Four Legs and a Tail

I’m continuously irked by calls for R&D to save us from climate change. Yes, we need it very badly, but it’s no panacea. Without other signals, like a price on carbon, technology isn’t going to do a lot. It’s a one-legged dog. True, we might get lucky with some magic bullet, but I’m not willing to count on that. An effective climate policy needs four legs:

  1. Prices
  2. Technology (the landscape of possibilities on which we make decisions)
  3. Institutional rules and procedures
  4. Preferences, operating within social networks

When I wrote that list down, it reminded me of Dana Meadows’ list of leverage points in systems. I’m a bit of a heretic, in that I don’t agree with the ordering of the list. In fact, I’m not even sure that it’s possible to come up with a general ordering for nonlinear dynamic systems. Nevertheless, I find it very useful in practice for pondering whether the solutions proposed for a problem are operating at the right level. In the case of climate, I think the reason we don’t have much of 1 through 4 above is that we don’t have much of 4 through 1 below:

Leverage points to intervene in a system (in increasing order of effectiveness)
12. Constants, parameters, numbers (such as subsidies, taxes, standards)
11. The size of buffers and other stabilizing stocks, relative to their flows
10. The structure of material stocks and flows (such as transport network, population age structures)
9. The length of delays, relative to the rate of system changes
8. The strength of negative feedback loops, relative to the effect they are trying to correct against
7. The gain around driving positive feedback loops
6. The structure of information flow (who does and does not have access to what kinds of information)
5. The rules of the system (such as incentives, punishment, constraints)
4. The power to add, change, evolve, or self-organize system structure
3. The goal of the system
2. The mindset or paradigm that the system — its goals, structure, rules, delays, parameters — arises out of
1. The power to transcend paradigms

Most of climate policy and public perception as I see it is operating near #12, trying to preserve economic growth (#7), facilitated by deficiencies in #6 to ignore #9. Integrated Assessment Models focus on prices and technology, largely neglecting a variety of institutional factors that obstruct the response to carbon and energy prices and constrain the adoption of technology. They take preferences as a given and thus neglect the possibility of social change complementing (or driving) technical and institutional change.

The reason we don’t have an effective price on carbon is not that it’s suboptimal to do so. It’s that getting to a price that would actually do something will take a massive paradigm shift – the tail that wags the dog. So, I’ll continue to like #12, but from here on out I’ll be working a lot harder on #6 as a path to #1.

6 thoughts on “Four Legs and a Tail

  1. Bill Harris

    Tom, good ideas; I won’t disagree with any of them.

    I will add two comments:

    With regard to R&D, look at the graph on solar energy R&D spending
    pointed to from
    http://www.facilitatedsystems.com/weblog/2007/11/youve-got-to-see-this-graph.html
    .

    When you started talking about our general focus on sustaining growth as
    part of the problem, that resonated with me and some of the things I’ve
    been wondering about
    (http://facilitatedsystems.com/weblog/labels/growth.html). I only hear
    that discussion in a few arenas, though, places that typically include
    Herman Daly, Brian Czech, John Feeney, and a few others. Is that a
    discussion we can hold more broadly?

    I suspect none of us have the total answers yet, and I suspect this is
    one of those cases that requires multiple systemic approaches as part of
    making sense of the situation. System dynamics certainly can make a
    contribution, but I suspect that Werner Ulrich’s critical systems
    heuristics is important here, too, perhaps along with other approaches.

    Bobby Milstein of the CDC recently published a paper (see
    http://facilitatedsystems.com/weblog/2008/11/systems-thinking-tour-de-force.html)
    pulling CSH’s attention to boundary management together with SD’s
    attention to dynamics, all applied to public health. Perhaps there’s a
    way to make a similar contribution to this problem you’ve described.

  2. Greg Robie

    Bill, before I post a comment to Tom’s blog, here is the comment I would have posted to your linked blog if I could have. This comment is itself a reference to a comment I posted to another blog you had linked to:

    =================

    Here is my comment about the linked graph. In my experience there is a line between creativity and propaganda that needs to be respected. Selling is only good when it is in the social good (i.e. helping society live sustainably).

    =================linked post:

    Great graph[ic] is somewhat disingenuous. In terms of our economy the Iraq “War” is and was necessary to hold up our end of the deal President Nixon made with the Saudi princes to cover their backside in exchange for OPEC oil being denominated US dollars. That deal made everything that has been “good” economically since 1973 possible . . . until just about three months prior to this blog post when the consequences of the irresponsible growth of M3 (a measure of the money supply) started to unravel and bringing us/US to where we are today, a year and three months later, in what has been a, somewhat controlled, free fall.

    I would argue it has only been necessary to fund R&D as graphed because of Nixon’s deal. Energy has been cheap, and, relative to inflation, getting cheaper. In a culture that values making money over all things sustainable (except, perhaps, sustaining an unsustainable economic model), the expenditure in Iraq is a bargain relative to the alternative, having OPEC oil sales denominated in any other currency.

    In addition, there is so much that can be done with existing solar technology, conservation, and energy efficiency that is not being done because of the agreement with the Saudis. Until the consumer consumes what’s already been developed, what is the need for more R&D? Isn’t it social marketing of existing means of avoiding (as another of the comments notes) the need for the war in Iraq what has been lacking?

    It is ironic that we ended up supporting the US dollar’s hegemony as we have in Iraq, only to have that hegemony–and the authenticity of all fiat currencies–implode. We will be forced into using the simple means for dealing with our environmental, economic and energy crises as only the simple stuff will be somewhat possible in a time of deflation and economic collapse, and then, only with a great deal of trust and cooperation. Causal inferences can be distracting and misleading, but then social sciences are never nice and neat are they?

  3. Greg Robie

    Tom, I experience the non-linear observation you make as being germane to climate change mitigation efforts because it appears to me that we seem to be still thinking of what mitigation means from within the memes of the paradigm that is the source of the problem: global capitalism. Global capitalism is now an economic system based on fiat currencies denominated in debt. The credit for that debt has reached it limits of growth. This system is dominated by the Federal Reserve note because–as I referenced in the post targeted to Bill–the US currency has as its primary strength due to the Saudi commitment to denominate OPEC oil sales in the US dollars.

    Postulating that the wealth/credit/debt of this exploitative, extractive, and externalizing-of-costs carbon-based economy cannot be the basis for an economy of a sustainable paradigm. To the degree I grasp the leveraging points, the collapse of the economy, and the government further bankrupting itself to try to rescue it are addresses in points 12-8. Global capitalism has exceeded its limits to growth in terms of environmental, social and economic justice. Exploitation of deregulation has eliminated buffers. The FDIC is so under capatalized relative to its expanded exposure it is a joke. The Fed’s balance sheet is destroyed. Accounting rules have been suspended. The Treasury has begun printing money in the most irresponsible way. The aging of the baby boomers stresses the system and changes a meme. Peak oil and perhaps peak coal have been reached. Just-in-time supply chains and ownership-to-the-point-of-sale dynamics, enabled and enhanced by computers make disruptions both immediate and systemic. All of these are negative feedbacks relative to ending the collapse of global capitalism and point #8.

    Ironically, this collapse is also the biggest positive feedback. The collapse is reducing the demand for fossil fuel. Everyone is starting to figure out how to do with less. This is #7. Point number 6 is not happening yet in the first world be3cause most are yet in denial that global capitalism has to go. The main stream media and public officials are still talking of a recovery because there is no language (yet) for talking positively about the collapse of an unsustainable “wealth” creation system. This point and points 5-1, while conceptually addressed by framed at this URL (http://is.gd/lJRy) will not likely make sense until we are further into the chaos. Though the sooner they are being talked about, the shorter the chaos can be.

    If what I’ve posited is wrong and recovery of capitalism is possible. but for the constraints involved with point #9 due to motivated reasoning, your analysis seems sound.

  4. Greg Robie

    Tom, I experience the non-linear observation you make as being germane to climate change mitigation efforts because it appears to me that we seem to be still thinking of what mitigation means from within the memes of the paradigm that is the source of the problem: global capitalism. Global capitalism is now an economic system based on fiat currencies denominated in debt. The credit for that debt has reached it limits of growth. This system is dominated by the Federal Reserve note because–as I referenced in the post targeted to Bill–the US currency has as its primary strength due to the Saudi commitment to denominate OPEC oil sales in the US dollars.

    Postulating that the wealth/credit/debt of this exploitative, extractive, and externalizing-of-costs carbon-based economy cannot be the basis for an economy of a sustainable paradigm. To the degree I grasp the leveraging points, the collapse of the economy, and the government further bankrupting itself to try to rescue it are addresses in points 12-8. Global capitalism has exceeded its limits to growth in terms of environmental, social and economic justice. Exploitation of deregulation has eliminated buffers. The FDIC is so under capatalized relative to its expanded exposure it is a joke. The Fed’s balance sheet is destroyed. Accounting rules have been suspended. The Treasury has begun printing money in the most irresponsible way. The aging of the baby boomers stresses the system and changes a meme. Peak oil and perhaps peak coal have been reached. Just-in-time supply chains and ownership-to-the-point-of-sale dynamics, enabled and enhanced by computers make disruptions both immediate and systemic. All of these are negative feedbacks relative to ending the collapse of global capitalism and point #8.

    Ironically, this collapse is also the biggest positive feedback. The collapse is reducing the demand for fossil fuel. Everyone is starting to figure out how to do with less. This is #7. Point number 6 is not happening yet in the first world be3cause most are yet in denial that global capitalism has to go. The main stream media and public officials are still talking of a recovery because there is no language (yet) for talking positively about the collapse of an unsustainable “wealth” creation system. This point and points 5-1, while conceptually addressed by framed at this URL (http://is.gd/lJRy) will not likely make sense until we are further into the chaos. Though the sooner they are being talked about, the shorter the chaos can be.

    If what I’ve posited is wrong and recovery of capitalism is possible. but for the constraints involved with point #9 due to motivated reasoning, your analysis seems sound.

  5. Tom

    Greg – Nice thoughts. It’s triggered a few of my own – hope to have an entry posted in the next day or two. Thanks.

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