Risk Takers Are Typically Also More Rational

During the first week of the year 2000, Sam Schmidt, an Indy Car race driver who was favored for the upcoming season, slammed into the wall on turn two during testing at Walt Disney World Speedway, leaving him a quadriplegic.

He fought back, got an MBA, bought his father’s company and with a  partner fielded Schmidt Petersen Motorsports, inspiration enough given the risks of racing.  But a new study shows that race drivers are actually more rational than the general population.

Fourteen years after his accident in the days leading up to last month’s Indianapolis 500, Schmidt drove a souped-up Corvette Stingray for several laps around the historic oval.

Using a semi-autonomous technology so he could handle the car with head movements, he hit 100 m.p.h.  Click here to see how it works.  Essentially he bites down to brake, tilts his head left or right to steer and tilts his head back to accelerate.

The development is part of a US Air Force-funded research project, but a new study shows that even amateur race car drivers are actually much “more rational” about choices than the average population.

Like motorcycle riders now who, on average, are in their 40s compared to the average of 24 during in the 1980s, the researchers found it isn’t risk they are immune from.  They are just better immune to “possibility bias.”

This is the overweighting of low probabilities that keep people from trying new things.

Instead they are less likely to overemphasize low-probability events including failure.

The latter fall on the risk-adverse “small-t” part of the T-Personality Spectrum refined by Temple professor and researcher Dr. Frank Farley over the last three decades.

Those who are immune to “possibility bias” are the “Big-T” or “T-Positive” personalities who take risks because they are motivated by intensity and innovation.

According to Farley, these “Big-T” personalities just have a much higher tolerance for uncertainty.  As nation’s go, over its history the USA has been a “Big-T” country according to Farley.

Over the course of its history, Durham, North Carolina has always been a “Big-T” community as are others who focus on being distinct.  “Big-T” is also why Durham’s destination marketing is more innovative than others.

While those who aspire to be “major league” by merely emulating others at the sacrifice of sense of place are probably “small-t” cities.

Farley also classifies gamblers and criminals as “T-Negative” personalities, a group that includes far too many business executives and government officials involved in “legal corruption” too.

When you take lessons to ride a motorcycle, you learn to sense your limitations, ride as though everyone is out to get you and always be alert to escape routes should a problem arise.

In general, motorcycle riders are expert at rationally calculating risk.

You also learn that the death rate for motorcyclists is 30 times higher than it is for drivers of motor vehicles overall, but that this rate falls dramatically depending on type of bike, e.g. sport bikes vs. cruisers like Harleys, and by speed and the age of rider.

I always wear a full-face, modular helmet because injuries occur more often to the jaw than the top of the head.  But ironically, 75% of the fatalities on sport bikes involved riders who also wore helmets of some type.

Interestingly, only half of those riding cruisers or standard motorcycles were wearing helmets when fatalities occurred, another reason perhaps that different types of bikes need to be differentiated for premiums.

But you don’t wear a helmet so you can take risks, you wear it because others who are less rational in vehicles of all type take them irrationally.  That may be why many race drivers feel safest while on the track.

Controlling speed, avoiding alcohol, staying alert and the wisdom of age bring the accident rate for riders down to near that of cars.  Overall, the fatality rate and crash injury rate for 100 million motorcycle miles traveled is 24.93 and 440 respectively.

The latter figure has fallen nearly 60% just since 1989 when I was just more than a third of the way through my now concluded career.

The biggest danger to riders is the same one it is for all vehicles: drivers of cars, trucks and SUVs who don’t pay attention.   And as we know from this assessment of what happened recently on Mt. Rainier, stuff happens no matter what you do to mitigate it.

Motor vehicle drivers are more likely than motorcyclists in my opinion to underestimate risk.  A new study by the National Highway Safety Administration computes that motor vehicle crashes costs society $871 billion annually, nearly $900 for each person living in the United States.

Nearly 70% of that comes from the lost of life as well as pain and decreased quality of life due to injuries. 

Nearly 75% of these costs are shouldered by non-participants through taxes, insurance premiums and congestion-related losses. Funny we don’t hear Tea Partiers whining about this!

The cost to society vs. the individual total $200 billion alone including nearly a fifth for direct medical care, another reason the new federal healthcare insurance requirement makes sense.

Here’s a thought for those obsessed with repealing this requirement: It may be your right to bang yourself up in a vehicle accident, but I shouldn’t later have to pay for it with my taxes or through other means.

Ride or drive stupid if you want, but insurance should be the minimum requirement.

The direct cost of a motorcycle fatality where failure to wear a helmet is involved is nearly $1.3 million alone.

But the direct economic cost to society for not wearing a seat belt is 11 times higher.

This failure results in killing 3,350 people and seriously injuring another 54,300 each year, costing society $13.billion alone, while using them prevented 12,500 fatalities and 308,000 serious injuries.

Using seat belts, which at one time was vigorously opposed by conservatives, saves society $69 billion in medical care, lost productivity, and other injury-related costs.

Two other new studies are disturbing.

One by University of Michigan researchers found that children of minority parents were far less likely to be given age-appropriate restraint while riding in a vehicle compared to the the children of white parents.

Other studies have often found that parents who are minorities, based on their own experiences, often try to counterbalance what they expect their children are going to face in society by being overly flexible, but this is one area where the requirement is a matter of life and death.

Motor vehicles are the leading cause of death and injury for children.

The other study, by the Oregon Transportation Research and Education Consortium (OTREC,) finds something even more disturbing.  An ongoing pilot study finds that pedestrians who are black are passed by twice as many cars before someone yields at an un-signalized marked crosswalk.

Black pedestrians were made to wait 32% longer than white pedestrians.  Subtle forms of racism surface when information and decisions must be processed very quickly.  This may also lead black pedestrians to take more risk in crossing.

Another new study by researchers at the University of Texas and UCLA finds that “executive functions,” the set of skills so essential to success in life and should be taught and learned at a very young age, also play a major role in our assessment of risk.

These include attention (shedding distractions,) working memory and self control, especially the latter.  Too little perhaps and we underestimate risk, too much and we overestimate the possibility or risk, resulting in “possibility bias.”

Both are harmful, one leads to truly dangerous choices, the other to a life not led.

An Unlikely End-Run

So much of what is wrong with society today can be traced back to about the time I was just graduating from college in 1972.

Back then there were just 175 registered lobbying firms according to an incredible article published this month by Stanford professor Dr. Francis Fukuyama, one of the neo-conservative founders of the magazine, The American Interest.

Roadside billboard barons back then were busy gutting the Highway Beautician Act but they stood out as exceptions and now I know why.  Today, having pacified virtually any enforcement of that act, a group such as this has become the rule at every level of government.

It is no coincidence that Americans now rank Congress next to last among professions regarding honesty and ethical standards.  Even lower is the ranking for lobbyists.

Reading that the number of lobbying firms increased 14-fold alone during just the first decade of my now concluded four-decade career in sense-of-place economic development before reaching a whopping 13,700 by the time I retired years ago, brought to mind an eloquent rant I listened to on the return leg of a cross-country road trip last fall.

One of the advantages of being a long-time political independent is being free to glean insight from all along the ideological spectrum.  The End Game for Democracy by progressive-leaning journalist and commentator Bill Moyer goes hand in hand with Dr. Fukuyama’s article on the other end of the spectrum.

The conservative columnist, David Brooks recommends that strengthening the executive branch is the solution.  A moderate Republican friend of mine and former local official would probably agree.  He speculates that regulations have become cumbersome and rigid primarily because so many executives fail to enforce them.

Fukuyama’s article appeared a few days after New York Times coverage of a new report by investor-inspired CDP showing that nearly 30 of America’s largest corporations including five major oil companies are not waiting for Congress to break free of special interests blocking it from taking action to control global warming.

Realizing that a market based cap and trade system such as that working so well to reduce Acid Rain will ultimately be the most cost effective way to reduce emissions, these corporations have already begun to incorporate a price on carbon in long range plans.

This hopeful news followed a report a week earlier in The Atlantic magazine about a community of more than 830 businesses across 28 countries and 60 industries worldwide enrolled in B Corps, a way to use market-based, scalable solutions “to compete not just to be the best in the world but the best for the world.”

The authors of the book Nudge: Improving Decisions About Health, Wealth and Happiness, who categorize themselves as libertarian paternalists, would likely agree.  These efforts are nudges to do the right thing.

Many states (20 have passed laws including Delaware and 18 more are working on it) are even establishing a new category of business incorporation called Benefit Corporations.  Unfortunately, North Carolina, where I live, lagging behind its neighbors to the north and south, is still one of 15 states failing to make progress, if not moving backwards.

The designation recognizes in a corporation’s legal DNA a signal to investors and consumers that this types of business considers what’s good for the earth and its inhabitants as good for good for business, a new style capitalism.

Together with certification programs such as Durham, NC-based Green Plus and a ground swell toward social entrepreneurism, I have hope that democratic institutions will one day be reclaimed from the stranglehold of “winner-take-all” special interests.

If reading all of this makes you feel as optimistic as it does me, click here for a report disclosing corporate and investor exposure to deforestation in terms of “operational, reputational and regulatory risks and opportunities and the value creation and erosion.”

Deforestation today contributes as much to greenhouse gas emissions as all of the cars, trucks, motorcycles, ships, airplanes and trains put together.  Look soon for “deforestation-free” designations in the marketplace.

And one day soon, this report will also help corporations understand their contribution to deforestation and value erosion from marketing departments that still condone roadside billboards.

Just sayin!

Old-School Sales Isn’t Extinct, but it has Migrated

Studies show that on average half of every job is project management. Another 40% is sales if you define sales like Daniel Pink does in his new book entitled To Sell Is Human – The Surprising Truth About Moving Others. I guess that leaves 10% of the average job for getting coffee, water-cooler gossip and hopefully catching up on “best practices.”

Pink is defining “sales” as any action to move others to exchange resources such as money or time or behaviors such as attention or effort for something you have.

Doctors, for instance, are selling when they try to persuade us to eat right or exercise.  More than 1 out of 9 people still work in jobs defined as traditional sales.  However, Pink’s entertaining and fact-filled book makes an excellent case that the other 8 in 9 are still involved in some type of selling.

Customary sales is only one small slice of the pie when it comes to the full range of communication activities that fall under the umbrella of marketing.  However, in some ways, every element of marketing, especially advertising, fits Pink’s definition of sales as “moving others.”

In 1895, with only four motor vehicles registered in the entire United States, the first community-destination marketing organization (DMO) was organized.  However, in those days it was really only a sales organization, as far too many DMOs are still stuck today.

Within a year the first automobile dealership opened becoming the basis for a caricature of what many people have used to stereotype sales over the years.

However, today, the stereotypical sales-type is much more likely to work in politics including many working as lobbyists for special interests or on behalf of political action groups and some even in elected positions.

Many of the best examples of sales people working in politics are now found in traditional local downtown/economic development, particularly in communities where those organizations rely heavily on lobbying favorable treatment from local government.

Rather than becoming extinct, traditional sales people have found refuge in politics because that interplay between special interests, campaign donors, lobbyists and elected officials is one of the few areas still functioning as though access to information is still asymmetrical (where one party has more or better information than the others.)

This is why politicians and even some working in public agencies seem to prefer being spoon-fed rather than to read, eschewing data for anecdotal opinions and far too often for ego massage.

There too, these throw-back sales archetypes stand out because they specialize only in zero-sum, power-politics. To them, someone always has to lose if someone wins.

You are either on “their team” or you’re not.   For them, special interest is a calling card and conflict of interest a myth.

They are likely extreme extroverts, the kind who never listen because they dominate every conversation and stop only to think of what they will say next.

Nearly all are men, many thinly veil a disdain of women in power. They tolerate technology but almost exclusively prefer the telephone or face-to-face conversation.

When they get a response to a request via email, they almost always telephone back to have it repeated verbally. When they send emails, they almost always widely copy others. They practice cornering someone as an art form. Their expertise is self-proclaimed.

They can appear very successful but only in the absence of full-cost, triple-bottom-line accounting.  Many seek every means possible to handcuff community DMOs to facilities subverting their obligation to benefit the overall community.

Despite fitting a stereotype, these sales-types have always been rare but they will probably never be entirely extinct.

In his book The Honest Truth About Dishonesty, Duke behavioral economist Dr. Dan Ariely, while noting that we are all dishonest at some level, cites experiments revealing that those involved in jobs that require creativity, such as marketing where I spent my now-concluded career, are the most likely to be tempted to be dishonest because they are good at story-telling.

That being true, then the most tempted of the creatives are probably those in sales including many now working in politics because they are the most supreme of story-tellers, especially those who still mistakenly think of sales as synonymous with marketing.

According to experts such as Dr. Philip Kotler at Northwestern University, traditional sales is about unloading something you have while overall marketing involves “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.”

Professor Kotler also notes that marketing is “terribly misunderstood in business circles and in the public’s mind,” and nowhere is it more misunderstood than in political circles, making them even more susceptible to sales pitches from special interest lobbies.

The most effective community DMOs embraced holistic marketing long ago while a few merely changed words around to mask that at heart they remain primarily sales-driven and conspicuous because they are facility-obsessed.

Those that remain sales-driven lock their communities into a perpetual and co-dependent dance - glorifying facilities, then subsidizing mega-events in hope of masking performance gaps.

Then they use these events as a rationale for an “arms race” with other communities for new or expanded facilities, all the while failing to fully exploit their community’s potential for visitor-centric cultural and economic development.

This makes these sales-driven DMOs highly vulnerable when their communities try to passively-aggressively chain them to specific facilities rather than enabling fulfillment of their community’s broader tourism interests.

More in the future on how to discern sales-driven from marketing-driven communities.

Nudging Government to Govern

For possibly the first time in its history, this month Scenic America filed a lawsuit of its own rather than just a supportive brief.  Having tried logic, evidence, encouragement and seemingly every other alternative, Scenic America has turned to the courts in an effort to get the Federal Highway Administration (FHWA) to, well, do its job.

The Highway Beautification Act (HBA) was signed into law in late 1965, during my last year of high school and just as the now-classic California Dreamin’ was released by The Mamas & Papas following a freak September snowstorm in eastern Idaho.

However, the HBA wasn’t fully deployed until 1972, as I was graduating from college.  It had been delayed by development of state-by-state agreements such as the one signed that year by North Carolina, where I now live.  By then outdoor billboard and other sign interests had already pushed through amendments that watered the HBA down, overriding the compromise agreements they made when it was created it.

The following year, as I took my first full time job in community-destination marketing to work myself through law school at night, I learned first hand about one of the amendments from Luke Williams, one of the inventors who had built the huge American Sign & Indicator Corporation based in Spokane, Washington.

In the late 1960s, Luke, a lifelong Republican, had persuaded the powerful Democratic Senator from Washington State, Henry M. “Scoop” Jackson, to insert an amendment to the HBA.  It was designed to exempt the ubiquitous, electronic time-temperature signs the company leased from the HBA’s purpose of reducing and restricting sign and billboard clutter and blight along the nation’s roadways.

The amendment carved out an exception along roadways stipulating that “public service information such as time, date, temperature, weather or similar information may be advertised on electronic variable message signs located in commercial and industrial areas.”

By 1978, as I headed to Alaska to head the DMO in Anchorage, the FHWA’s administration of the HBA had become so politicized that the agency formed the National Advisory Committee on Outdoor Advertising and Motorist Information to make an assessment along with recommendations to improve effectiveness.

It was chaired by Thomas W. Bradshaw, Jr. a former mayor of Raleigh, North Carolina.  At the time he was secretary of the North Carolina Department of Transportation during the first terms of Governor Jim Hunt, who would again serve as governor after I arrived in Durham, NC to jump-start a DMO here in 1989.

The Committee included a balance of transportation and planning experts, tourism representatives, billboard representatives, sign manufacturers –including the senior vice president under Williams at American Sign - environmental experts, garden clubs, local officials and academicians including University of George economist Dr. Charles Floyd, now a friend of mine and retired in North Carolina.

Over several years the Committee met and conducted a wide range of public hearings.  It also broke into sub-committees to evaluate a wide range of aspects before making a final report in 1981 to the head of the FHWA, almost exactly 16 years after the HBA was first enacted.

One interesting aspect of the report is that it attempts to benchmark the improvements generated by the HBA as of 1980 including a 71% improvement in aesthetic quality by removing 542,115 signs from roadsides - including 103,000 large, unsightly billboards -  and a 33% reduction in standard-size billboards while preventing another 200,000.

In 1965 when the HBA was enacted, there had been an average of one billboard every third of a mile along primary highways throughout the nation. By 1978 when much of the act had been gutted by the allies of billboard companies, the sign blight along roadsides had been reduced to a little more than one per mile.

But the improvements were not even. The General Accounting Office reported prior to the Committee’s deliberations that residents of many areas could detect little or no improvement in their states.

What they couldn’t thwart by diluting the HBA with subsequent amendments, the billboarders effectively thwarted by starving it of funding for implementation as well as by bullying agencies, bringing the FHWA to estimate in the 1981 report that it would take another 154 years to remove non-conforming signs, a clock that today has probably reached several hundred years.

In its 1981 report the Committee laments the loopholes in the law as well as poor enforcement of the HBA.  It notes in one resolution that staff and funding for the FHWA’s Junkyard and Outdoor Advertising Branch had been slashed to skeleton only a few months into the then-notoriously anti-regulation Reagan administration.

Today, ironically, many thoughtful Republicans including former elected officials believe that the reason so many members of that political party are rabidly anti-regulation is not because they are inherently heavy-handed and excessive.

Instead, they believe regulations only got that way as lawmakers responded to the general and enduring failure by the executive branch at every level of government to execute them in the first place, setting off cycles of over-tightening and more and more complexity.

At the heart of even the watered-down HBA are three relatively straight-forward restrictions that even today, nearly 50 years after its passage, both federal and state agencies are failing to properly execute.

The law stipulates that:

1) Roadside billboards are permitted only in commercial/industrial zones but using tactics some experts call “legalized corruption,” billoarders have persuaded lawmakers in many areas to establish what was already castigated in the 1981 Committee report as “phoney zoning,” and still clearly evident today in North Carolina.

2) The act stipulated that billboards existing before 1965 could continue if they met state and local customs prior to passage of the HBA. However, billboarders have successfully pressed agencies to permit thousands of new billboards after that date. Failure to enforce this aspect is the basis of the suit now filed in U.S. District Court.

3) It also stipulates that billboards must be regulated as to lighting, size and distance. This included the prohibition of digital billboards for anything other than time and temperature or public service.  The Scenic America lawsuit asserts that the lighting provision is obviously not being enforced.

However, in late 2007, just as the “Great Recession” hit during the final months of the Bush Administration, the Federal Highway Administration, without rationale or discussion, inexplicably reversed its position on digital billboards and issued a memorandum declaring that digital billboards were not intermittent.

Failing in the years since with expert testimony to persuade the FHA that digital billboards are by their very definition, intermittent lighting, and frustrated at years of non-enforcement of the Highway Beautification Act, Scenic America has turned to the courts to force the government to govern.

Scenic America, in the suit filed on its behalf by the Georgetown University Law Center’s Institute for Public Representation, is asking the courts to require the federal agency to resume active enforcement of the provisions and intent of the 1965 Highway Beautification Act, including the original intent of intermittent.

Not so coincidentally, the origins of Scenic America date back the 1980s and a response in part to the findings of Bradshaw’s 1981 Committee Report to the FHWA.

The Committee, lamenting that amendments pushed through Congress in 1978 were interfering with local community control of roadsides as well as lax state enforcement, encouraged in one of its motions the creation of state and local advisory committees across the nation to advise and assist administrators in implementation of the HBA.

However, foretelling that the FHWA would probably continue to be grid-locked or politicized into inaction, the Committee noted that it had been divided into two opposing camps and because its motions had narrowly passed, minority reports were included in the report.

Frustrated at continued FHWA inaction, within months of the Committee’s report, a nationwide coalition formed what would be renamed Scenic America later in that decade, along with affiliates in each state and in many communities, one of which I have been involved in resurrecting for North Carolina.

The objective of these scenic entities are to safeguard the scenic qualities and character of America’s roadways, countryside and communities and foster citizen engagement in scenic conservation.  It isn’t being anti-billboard but anti-blight and pro-scenic character.

Polls continue to overwhelmingly favor beautification of roadsides.  And voter sentiment runs strongly against the blight created by billboards and any tree-cutting to make them visible.

Yet this sentiment has continued to be thwarted both in legislative bodies and in agencies by powerful billboard interests, even as consumer and business use of billboards had dramatically shrunk to less than .20%.

Economists call the tactics used by billboard companies “rent-seeking,” including campaign contributions and heavy-handed lobbying.  Think of it as renting economic value by influencing government decisions rather than creating economic value.

Other experts refer to these actions as a form of “legalized corruption.”  According to free-market advocates, entities and allies so engaged are not pro-market but seek instead to tilt the playing field to their benefit, but never to level it. Lawmakers and agencies are pawns, voters the victims.

Hopefully Scenic America will prevail in the courts and government will begin to govern by finally and fully enforcing the Highway Beautification Act.

The Same Ole’ Enemy – 239 Years Later

Taking a long-view of economic history is another way to pinpoint the fact that climate change is a direct result of human activity.

Years before it would be confirmed by Berkley Earth by scientists who were skeptical about climate change but who found the link after going over data from the last 250 years, one could see the link pinpointed in the work of economic historians such as the late Dr. Angus Maddison in his book entitled Contours of The World Economy 1-2030 AD.

Berkley Earth reconstructed climate data to make their link, while Maddison reconstructed economic growth over three millenniums to find a pattern.  He learned that between the years 1 and 1000 AD, around the time that another era of climate change spawned Viking conquests, people had actually become slightly poorer overall.

Between 1000 AD and 1820, economic growth was stagnant even in western Europe and spinoffs such as the American colonies and fledgling United States of America.  The surge following 1820 was brought about as the industrial revolution kicked into ever higher gears.

Ironically, the seminal Boston Tea Party protest was not over unfair taxes but a revolt against a tax loop-hole created by the British for a “too-big-to-fail” corporation at the disadvantage of small independent merchants, some of them smugglers, as noted in this excellent TED Presentation  published on “Black Friday” by Stacy Mitchell, a senior researcher for the Institute for Local Reliance.

I agree with Republican lawmakers that there is something wrong with government but, in my opinion, size isn’t the real issue.  Making government more nimble and responsive seems much more important. Nor do I buy the part of their tightly-woven narrative that this group’s frequent stalemating is on behalf of small businesses.

I am far more persuaded that the policies that have marginalized the middle class over the last thirty years and eroded small business by consolidating almost every part of the economy into the control of a few top-heavy players has been engineered not by government or the free market but by those on whose behalf lobbyists have rigged the system.

Even the process of devising regulations has been polluted by special interests; and those who argue that regulations should be simplified are far too often only fronting for interests, such as outdoor billboard companies, eager to see these regulations further rigged to their exclusive benefit.

“Rent-seeking,” the term economists give this loathsome activity probably dates back to the 1879 book Progress and Poverty, written by economist Henry George in the early years of the Gilded Age.  George observed that poverty occurred back then when policies permitted absurd “economic rents” to be charged by monopolists including landowners resulting in an over-concentration of unearned wealth.

George proposed solutions he believed would benefit both capitalism and labor while curbing these rent-seekers.  Seven years after the book was published, George sought the office of mayor of New York City but finished behind a Tammany Hall candidate.

However, the coalition forged by George caught the attention of the third place finisher, Republican candidate Theodore Roosevelt.

Henry George had forged a coalition of groups that in a few years would become nationwide force known as the Progressive Era, which sought, in part, to curb the excesses of the Guided Age.  A variation would elect President Theodore Roosevelt and inspire the Square Deal including conservation and anti-trust.

It isn’t easy being a Republican right now.  A social network feedback-loop has the party torn between a “circle the wagons” approach and a desire to open up to alternatives.  A new poll for ABC, Washington Post and the Pew Center shows that by 53% to 27% Americans will blame Republicans if the current impasse persists.

The party would do well to study T.R., one of its greatest Presidents.  The real enemy isn’t government or taxes and it isn’t Democrats or women or minorities.  Just as it was in Boston harbor as the dawn of the American Revolution, the common enemy is still economic rent-seekers.

This issue isn’t about the 1% or the wealthy, although many didn’t earn their wealth but used rent-seeking instead.  The issue economic rent-seeking, as Joshua Brown, who blogs at The Reformed Broker, put it so eloquently a year ago is about the fact that:

• “America hates unjustified privilege,
• it hates an unfair playing field and crony capitalism …,
• it hates privatized gains and socialized losses,
• it hates people who have been bailed out and don't display even the slightest bit of remorse or humbleness in the presence of so much suffering in the aftermath
• it hates rule changes that benefit the few at the expense of the many…”

Managing for Porosity and other Survival Tips

It has been twenty months now but I still keep coming back to a 30-page report by Andrew Curry entitled “The World In 2020,” a document prepared for business leaders but equally prescient for policy-makers.

It provides a window on business challenges that goes far beyond the next seven years, and its eight contours of “the map of how the world is likely to change” are as applicable to small organizations as to large.

Curry’s report synthesizes expert observations about lingering changes embedded in the worldwide crisis of 2008.  Quoting Ged Davis, a former petroleum executive and currently co-president of The Global Energy Assessment, who claims that “a trend is a trend until it bends,” Curry notes that trends do not continue unchecked:

“Eventually, they create a response, and it’s in the interplay between trends that new markets open up and new risks emerge.

There are some relative certainties embedded in the big trends which will shape the world over the next decade but there are also some uncertainties, where several trends collide and combine.”

The report identifies “hard constraints,” “soft opportunities” and “ambiguities.”  Rather than viewing these as dilemmas to be traded off as businesses often do, it distills business “dilemma theory” developed by Charles Hampden-Turner and Fons Trompenaar.

The report notes that business “dilemma theory”…“suggests that rather than ‘either/or’ trade-offs, ‘both/and’ outcomes reconcile differences and create more value, opening up spaces for innovation.”

The reports cites Umair Haque, the director of Havas Media Labs, who blogs for Harvard Business Review who claims that “the future belongs to ‘the meaning organization’ which sets out to build authentic prosperity.” 

“Companies are going to have to get lethally serious about having an enduring, meaningful, resonant, multiplying, positive, proliferating set of impacts—of all types, whether social, human, intellectual, spiritual, creative, or relational. An isolated notion of ‘profit’ is obsolete: it’s an arid industrial-age conception of a currency-focused construct that’s built to trivialize everything but what a firm owes its ‘owners’.”

Curry’s synthesis also suggests that “capitalism, perhaps, is no longer well served by capital” and that “one way of thinking about this new business landscape is to go back to some of the early ideas about economies, namely that an enterprise was obliged to combine resources of land, labor and capital” with an emphasis on stewardship.

No this isn’t the brittleness of today’s libertarianism or your father’s but it may be your grandfather’s.

In an ominous note, the report, while quoting Stein’s Law that “the future is never a simple extrapolation of the present, reminds us that “globalization has retreated in the past: by some measures, levels of economic interconnectness are lower today than at the outbreak of WWI.”  And we know how that turned out.

I found particularly enlightening the report’s discussion of a distinction made by Dr. Barbara Heinzen between “column” property rights which are framed only by economic rights and “mosaic” property rights “giving different groups overlapping rights of use and access to land.”  This distinction would help resolve the desecration of public roadsides by private billboard companies in favor of the public’s right to a scenic view-shed.

The report indicates that adoption of “full-cost” accounting models “which include the costs which businesses,” such as billboard companies, “currently dump on their neighbors and the environment.”

Curry notes that “one of the sharpest trends in the wake of the financial crisis has been the widespread emergence of arguments for new ways of measuring economic and business performance.”

Perhaps of particular interest to my former colleagues in community-destination marketing is a section of the report on the business of the future.  Instead of relying on descriptions such as relevant, “responsive, adaptive, flexible, agile” it details three characteristics under the headings of:

• Managing for resilience
• Managing for variety
• Managing for porousness

I’ve cited this report in previous blogs and judging by my continual re-reading, I will again.  Rarely, if ever, has so much useful insight been packed into thirty pages.

Do Tax Cuts Generate Growth?

There are some really smart people who run for President of the United States of America and many who may be even smarter serving as advisors to these candidates.  One of them, Mitt Romney, who was a richer if not also smarter classmate of mine at Brigham Young University during the 1970s, is promising to cut taxes even further as a means to quicken economic growth.

To moderate Independents such as me that may sound reasonable, in the same sense that any stimulus is also reasonable, until you look at the result of past tax cuts as illustrated in the chart in this blog which appeared last month in a New York Times piece by David Leonhardt.  

Looking at the period covered by the terms of our previous four presidents, it turns out that when taxes were increased during the George H.W. Bush and Bill Clinton administrations growth occurred – indicating that their tax increases actually generated or were not adverse to economic growth.

The complete opposite happened, when in the both the early and mid 2000s, George W. Bush cut taxes.

Of course it is more complicated than that and anyone interested or swayed one way or another to base his/her vote on this issue alone would be well advised to read Leonhardt’s piece.

One reason tax cuts have so little, if any, impact is that tax rates are are currently so low.  Tax cuts also don’t make much sense at a time when our most important priorities are to make significant reinvestments into aging infrastructure, research and development to achieve energy independence and to restore strategies to generate social mobility and pay down the deficit.

Any tax priority now seems better aimed at revising the code and eliminating loopholes and especially favors carved out by rent-seeking groups that rather than create value-added to the economy seek to use lobbying and campaign donations to rig the system in their favor.

As for the so-called 47% who Romney claims don’t pay federal income taxes, which is more like 1%, it appears to me from recent analysis that they disproportionately live in red-states and that the proportion has tended to increase during my lifetime mostly during Republican administrations.

There has to be more to the fact that so much analysis reveals that states dominated by factions who seem to despise government and taxes the most, including reforms such as those being made to healthcare, are the same states where residents take far more than they give in terms of federal benefits, who are more obese and drive up healthcare costs, scam Medicaid while going to college and have higher teenage pregnancy and the worst credit.

Maybe some of this can be chalked up to “inversed projection,” a condition where individuals or groups subconsciously rationalize a contradiction by painting themselves as the victim instead.

But just maybe, across the political spectrum, we all need to be a little less impious and spend more time looking into the mirror than down our finger.  Humility in a candidate may be the attribute that most swings my vote in this election.

The Hoof Beats Of Obsolescence

Last month, while I was traveling cross-country and back, I read one night, as I was catching up on news, that the proportion of Americans with smartphones zoomed past 44% and is projected to approach 60% in just a few months, up from 31% last year.

More remarkable, 74% are already using the hand helds to access location-based information in real time including a majority who use them for GPS navigation from a car or vehicle, further fueling the futile desperation by companies owning roadside billboards and their determined efforts to scrape and clear-cut more and more valuable roadside vegetation even though independent surveys now show that the ads place on these hulks now influence fewer than 1 in 10 consumers (8%) to purchase anything in a given year.

As much as we disagree on the sanctity or value of trees vs. the needlessness of roadside billboards, I can empathize with the fear these technologies create for those whose lives and careers have been centered around something that is fast becoming extinct.

Billboard companies are just the most visible form of media to hear the ominous technological hoof beats of obsolescence.  A new study shows that 21% of TV subscribers have moved to cord-cutting or cord-shaving in just the past year.  This also applies to local television for those who access it through subscription. 

More than 60% of consumers now use time-shifting such as video on-demand weekly and 60% use social media while watching television, up 18 points from just last year.

At the same time 58% of smartphone owners and 38% of all cell phone owners use the device to “keep themselves occupied during commercials,” prompting forecasts that online ad revenue will eclipse television within just four to five years.

Technology, as well as the decline in trust for advertising in traditional media (nearly 25% in three years) along with the over-exposure individuals feel at being bombarded with 10,000 advertising messages a day, is fueling the substitution of earned media such as news articles and much more trusted and curated content on organizational websites such as the one at this link for Durham NC, where I live.

It is also spawning formation of new media such as “digital placed-based advertising” (e.g. the video ads shown inside stores etc.) that are threatening to cannibalize more intrusive and destructive media by sucking as much as 64.2% of their revenue away from outdoor advertising such as billboards and 41% away from television. 

This is only the beginning of a massive and rapid sea-change and elected officials and other policy-makers need to be wary of desperate lobbyists and other economic rent-seekers, such as those who pushed through a bill in North Carolina to sacrifice 70,000 publically-owned roadside trees, worth more than $11 billion in just ecosystem services alone (over a 50-year lifetime had they been saved.)

This is a huge sacrifice of the “common good” just so the 8% of consumers shown to use messages posted on outdoor billboards over the course of a year can be even more sure to see them.