Monday, June 29, 2009

The Tragedy of Freedom in a Commons

In 1788, James Madison said, "If men were angels, no Government would be necessary" (Federalist, no. 51). But, the reality is that all men would have to be angels because all it takes is one non-angel to spoil the environment for everyone.

The first "greed is good" banker -- someone who over-leveraged his portfolio, speculated on swaps and derivatives, paid mortgage brokers to find questionable loans to be packaged for a fee and turned over to another unsuspecting investor -- was all we needed to begin the slide down that slippery slope to the "ruin of the commons:" the toxic mortgage and derivatives fiasco. In our world, resources are limited. When anyone over-grasps at his or her share, we all face the risk of incurring the long term costs or losses. When we think "things are free," we invite excessive use or consumption of that thing -– a scarce resource.

The "ruin of the commons" is what happens in the frat house when the occupants know that "someone else" will clean up their mess. In governance terms, it’s called "moral hazard." In contemporary finance, the equivalent concept is "bail out those who are too big to fail."

In 1832, William Forster Lloyd, a political economist at Oxford University, first wrote about the problem of "the commons." Cattle grazing on the common pasture area tended to over-consume the shared resource. Lloyd wondered, "Why?" And why were nearby "enclosed" areas under-utilized? The answer was that townspeople tended to keep adding their growing herd to the "free" commons area, avoiding the privatized "enclosed" areas which had some cost associated with their use. Unless there were a pricing mechanism or other coercive control over the actions of the townspeople, individuals were self-motivated to abuse the free resource.

In 1968, Garrett Hardin, professor emeritus of human ecology at the University of California at Santa Barbara, wrote an article (Science 13 December 1968: Vol. 162. no. 3859, pp. 1243 – 1248) based on his presidential address before the Pacific Division of the American Association for the Advancement of Science at Utah State University in Logan, Utah on 25 June 1968.

Professor Hardin described the "tragedy of freedom in a commons" as one of a class of human problems for which we know of no technical solution. A finite world can support only a finite population. Maximizing population does not maximize goods. Freedom in a commons brings ruin to all.

The dilemma is that many individuals, acting independently in their own self-interest, ultimately will destroy a shared limited resource even though they all know that it is not in anyone's long term interest for them to act in this manner. The division of costs and benefits is unequal: the advantages go to individuals, while the disadvantages are shared only slowly among all individuals over the longer term.

Professor Hardin pointed to a number of other examples of "commons" with which we should all be familiar: fish supplies, transportation and smog, air pollution, oceanic pollution, river pollution, national parks, advertising and bill boards, and "free holiday" parking meters.

Another example is the demise of Easter Island or Rapa Nui, known for its 1000 giant stone monoliths, called Moai, along its coastline. The island was abandoned an estimated 1200 years ago, and today is considered a metaphor of ecological disaster. It is the world’s most extreme example of deforestation that resulted from the creation of statues by the citizens largely for ancestral worship.

Another example is the environmental movement. Rachel Carson’s 1962 book Silent Spring, provided an argument to "internalize social costs" when she warned of the adverse long term impacts on ocean life from our unfettered use of pesticides to maximize agricultural production.

One possible constraint upon natural self-interest is enlightened self-restraint: if individuals could recognize the very high probability that their actions will destroy the shared resource, they might consciously limit their own free choice. Education can reveal to all parties the need to "give up" some freedoms in order to preserve resources over the long-term. But, while education might counteract the natural tendency to do the wrong thing in the short term, in the long term the dissemination of knowledge must constantly be renewed for each successive generation.

When the 1973 and 1979 gas crises hit, families constrained their demand by driving at 55 mph, carpooling, and telecommuting. When the crises passed, families went out and bought gas-guzzling SUVs en masse. The same thing happened in 1990 and 2000. Memories are short. And effective long term education entails additional personal and social costs that must be borne by someone.

Other, possibly more effective, solutions to the problem of the commons involve different forms of "management" or limiting access through privatization, polluter payment schemes, or outright regulation. Prof. Hardin described these as variations on the concept of "enclosure" of the commons: limiting unfettered demand on the scarce resource.

The ruin of the commons is not an esoteric economic concept. It is something with us here and now. Every time someone writes a book or an article lauding the wonders of "free", just ask them if they really would like their intellectual product to be e-published and available to all for "free", or if they would really like to forego their royalties in the interest of "free" access.

The challenge is how to make "hidden costs" become more apparent: how can we make individuals internalize long term, sometimes hidden externalities or social costs? How can we ensure everyone is an angel?

Wednesday, June 17, 2009

Idiot Punster Awards

The latest award for the dumbest pun in a business journal title goes to the Financial Times (FT.com) for the June 15, 2009 article by Richard Milne updating earlier reports on the status of women directors in Norway, after the passage of a law mandating 40% of board seats for women:

"Skirting the Board"

Second prize goes to Fortune Magazine for its April 27, 2009 article on Lynn Tilton, a sophisticated, experienced, and competent venture capitalist managing $6 billion (YES, boys, with the Big B!) fund owning portions of more than 70 mid-market companies.

The article title chosen to describe this highly competent woman was:

"Damsel of Distressed"

Can’t we all imagine the boys in the editorial staff room, storming their little micro-brains out, tossing around ideas for stupid titles while munching on nachos covered with aerosol cheese spread?

The honorable mention award goes to the same article for the photographic subtitle, beneath a picture of Ms. Tilton next to the helicopter she uses to commute into the Big Apple. Are you ready?

"Hot Chop"

Brilliant! How many years of Journalism School does it take to come up with this tripe?

Monday, June 15, 2009

Editors' School

There must be a required course taken by all journalists and would-be editors to train them in The Proper Way to write about Women, especially in business. The course outline goes something like this:

Week 1. The Lead Sentence.
This session presents the many ways to write about how women can be portrayed as underlings, minorities, and other diminutive representation. Be prepared to complete the following sentence: "Only ____ women ____." Bonus points for collecting the greatest number of synonyms for "fewer than, less than, and only." Bring your Roget’s!

Week 2. The Editorial Take-Away.
For those special occasions reporting on women who have achieved something, this class will demonstrate how to reduce the value of that accomplishment preferably in the same sentence. Class will demonstrate the creative use of the reductive subordinate clauses, such as "Even though . . . yet," "Although . . . but," and "While . . . still.

Week 3. The Power of the Cliché
Writers will learn to insert metaphors designed to denigrate, demean, and discourage women readers. Effective use of "glass, concrete, steel" and other limiting materials will be emphasized. Test your ability to use imagery such as "labyrinths, mazes, and tunnels" to show the power of obfuscation.

Week 4. Finesse the Demean.
Explore how to finesse the disparagement of others. Select from the target of your choice: men, husbands, "good old boys," strong women, athletic women, tom boys, gays/lesbians, unmarried, childless, divorced or widowed women. The class will help you avoid crossing the line into slanderous or libelous territory, while protecting the Real Woman Image.

Week 5. Affirming the Princess Within.
Develop the imaginative powers of the creative writer/editor: reminiscing about the perfect woman/women in his life. Practice exercises include story-telling about Cinderella, Fairy Godmothers, June Cleaver, Mary Poppins, or your own mother if necessary.

Week 6. Five Easy Pieces.
Select from among your favorites, the five soft skills that only women (especially mothers) possess. Extra credit will be give for folding powder-puff concepts into otherwise hard core, real world topics, with special bonus points for mention of female-only hormonal activity.

Week 7. The Piéce de lá Resistance!
What would any delicacy be without the crowning glory: the pun-ster’s title?! Explore the play on words, with the special emphasis on Princess, Damsels, Mother, On Top, and the like. Your ability to wrap together all of the indignities of the earlier class sessions and/or use words and phrases designed to elicit sexual imagery will constitute 60% of the final grade.

Friday, June 12, 2009

Differences

On any given day, how many times might one encounter differences that she had to assimilate? How many challenges to her presumptions might one person see in a given 24 hours? Try it sometime: just tune in to see how many different ideas, concepts, people, perspectives you see and while you’re at it, see if you are open to them or close minded.

A husband and wife do the morning crossword puzzle over breakfast. Each brings to the experience a different vocabulary drawn from different life stories. They pass the puzzle back and forth as one reaches a mental log-jam that the other loosens by adding a word from her recollected experiences, triggering another cascade of ideas and words from his background. Together, they solve the challenge whereas alone they would have remained stymied long ago.

Product designers deliver merchandize to us that their engineers presume are perfect solutions to the defined problem as their experience has dictated. Take GM or Chrysler, for example. Or consider when she, in the kitchen, facing the reality of the day, struggles with the thin sliding "crumb tray" at the bottom of the toaster. Engineer never experienced the challenge, himself, of how to remove a 1-inch cubed piece of bread from the bottom of his functionally-challenged toaster. Therefore, with his limited experience, he designed a sleek, ultra narrow sliding tray that could accommodate the removal of crumbs that were only 1/8th of an inch in total height.

Homemakers, for years, have endured a host of products designed by 49% of the population but which are used by the other 51% on a daily basis. Vacuum cleaners have a special place in our homemakers’ hearts: they are powerful enough to satisfy Tim the Toolman Taylor, are capable of being lifted only by Atlas or Arnold. What engineer would design a tool that required all of the attachments to be carried around with the machine itself?

Acknowledging differences cuts the other way, as well. Men have constructed fantastic solutions to perceived problems which women would do well to appreciate, to value and to apply. Men created baseball and football leagues to provide youth training and conditioning with adult supervision. Little League and Pony League sports provide superior youth guidance in a fun and supportive environment. Wouldn’t you think we could apply a similar model to "the problem" of early childhood care and education? Isn’t that a better economic model than expecting business to create little company-stores: day care centers where we put children at risk in urban centers and levy the financial burden on just a few wealthier firms, denying such opportunities to society at large? Isn’t a self-sustaining community-based child-care model better than expecting all citizens, including singles and elderly and those whom we sometimes prohibit from having children, to subsidize the choices of a few?

We have much to learn from each other. We need to stop expecting “others” to be exactly like us. We can learn a lot by listening to and being more accepting of differences.

Wednesday, June 10, 2009

What Does She Mean?

What does Supreme Court Justice-nominee Sonia Sotomayor mean when she says that different experiences count for something? I think she is suggesting that we are a richer society because we are compelled to consider the impact of our divergent perspectives on a wide array of audiences. We have an obligation to at least listen.

Our forefathers and mothers fled isolated isles, countries, and continents because there was not enough room there to accommodate different thoughts and ideas. First sons, by the rule of primogeniture, inherited the world. Second and subsequent sons and their brides came to our shores to exercise freedom of religion, speech, and economic choice.

Today, the search for a field of play that is open and inviting continues. The media princes who would pre-judge this capable candidate before she has her rightful hour upon the hearing stage – the due process of the Senate confirmation review proceedings – are no better than the princes of common law in ancient England and Europe who would have shut up all dissent about "their right to rule."

Thursday, June 4, 2009

Simply Showing Up

Woody Allen once said, "Eighty percent of success is simply showing up." Women on corporate boards of directors definitely “showed up” when the opportunity called on them to perform on the business stage. But, there are others, incredibly talented women who opt not to accept the challenge of leadership. That’s terribly unfortunate. (Yes, there are men who do likewise, but we are most interested in how to enhance the presence of that "other 51%" of the educated, talented labor pool.) On these pages, we’ve highlighted many women in leadership, and we shall continue with that focus. Many women need to take the risk and step up to claim the mantle of leadership.

At the same time, we take note of the fact that recently another talented woman stepped back off the stage, , saying she changed her mind about serving among those who are trying to fix the US tax code.

Who knows her specific reasons -– that’s between her and her conscience. Perhaps, like Mr. Geithner and others, she erred in a past tax matter. Perhaps there was a major family event that suddenly intruded on her otherwise civic ambitions. Or perhaps her health is facing a more immediate challenge. It no longer matters because the die has been cast, and there is one less highly trained and capable woman willing to work, willing to lead. This is an opportunity lost.

Whenever a talented and experienced woman packs herself off, prematurely, we lose valuable insight and creativity in the problem-solving process. When a "young" sixty-something professional woman leaves her remaining twenty years on the table, "folding 'em in" for some retirement village in El Laguna, we lose decades of applied business acumen.

For those endurance runners, those sharp and savvy 70-something women who are staying the course and persevering at whatever you do best, thank you for your exemplary long distance performance. For those 80-plus women who continue to write, speak, and express yourselves, thank you for your inspiration.

Thank you all for your willingness "to show up." That is the beginning of leadership.

Wednesday, June 3, 2009

Kudos to the Dawgs!

University of Washington’s Huskies rallied for a 3-2 win to sweep the University of Florida’s Gators in the best-of-three series for the Huskies’ first national Women’s College World Softball Series championship. The Washington web site says it all (www.washington.edu) -- "National Champs!" reads the text beneath the pictures of four beaming young ladies who proudly represent some of the best and the brightest in NCAA sport.

The world series playoffs in Oklahoma City, ending June 2nd, was a fascinating look at how far we have come as a nation in valuing sports performance by 100% of the population.

The Women’s Collegiate World Series of Softball has been around "only" since 1982. So, women have competed for that top caliber recognition for not yet three decades. The Amateur Softball Association’s Hall of Fame Stadium in Oklahoma City sold out all 4,340 tickets available for the entire series this year, with the games being broadcast live on ESPN. The game has been played in Oklahoma City since 1990.

Watching pitches cross the plate at close to 70 mph was a bit different to say the least. These young ladies were sheer professionals at work, in every position, and at bat. Gracious, charming, and enthusiastic. It was a delight to watch every game. It is said that softball is the most popular sport in the US, with 40 million people playing at least one game a year. (Encyclopedia of World Sports.)

Kudos to the young ladies of the Washington Huskies -– good job really well done.