn't adequately feed the 4 million people living in its urban areas with current technology, at least not year round. Local farms can certainly supplement our diets and provide a solid share of the vegetables we consume during the growing months, but a large portion of our calories come from elsewhere.

Other things that large businesses can often do better than small ones:

• Customer service and convenience: The scale of larger businesses often allows them to provide better warranties that can be serviced anywhere, whereas small companies often operate on tight margins and have a single location. Take REI: customers can buy a product with the knowledge that they can return that product if it doesn't work out, and that the company will always be there to honor that warranty (too big to fail?) This is also the case with the manufacturers of many consumer goods.
• Employee benefits: Small businesses (particularly retailers and restaurants) are often run on extremely tight margins, and one of the first things to go is often employee benefits, such as health insurance and retirement accounts. Large companies have the administrative ability and revenue to cover these benefits. In addition, employee redundancy often allows staff more flexibility in taking time off. Sure, the government should probably be providing universal healthcare, but some of these benefits are really valuable and can't be easily replicated by the government.
• Opportunities for advancement and diverse work: In a small company, oftentimes the only opportunity to move up is by moving to a different firm, whereas large firms offer more opportunities for advancement as well as trying different types of work.

Don't get me wrong! I still faithfully support lots of local businesses, and I believe they are an invaluable part of our economy. But I don't think this issue is quite as simple or black and white as we're tempted to believe.

Private Transit?

So recently I've been thinking about the role that the private sector can play in mass transit. I'm a firm supporter of public transportation as a vital part of urban living, but sometimes it leaves holes that are better filled by other organizations. Taxis are an example of on-demand transit that fulfills a need - that of the carless urbanite who is tight on time or flush with cash. Cabs are also useful after a night of drinking if the bus is too slow or indirect for one's tastes. But cabs are expensive, to the point where many would rather drive drunk to avoid paying the fares, or designate a sober driver who has to deal with the headache of parking in a dense urban neighborhood and refraining from drinking.

In Seattle, I often find myself frustrated getting between a pair of neighborhoods that are geographically isolated from one another, with limited public transit and extremely tight parking. Ballard and Capitol Hill are two of the most vibrant neighborhoods in Seattle, both boasting dense housing, amazing restaurants, and hopping nightlife and music scenes. The two neighborhoods lie on opposite sides of Lake Union:

While a cab or car ride might only take 15 minutes (not counting the time it takes to park), a bus ride takes nearly an hour, including transfers. Metro seems little interested in providing direct routing between the two neighborhoods, although matters will significantly improve once light rail serves the corridor between downtown, Capitol Hill and the University District. Even so, the quickest route between the two neighborhoods will still likely be around 40 minutes, and that's if your transfer is perfectly timed. Not so stellar. Might there be an alternative in the next decade, while the city gets its act together to build grade-separated rail from Ballard to downtown?

I thought I'd engage in a little thought experiment, and start to ask some marketing questions.

What if someone ran a van between the two neighborhoods, with stops at the most popular spots? Could private transit fill the gap? Here's what I have in mind:

 A pair of 16-passenger shuttle buses (the used one on the left is selling for $4000) could run a fixed schedule between Ballard and Capitol Hill during the evening hours, with regular departures every half hour on the :00s and :30s until, say, 3am. Fares would be about the cost of a drink -- somewhere between a cab fee and a bus fare -- and barf bags would be included. Music selection would fit the mood. Passengers could pay when they board, or pay in advance online (round trip or one-way) for a $1 discount. Because it's a set route with regular departures, people would know they can depend on getting where they want to go, and they'd quickly get the hang of exactly where they need to be to make it home after a night of carousing.

There's some serious benefits to society here too:
-Fewer cars on the road, which means less greenhouse gas emissions.
-One less reason to drive drunk means safer roads.
-Stronger connection between Seattle's hottest neighborhoods and the friends who live there, and a boon to the restaurants, bars, and music venues (and musicians) in the two neighborhoods.

So what do you all think? Would you use such a service? How far would you be willing to walk for a cheap, quick and easy ride to a hopping nightlife spot? How much would you be willing to pay? Would you be more likely to use this traveling alone or in a group? What kind of partnerships might help make this possible (perhaps a public private partnership with the neighborhood chambers of commerce?) Could this actually be a money-making venture if done right? What kinds of costs would we need to look at? Might it even be a victim of its own popularity?

Let me know what you think!

Is marketing evil?

I've been having trouble thinking of what to talk about the last few weeks. Truth be told, I'm not super interested in marketing as an overall subject. I'm interested in the particulars.

Something that does interest me, and has come up quite a bit in class discussions is ethics in marketing. The question "is marketing evil?" is often brought up. I think the answer really must lie in the idea that marketing is simply a tool (or set thereof). It can be used for good and it can be used for "evil," if you will. That is, marketing can be used to discover and satisfy an unmet or poorly addressed need, thereby improving the lives of countless people. Or it can be used to discover where a human weakness can be exploited in order to make money.

Let me try and elaborate: when a company conducts a marketing study to figure out how to sell junk food or cheap toys to children, in my opinion that company is using marketing in an "evil" way. If a startup tries to figure out how to better enable families to keep in touch or stay safe in their cars, marketing is being used for good. Many of the most important technological advances have happened, or at least gained traction, through marketing just as much as engineering. Without proper knowledge of the market and people's needs and wants, a seemingly great idea can fizzle. Even nonprofits benefit from marketing. Fundraising is greatly improved through effective research and outreach. Inversely, a firm understanding of current trends and desires (and maybe brainwashing techniques) can make a useless gadget or toy sell like hotcakes. Ever seen a Furby?

Some amount of marketing is nearly always essential for the success of a business, and it's pretty clear that there are a huge range of businesses with a wide range of goals and ethical standards. Regardless, I'm excited to learn more about how marketing can help regenerative business to be an effective force for improving our world.

Super Sunday

I'm totally fried from this week's quizzes and case study. I'll be writing my post tomorrow.

Decisions, Decisions

Like most teams, my project group has had some difficulty making some of our decisions over the last few months. To be fair, we've done a fairly good job of making smaller decisions regarding tasks or even individual roles. But coming to a consensus on bigger content-oriented questions has been difficult at times, and set us back on the project timeline. Last quarter we didn't pick our problem statement until about a month into the quarter, and we're still picking the organization we'll be auditing this quarter.

So what goes wrong to cause decision-making so difficult in teams, and what can be done to make these decisions easier?

We decided to read "when teams can't decide," an article by Frisch in the Harvard Business Review.

Frisch argues that one of the big problems is that many teams don't ask the right question when a decision needs to be made...

He also talks about the executive decision when an impasse is reached, and how it can lead to resentment and lack of buy-in.

So how can teams come to a decision that will be accepted and embraced by all the members? In a group of four like ours, this buy-in is extremely important.

I think we'll need to frame the question and desired outcome better. What exactly are we looking for from the organization we pick? Do we want an organization that is a leader in the field so we can build on what they're doing right? Maybe we want a company that is making good money? Maybe we want to look at an organization with the same mission statement as us but which is struggling so we can make some helpful recommendations? Or maybe we want someone who will be excited to work with us and share lots of information.

If we can agree on some criteria first, then I think that picking an organization will be much easier.

Back at it with an interesting concept for student loans!

Hi everyone! After a nice long break it's time to get this thing going again.

Having learned last quarter about the current systems in place keeping so many low income students from finishing college, this quarter we will be looking at an organization that is currently working to address this problem. We will then recommend changes that would make that organization more effective.

Something my team discussed at a recent dinner was the idea of tying financial aid to personal and career counseling. As we found last quarter, two of the most important reasons for college graduation failure are finances and stress. What if we could kill wo birds with one stone? What if we required that, in order to receive a low-interest loan, a student must meet with a counselor twice a month to work on personal issues holding that student back? Could we assure financial stress relieve coupled with significant improvement in stress management and life skills? Could this significantly help with college graduation rates for low income students?

First, we need to answer a few important questions.

How do we sell the idea to investors?

Investors want to have reassurance that either their investment is low risk, or that their risks are balanced by a high potential payoff. I believe that the former would be the main argument we'd have on our side. Here's why: Most of the risk involved with student loans is the threat of missed repayment. Students who don't graduate have a hard time finding a good job. If they don't get a good job, then they can't repay their loans. If we can do something to significantly increase graduation rates and get good jobs, even if that costs more, we can increase repayment and potentially offer loans to students traditionally considered "riskier" and offer lower interest rates. I believe the costs of providing counseling would be minor and be offset by higher repayment rates. But even more importantly, this could make significant strides in lifting low-income students out of poverty.

What would the students be coached in?

Personal development, career development, study skills, stress management, relationship management, and financial management would be a few of the areas in which any student would greatly benefit, but especially a low-income student. The content would be similar to what we focus on in Leadership and Personal Development at BGI, but tailored to undergraduate students. Counselors would be trained in and focused on helping students to graduate and find a successful, fulfilling career. Upward bound might provide a useful model for coaching and counseling students.

Of course, there's still some research we'll need to do, such as the effect of counseling on student graduation, typical student loan rates, and the cost of providing counseling, but I believe this may be a great opportunity to greatly impact the lives of many students and begin to address income inequality in our country.

 

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Consumer Christmas

[This post was meant to be written on December 9. Instead, I waited 'till the eve of the apocalypse for additional emphasis.]

After weeks of academic writing, it's time to let my hair down a bit and share some opinions! I just finished my Christmas shopping. All in all I think I spent $160 dollars, mostly on useful new things, some made-in-Seattle candle holders, and a few vintage records.

However, by tradition, my maternal extended family insists on a yearly $50 gift - we draw names from a hat and give that person something they probably don't want or need, since it would be rude or shameful to ask for something specifically. And besides, Christmas is about extravagance, not usefulness. It's the most shoppingest time of the year!

This gets me thinking about consumerism in our culture. Last week (let's call it that) I wrote a bit about gross national happiness as an alternative measure to GDP. Consumption is a major driver of GDP in America, and the holiday shopping season is often touted as vital for the American economy. Christmas has the power to create jobs, defeat the terrorists, and save America from certain doom!

According to a recent Gallup poll, Americans on average plan on spending $770 on Christmas gifts this year. 30% plan on spending more than $1,000. While this is off from the 2007 peak of $866, this is still a lot of money and will certainly put a dent in the finances of many Americans. So why do we spend so much on Christmas?

Are we Brainwashed?

Think about it.

Ho-Ho-Hos

Garland

Giant Red Bows

Twinkly Lights

Candy Canes

Jingle Bells

The Smell of Freshly Cut Fir Trees

It's like one giant Pavlovian orgy intended to get us to spend all our money in one month. At the first three notes of "Deck the Halls" we're bending over and asking how much it'll cost us. Then we wake up the day after Christmas and ask ourselves why Christmas just didn't feel like Christmas this year. Wash, Rinse, Repeat.

From our first winter as a child, we are brought up to expect magic every year on December 25. We're told tales about a big fat man with a beard whose sole purpose in life is to stealthily give us useless toys in exchange for some cookies and milk, so long as we're good for the two weeks leading up to Christmas. It's all an elaborate bribe as far as I can tell, perpetuated by the companies who profit from our out of control spending: advertising agencies, toy manufacturers, Macy's, Walmart and Target.

Is Christmas really that great for the economy?

A CNN Money article (from Canada where they're experts on Santa) discusses this question and finds that, with so much of our money going to Asian manufacturers, the economic impact of Christmas may not be as significant as we've been told. Add in the argument that our money is being spent inefficiently on things with little use while building up debt that will hamper future spending, and the case for the Christmas boom sounds a little bit shaky.

And of course this is ignoring the immense environmental impacts of an elaborate Christmas. For instance, how much of our wrapping paper and ribbon is simply thrown away after one day of use? How many gifts are manufactured using coal, shipped to America using bunker fuel, and trucked to warehouse, store, and home before sitting idle and useless in a closet until they are rediscovered and thrown in a landfill? Could this energy and money not have been used for something worthwhile? Paying off household debt, for instance, or donated to a charity? And of course all of this is mere distraction from the things that make the holidays meaningful: goodwill, family, charity, and staying sane during the dark of winter.

An alternative Christmas

I fully intend to institute a gift-free Christmas next year, in order to focus on those closest to me. Eggnog, twinkly lights, candles and a wreath should be enough to have a cozy Christmas with loved ones. I'll just have to see what my family thinks about breaking with tradition.

Toward a new meaning of success

 Something I've been thinking about lately - and which we've discussed in class - is the idea that our measure of economic success is off. For decades our government and economists have focused so much on growth in Gross Domestic Product without thinking about whether GDP is a worthy measure, or what our true goals are. GDP basically measures how much money changes hands in the economy but doesn't measure all of the other transactions and activities that help to provide quality of life. When someone does a home repair or babysits their grandchildren, GDP measures these as less valuable than, say hiring a repairman or sending kids to daycare, because no money was changed hands. However, I would argue that these activities performed by self or a loved one are more valuable in improving one's happiness.

Even more, is a family dinner, a hike, a bonfire at the beach, or a hug represented in the GDP? Only marginally. GDP seems to only measure one element of the life of a country, and yet it is often held up as THE main indicator of the progress of a country.

So what should we be measuring?

Let's start by examining a few elements that make a good place to live.

• Personal freedom. 
• Social mobility. 
• Support of family and friends. 
• A healthy environment. 
• Useful infrastructure. 
• Access to work and knowledge. 
• Access to healthy food and quality shelter. 
• Freedom from crime, fear, and government corruption.

Few of these are measured by traditional economic metrics. What do they all have in common? I would say they are all means to one common end: human happiness.

Toward a measure of gross national happiness

Bhutan has begun to use  "gross national happiness" as its main measure of national success. That is, if the economy is growing by western standards but its people are unhappy, the government must act to improve the quality of life of its citizens. I believe we should consider following this model.

The GNH index used by Bhutan measures the four following pillars:

• good governance
• sustainable socio-economic development
• cultural preservation
• environmental conservation

Those have been further divided into nine "domains:"

• psychological wellbeing
• health
• education
• time use
• cultural diversity and resilience
• good governance
• community vitality
• ecological diversity and resilience
• and living standards.

I believe that if the United States were to begin incorporating such a measure into our national goals, we would all be better off, and we would do things quite differently. Rather than simply focusing on the bottom line, we would begin to make strides toward the well-being of the economically disadvantaged. Indeed, some of the harmful economic activities so prominent today might begin to lose their luster as we begin to focus more on what truly makes human beings happy.

Fiscal Policy and Unemployment

Sorry everyone, this post is going to be short tonight as I'm fighting a bug and really need a full night of sleep. This last week has been challenging as I try and fit in more schoolwork to an ever busier week. I'm confident I'll strike a balance as I move from a mode of scarcity to a realm of possibility, but whoever said that November was going to be a difficult month in our first year at BGI was right!

Anyway, we've been discussing fiscal policy and its effect on the economy. Expansionary fiscal policy can directly effect GDP and create more jobs. One question that we need to ask is, can we combine expansionary fiscal policy with investments that will make long-term benefits for the economy and society as a whole? The Bush tax cuts and military spending hikes may have grown the GDP, but at what expense? Arguably, we made the rich richer, the poor less secure, and created a culture of fear and instability, while partly setting the stage for the largest recession in recent memory. This led to more power in the hands of the powerful serious tension and polarization in our politics. Hardly a positive development.

On the other hand, the American Reinvestment and Recovery Act (or ARRA) of the last four years, while modest, has sought to invest in infrastructure projects and various programs that can have a lasting positive impact. Particularly valuable is the investment in public transportation, which benefits the middle class and improves connections within and between cities. The construction projects themselves provide thousands of jobs, while the systems, once running, will also provide jobs while improving connections between people, which can help lead to a more vibrant economy. Like the great freeway expansion of the Eisenhower era, creating something valuable and tangible with our government spending has the double impact of injecting money into the economy immediately and supporting long-term economic health.

Assets and Liabilities

Goodness gracious! Another busy week. I committed months ago to hosting a Halloween party on Friday, without understanding how much time and energy my coursework would require. It was a fantastic time and one friend even called it "the party of the year," but I'm paying the price right now. Time and energy are a limited asset at the moment, while I suppose sleep debt is a short-term liability. Basically, I feel like I'm over-leveraged right now and that won't change until my work schedule subsides next week. (How's that for internalizing our economics lingo?) Live and learn.

Some of the research and reading I've done this week has centered around structural versus cyclical unemployment, and their roles in the current economic climate. Structural unemployment refers to a mismatch between jobs and workers. That mismatch can be in skills, geography, experience, or any number of other factors. As the economy changes along with the types of goods and services we consume, there will naturally be a mismatch as workers in old industries will lack the jobs for new industries. While I'm sure this plays some part in the currently high under- and unemployment rates, this Atlantic article and this Reuters article both argue that the more pressing and dominant issue is the overall lack of jobs. In fact, according to Economytrack.org, the number of unemployed workers per job opening peaked at over 6 in 2009, and is still hovering above 4. And high-school graduates fare significantly worse than college graduates in competing for middle-education jobs in the current economy.

So maybe adequate or appropriate education (or lack thereof) is not the dominant issue facing recent college graduates. If much of the workforce is overqualified, then the real goal should be job creation, not reeducation. But what about jobs outside of the current employment system? Can we just sit around and hope that something will change and all will be okay? Some on the right think that simply cutting the taxes on the rich will fix the economy, but Norm's recent blog post suggests otherwise. And what if the current economic system is broken? Perhaps limited participation in the existing system of greed and exploitation is possible. Perhaps there are other ways to live a productive, comfortable, happy life outside of corporate America.

As Jill mentioned in a comment last week, there is a growing trend of young people creating their own economic opportunities - creating a new economy where the roles of giant corporations are limited and flexibility and relationships are paramount. For instance, Airbnb hooks up vacationers with property owners who want to rent out empty rooms or homes for some extra income. Taskrabbit allows people with valuable skills or physical resources and free time to bid on tasks ranging from raking leaves to planning a party. Time banks offer a similar function, except helpers are paid in time credit, which they can then use to pay for other services from members of their communities.

These are just a few ideas for how we might improve income among unemployed and underemployed college graduates while providing more meaningful interaction and services. But how about the psychological impact of the last four years, and the feelings many of us hold that we are now outsiders, disenfranchised from the mainstream of society? Can these alternative economies start to heal the wounds of unemployment and disappointment, or will it take a wholesale shift in the economy for the disenfranchised to feel validated? I hope to examine that in next week's blog. Stay tuned!

What's holding college grads down?

Now that we're moving into systems analysis in our group projects, I thought I'd take a first swing at some of the reasons why I think recent college graduates are having trouble finding meaningful work. Sure, as Norm mentioned in a recent blog post, GDP is up 2% over the last quarter. That's great for those whom it helps, but there are still huge amounts of people who are down and out, even college grads. Let's examine what's keeping them back.

Fewer Jobs

Of course, this is the most obvious reason. Jobs are indeed harder to come by in the current economic climate than they were 10 years ago. This is due to a number of factors. Besides the general economic malaise with its accompanying layoffs and lack of hiring, the nature of the American economy has shifted over the last 50 years, from a manufacturing-based economy to a financialized and monopolized economy, where the presence of large firms and their economies of scale means fewer employees are needed for the same amount of work. Technology, such as computers and robots, has also made some jobs redundant. For instance, significantly fewer workers are needed to make a car than were needed 50 years ago. I think that lots of these traditional jobs are gone and will never come back, and the recent economic depression only hastened that process. 

Lack of Confidence

On an individual and personal level, being out of work, whether after graduation or a layoff, can be extremely damaging to someone's confidence. That lack of confidence can limit the goals one sets and the energy to pursue those goals. One can feel unmotivated and much less willing to take risks, especially when those risks involve spending money. Lack of confidence can also hurt performance in interviews. I think this is a self-reinforcing cycle until a major change helps to break the chain. This is certainly the case for myself. It's been nearly 3 years since I was laid off from a consulting job that I was fortunate to land after college. The hung-ho, confident outlook I had through college is only now starting to return now that I'm at BGI and surrounded by such an amazing community.

Misplaced expectations

On the flipside, the Echo Boom was one of the most privileged generations in the history of the world. We expected things to be easy for us - that college would put us into a stable, well-paying job with a comfortable retirement. We expected convenience and immediate gratification. Perhaps we even expected a hollywood life, because that's what we're bombarded with on TV. We expected an easy life. Perhaps we were too complacent. Perhaps growing up in comfort, we missed out on the do-it-yourself ethic that our great-grandparents knew. But this is changing. We've learned some hard lessons, and a new bottom-up economy is emerging in the vacuum. 

Insufficient Education

Perhaps one of the problems is the degree itself. Or to be more specific, the content of the education. Maybe colleges aren't putting enough resources into preparing college graduates for a changing job market in which things are no longer neatly laid out for us. I was fortunate to have a career-oriented degree in which resumes, cover letters, team-building and conflict resolution were part of my coursework, but many students, particularly in the liberal arts, have no clue as to how to build a career outside of academia, due to no fault of their own. 

These are just a few contributing factors in the underemployment of many college graduates, and I'm excited to explore more soon. 

Week 3: Generational Inequality

Whew! It's been a busy week! 3 team meetings to agree on operating agreements and a problem statement, followed by editing both documents; quizzes and excel problems on Return on Investment; a dozen readings; and 30 hours of work at a very busy Trader Joe's. Add drastically changing weather and noticeably shorter days and it's no wonder that I'm tired!

Fortunately I can now sit back, relax, and blog about one of my pet issues, which my team decided to take on as our official problem statement.

Underemployment of Recent College Graduates

That issue happens to be the problem of an increasing number of college graduates failing to find meaningful employment after graduation. We are just starting to dive into this topic but I am quite excited to begin to sift through the causal relationships and find leverage points where we may be able to make an impact on this problem.

Here's how I see it:

Traditionally, college graduates could expect to find a well-paying, stable job right out of college and plan to buy a house within only a few years. By 2007, that expectation had already become less tenable as the cost of tuition, housing, food, transportation, and numerous other necessities were rising and taking a larger chunk of graduates' incomes, which were remaining flat. And with the financial collapse of 2008 this dream was dashed for an ever larger number of college students.

Here's a few pieces of data to show just how serious this is:

• According to The Atlantic, a whopping 53% of recent college grads are jobless or unemployed in 2012. Ouch!
• According to the same article, 18.4% of all Americans under 25 were unemployed in 2010.
• According to this CNN article, "Among 18- to 24-year-olds, 53% said they live at home or moved in temporarily, compared with 41% among adults ages 25 to 29, and 17% among those ages 30 to 34."

In addition, Norm Becker mentions in his Ab-Norm-al Econ blog that the price of housing in the areas (and states) with high-paying jobs has increased as supply has been constricted, making it difficult for recent college grads to get an economic foothold. Desirability, government regulations, and competition for limited multifamily housing units all contribute to this, in addition to high levels of student debt. While homeownership - or lack thereof - is an important issue for recent college graduates, more pressing is the lack of suitable jobs. What might be some contributing factors?

Causes

Here are just a few ideas to explore as the quarter goes on:

1. The outsourcing of a wide variety of jobs formerly performed by middle-class college graduates to developing economies in Asia. These fields include information technology, software engineering, human resources, and drafting - that is, somewhat technically-oriented jobs in which face-to-face interaction isn't regularly required.
2. Computers. This could be seen as a type of outsourcing, as machines are now easily doing the jobs that humans used to do. Mail carriers, number crunchers, draftsmen, and research assistants have been replaced by email, Excel, AutoCAD, and Google, respectively. Okay, perhaps not completely, but the amount of work that one person can do has grown considerably, meaning less jobs for everyone.
3. Concentration of wealth and a focus on ruthless efficiency. Cutting costs so stockholders and executives can rake in the dough has become something of a religion in our Chicago School-dominated economy. And as companies get bigger and bigger, economies of scale require fewer and fewer workers per unit of revenue.
4. Lack of investment in infrastructure. America now lags behind much of the developed and developing world in transportation and communications infrastructure. Most European and East Asian countries have high speed rail and a well-maintained regional rail system, while the U.S. still depends on an outdated, crumbling, and congested freeway system designed for much lower population densities and different commuting patterns than now exist. In addition, the US has lagged behind in broadband adoption.

Why does this all matter?

While the answers may seem obvious, I believe it is also important to ask, "why does this all matter?"

• College graduates who haven't established a career will be stuck behind their peers for years, and may never recover their economic confidence.
• Related to this is the larger prevalence of psychological issues such as depression, and associated healthcare costs.
• The reputation of our higher education system is at risk.
• It will take much longer for college graduates without a job to begin saving, which will severely affect their retirement comfort.
• Lower income often means delayed family formation and other potential social effects.
• As unemployment rises, crime often grows alongside it since people become desperate to find a way to get ahead.

To finish, I'd like to invite my lovely readers to give me any feedback (critical or creative) that they might have, as the more information and insight I can gather, the more likely it is that we'll be able to start to put a dent in this issue. Thanks for reading!

Introduction

About me

Hello everyone. My name is Chris Shotwell. This is my first post for my Bainbridge Graduate Institute blog. I just started the program and I'm super excited to explore the many ways in which business can make the world a better place.

First, I want to introduce myself. I was born in Seattle and moved around quite a bit as a kid - to suburbs of Phoenix, Portland, and, finally Sacramento at age 11. After high school I attended California Polytechnic State University, where I proceeded to change my major several times, finally settling on City and Regional Planning. this major exposed my to quite a few new ideas and influenced my desire to protect the environment. Indeed, a major part of the urban planning profession is a dedication to protect our natural resources through responsible land use and transportation policies.

After gradation, I took the first job that was offered to me: a "planner" position with a multinational engineering and architecture firm with an office in Seattle. Unfortunately, while most of the work the firm did contributed positively to society, I found that the focus was often on pleasing the clients and shareholders rather than on making the best products possible. In addition, a sink-or-swim attitude towards recent college graduates left many of us barely treading water, and when the recession hit most of us were laid off after a few months of twiddling our thumbs. I took a few odd jobs during unemployment and eventually found a fit at Trader Joe's, where I could make enough to pay the bills while I reconsidered my path, which led me to BGI.

Inequality

But enough about me for now. This first post, I'd like to focus on a topic that has gained a ton of attention over the last few years and has launched a political and social movement: inequality. Specifically, income inequality. A lot of heated rhetoric is thrown around by both sides of the American political spectrum, and it takes some courage to step back and examine the issues with a cool head.

First, some of the facts: According to the congressional budget office, the income of the top 1% of households grew by 275% from 1979 to 2007, while incomes grew much more slowly among other groups. Similarly, while the income share of those top households grew by 10% over that period of time, the income share of the other groups actually fell by 2-3%.

An important question to address is "Why does this even matter?"

Happiness and inequality

According to recent studies an income of $50,000 is the sweet spot for happiness. below that, happiness plummets, above it happiness grows much more slowly. This makes sense, as below a yearly income of $50,000 money becomes something we are always aware of when we make a decision. Above 50,000, we can go out to lunch, head up to the mountains, for a day of skiing, and take a week-long vacation each year without financial worries becoming a burden.

Even more interesting is that studies show a moderate negative correlation between inequality (as measured by the GINI coefficient) and happiness. Why might this be? I would posit that being exposed to people who are significantly wealthier than oneself makes one significantly less satisfied - and more insecure - with one's own lot. Rather than enjoying my nice cottage, suddenly I'm wishing I had a lakefront mansion. And it makes me sad.

I'd also like to point out that while the capitalist economic system has certainly reduced absolute poverty (those living in abject conditions), this has not been uniform or universal, and in many cases, such as urban slums, living conditions have actually deteriorated even as material wealth has increased.

Economics and power imbalances

Now, I'm just starting my studies of economics but I can offer a few nuggets. The political right would argue that the wealthy make the world go round and are the main instigators of economic growth. While many wealthy people are investors, many of these investments mainly serve to make the investor more rich and, in some cases, are actually standing in the way of progress. While Joseph stiglitz's argument for causality (that inequality has been a major contributor in the current economic depression) may or may not be provable, there is little doubt that income inequality in America leads to a lopsided political situation in which the rich have a disproportionate amount of power (consider Rodney's political campaign). The rich can get away with a lot more than the middle class and poor (hire a good lawyer, just pay the speeding ticket, etc.) And as shown during the recent economic depression, when the wealthy and powerful take a risk, it can bring down an entire economy.

Something I'd like to look at in future blog posts is how much the wealthy are saving vs investing, as well as the social and economic benefits (or lack thereof) of those investments. One of the most common arguments (if not the primary argument) for low taxes on the rich is that the rich are: a.) stimulating the economy; and b.) giving large amounts to charities. If we can show that these investments are smaller and less beneficial than the right wing claims then we might be able to gain a foothold. (Is the stock market much more than a glorified gambling parlour?) I will also examine other sides of this debate. For instance, does some amount of inequality lead to greater productivity through motivation, investment, etc? Is there a sweet spot we can aim for?

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