1 00:00:00,008 --> 00:00:03,738 All right, well, welcome, 2 00:00:03,738 --> 00:00:10,190 everybody to the training seminar series. 3 00:00:10,190 --> 00:00:14,887 And we're gonna talk about how finance and metrics and 4 00:00:14,887 --> 00:00:18,910 sustainability all fit together. 5 00:00:18,910 --> 00:00:21,290 So I'd like you to introduce yourself. 6 00:00:21,290 --> 00:00:22,332 You have done a very good job of it. 7 00:00:22,332 --> 00:00:23,293 >> Take it away. 8 00:00:23,293 --> 00:00:25,820 >> Hi, I'm Hank Patton. 9 00:00:25,820 --> 00:00:29,730 Yeah, some of you troublemakers already know who I am. 10 00:00:29,730 --> 00:00:32,900 I've had the privilege of working with Michael incessantly in different settings 11 00:00:32,900 --> 00:00:34,770 over long periods of time. 12 00:00:34,770 --> 00:00:37,529 And David has graciously come out and 13 00:00:37,529 --> 00:00:42,341 spoken to us at our wildlife refuge in the Columbia River Gorge. 14 00:00:42,341 --> 00:00:46,615 And work with a group of teaching colleges that are attempting to create a landscape 15 00:00:46,615 --> 00:00:51,010 for literally a living classroom for what we call stewardship learning. 16 00:00:51,010 --> 00:00:56,570 The land is in the drain into the little wild salmon river and 17 00:00:56,570 --> 00:01:00,320 magic, powerful, beautiful place permanently protected. 18 00:01:00,320 --> 00:01:05,730 And the first 20 minutes is free, so you're all welcome to come out and 19 00:01:05,730 --> 00:01:09,810 hang for 20 and then you've got a shovel governor and 20 00:01:09,810 --> 00:01:14,443 do the other useful things that farmers and land stewards do. 21 00:01:14,443 --> 00:01:20,053 [LAUGH] So I'm about to throw one of the most complex 22 00:01:20,053 --> 00:01:25,140 problems that this planet has ever run into. 23 00:01:25,140 --> 00:01:31,476 Onto a cutting board in a way that allows you to see a transactional framework 24 00:01:31,476 --> 00:01:38,590 that could turn extremely valuable actions which are presently unsellable. 25 00:01:38,590 --> 00:01:42,780 Like dealing with climate change, obviously, an extremely valuable thing to 26 00:01:42,780 --> 00:01:48,170 do, but for which there is presently no transactional framework. 27 00:01:48,170 --> 00:01:52,977 And I'm gonna do it more with questions and with the answers. 28 00:01:52,977 --> 00:01:58,087 But what you're going to see are some very out of the box ways of 29 00:01:58,087 --> 00:02:04,982 using traditional tools in finance and science, to make markets at system scale. 30 00:02:04,982 --> 00:02:11,519 There's never been a market for, I mean, how big is the cost of climate change. 31 00:02:11,519 --> 00:02:15,263 I mean, you're talking numbers that are literally the cost on the margin is 32 00:02:15,263 --> 00:02:16,680 the only known living plan. 33 00:02:17,790 --> 00:02:23,880 That's a big price to pay for making the kinds of mistakes that are tied up 34 00:02:23,880 --> 00:02:31,460 in short term revenue-oriented investments to hide the true costs of the book. 35 00:02:31,460 --> 00:02:36,290 So what I'm going to do first is introduce you to a couple of 36 00:02:36,290 --> 00:02:41,031 maybe turn some of the slide off so you get a better image. 37 00:02:45,687 --> 00:02:48,654 And my clicker is gonna click, one, 38 00:02:48,654 --> 00:02:53,270 close the closest one right next to them right at the top. 39 00:02:53,270 --> 00:02:54,005 >> It's got right there. 40 00:02:54,005 --> 00:02:58,657 >> Although [CROSSTALK] >> God [LAUGH]. 41 00:02:58,657 --> 00:03:01,576 >> So here's the place and I have to say 42 00:03:05,470 --> 00:03:08,624 having worked on the protection's place for 40 years and 43 00:03:08,624 --> 00:03:12,040 hearing people say, well, that was a really good investment. 44 00:03:13,040 --> 00:03:19,548 We got started on a square mile with a $500 down payment. 45 00:03:21,581 --> 00:03:26,601 To be really valuable now but it really hasn't changed the holder. 46 00:03:26,601 --> 00:03:29,800 What's happened is the value of the money that we used to buy land has gone down. 47 00:03:29,800 --> 00:03:34,400 The land hasn't change at all, so don't cheat yourself when you think that you 48 00:03:34,400 --> 00:03:38,680 kept your house is more valuable because suddenly you have more purchasing power. 49 00:03:38,680 --> 00:03:45,206 So let's just say a fun place to begin. 50 00:03:47,787 --> 00:03:51,130 And before I, this is gonna be a multiple choice question that comes 51 00:03:51,130 --> 00:03:54,665 up during this and what do you get and I'll give you the trestle second. 52 00:03:54,665 --> 00:03:59,510 But first, I'd like somebody in this room to give me their favorite definition of 53 00:03:59,510 --> 00:04:02,410 what a system is, action by beckon. 54 00:04:02,410 --> 00:04:06,000 This goes around with the shock barely commonly but 55 00:04:06,000 --> 00:04:08,100 what is a system, short and clean? 56 00:04:08,100 --> 00:04:11,526 So the question is who is the bravest in the relationship. 57 00:04:11,526 --> 00:04:15,956 >> [LAUGH] >> [LAUGH] I can see the ears rolling 58 00:04:15,956 --> 00:04:19,839 back, it's- >> [LAUGH] Elements with attributes and 59 00:04:19,839 --> 00:04:23,825 relation among elements that generate some kind of hold 60 00:04:23,825 --> 00:04:28,332 [INAUDIBLE] environment that interacts with its environment. 61 00:04:28,332 --> 00:04:33,620 >> Okay, there you go, I buy that. 62 00:04:33,620 --> 00:04:35,332 Can somebody do it a little shorter? 63 00:04:35,332 --> 00:04:39,724 >> [LAUGH] >> You really have naughty words. 64 00:04:42,643 --> 00:04:44,355 >> Elements, relation, and purpose. 65 00:04:44,355 --> 00:04:48,200 Not everything has purpose. 66 00:04:48,200 --> 00:04:52,630 It's something that has orders and distinct from its environment, and 67 00:04:52,630 --> 00:04:54,619 interact and relates to its environment. 68 00:04:56,400 --> 00:05:02,050 >> Yeah, I like that, and I like the angst that the question generates. 69 00:05:02,050 --> 00:05:08,031 >> [LAUGH] >> If you have trouble with that question, 70 00:05:08,031 --> 00:05:10,945 just wait a little ones that are coming up here. 71 00:05:10,945 --> 00:05:15,347 [LAUGH] Here's the way we think of it is 72 00:05:15,347 --> 00:05:20,181 it's a purpose with a source and a sink. 73 00:05:25,912 --> 00:05:28,849 The purpose of the magnet that pulls stuff out of the source and 74 00:05:28,849 --> 00:05:32,050 the sink is what happens after potato chips and throw the bag away. 75 00:05:32,050 --> 00:05:36,898 [LAUGH] The purpose was I want a potato chip the source 76 00:05:36,898 --> 00:05:39,617 was leaving all that stuff. 77 00:05:39,617 --> 00:05:41,528 The sink is where did the bag go? 78 00:05:41,528 --> 00:05:42,823 Where did the salt go? 79 00:05:42,823 --> 00:05:44,151 Where did the minora go? 80 00:05:44,151 --> 00:05:46,890 The system is all tied together by the purpose. 81 00:05:46,890 --> 00:05:49,640 But why does our economy not do this? 82 00:05:49,640 --> 00:05:53,230 Okay, so here's a system question, burn this stuff and what do you get? 83 00:05:55,170 --> 00:05:57,030 I have to give you a choice, don't I? 84 00:05:57,030 --> 00:05:59,785 There you go, one or the other, what is it? 85 00:05:59,785 --> 00:06:01,950 >> [INAUDIBLE] nox and sox. 86 00:06:03,340 --> 00:06:07,154 >> Nitrogen dioxide or scoring silver nitrate, NOx and Sox. 87 00:06:07,154 --> 00:06:12,551 You can guess [LAUGH] I've seen this one, 88 00:06:12,551 --> 00:06:17,790 otherwise, why can't make the both, 89 00:06:17,790 --> 00:06:21,810 because of what this is? 90 00:06:21,810 --> 00:06:23,100 >> Well, that's oil right? 91 00:06:24,400 --> 00:06:25,850 >> Somebody's making assumption. 92 00:06:25,850 --> 00:06:27,310 >> What else might it be? 93 00:06:27,310 --> 00:06:31,627 Looks a piece of bamboo. 94 00:06:31,627 --> 00:06:36,350 >> [LAUGH] >> God, you're so timid. 95 00:06:36,350 --> 00:06:39,970 All you have to do, it's a 50% chance, I mean what is it? 96 00:06:39,970 --> 00:06:41,270 >> Raspberries. 97 00:06:41,270 --> 00:06:45,505 >> You're right, why, why? 98 00:06:45,505 --> 00:06:48,702 >> Because there's raspberries [INAUDIBLE] >> Michael why? 99 00:06:48,702 --> 00:06:53,060 >> Because that is honey. 100 00:06:58,424 --> 00:06:59,792 >> Raspberries. 101 00:06:59,792 --> 00:07:03,752 So, if we assume that the energy source is oil, 102 00:07:03,752 --> 00:07:07,770 we're obviously gonna get Nox and Sox. 103 00:07:07,770 --> 00:07:12,570 If we assume that the solution to financial problems is money, 104 00:07:12,570 --> 00:07:15,070 we probably made a mistake on day one. 105 00:07:15,070 --> 00:07:20,400 Some of the biggest engineering mistakes are always made when you make certain 106 00:07:20,400 --> 00:07:26,600 assumptions and then never consider those assumptions you bring to your discussions. 107 00:07:26,600 --> 00:07:31,030 That we assume that that obviously looked like these a lot but it wasn't. 108 00:07:32,090 --> 00:07:34,629 So here's where we are. 109 00:07:42,744 --> 00:07:43,979 Here's the problem. 110 00:07:48,512 --> 00:07:53,970 Here's the pattern We call this the exhaustive model. 111 00:07:55,220 --> 00:07:57,260 You got a business, you build something. 112 00:07:57,260 --> 00:07:57,933 You sell it to somebody. 113 00:07:57,933 --> 00:08:01,598 The regulator just says, I don't, so you put a filter on it. 114 00:08:01,598 --> 00:08:06,428 >> [LAUGH] >> You make a lot of externalized costs, 115 00:08:06,428 --> 00:08:10,485 social and environmental, but you get money. 116 00:08:10,485 --> 00:08:15,473 But essentially, you have accelerating decline in the resource base in 117 00:08:15,473 --> 00:08:21,080 the ecosystem services, and in security and health, obviously. 118 00:08:21,080 --> 00:08:21,941 But that's what we do for a living. 119 00:08:21,941 --> 00:08:27,077 Hal Mooney, I'm sure some of you know of his amazing work, 120 00:08:27,077 --> 00:08:32,115 but he helped create DIVERSITAS and you'd appreciate his 121 00:08:32,115 --> 00:08:36,977 kind of homely but incredibly important insight here. 122 00:08:36,977 --> 00:08:44,738 If you can't compare systems, It's gonna be hard to make a good decision. 123 00:08:44,738 --> 00:08:50,166 And giving us permission to compare systems is a big psychological problem, 124 00:08:50,166 --> 00:08:55,093 because there's this implicit conviction that we can't afford to do 125 00:08:55,093 --> 00:08:56,356 the right thing. 126 00:09:00,765 --> 00:09:02,847 Which is a joke because what's the cost on the margin? 127 00:09:02,847 --> 00:09:05,200 The whole bloody planet? 128 00:09:06,540 --> 00:09:07,180 That's our budget. 129 00:09:08,850 --> 00:09:09,657 That's the cost on the margin. 130 00:09:09,657 --> 00:09:15,389 So let's give ourselves permission to think of the scale of the problem, 131 00:09:15,389 --> 00:09:18,172 which is of course what the NES did. 132 00:09:18,172 --> 00:09:23,013 These incredibly critical functions, provisioning, supporting, regulating, 133 00:09:23,013 --> 00:09:27,775 cultural, creating all sorts of beautiful and healthy, wonderful things. 134 00:09:27,775 --> 00:09:30,661 Was your tap absolutely essential, and what you can't buy for money. 135 00:09:30,661 --> 00:09:36,153 You know what happens to the cost of a bottle of water on September 11th, 136 00:09:36,153 --> 00:09:39,265 crossing the bridge into Washington DC? 137 00:09:39,265 --> 00:09:44,721 If you bought a bottle of water going into DC, you would have paid $1 and 138 00:09:44,721 --> 00:09:50,265 if you bought a bottle of water about three hours later if you could get it, 139 00:09:50,265 --> 00:09:51,977 it cost you 7 to 10. 140 00:09:51,977 --> 00:09:57,400 It's not about money, it's about something else altogether. 141 00:09:57,400 --> 00:09:59,840 And here's the key idea. 142 00:10:01,070 --> 00:10:07,360 Pardon the semiology here, but the intent is to make it [LAUGH] very simple. 143 00:10:09,370 --> 00:10:10,702 And this is absolutely fundamental. 144 00:10:10,702 --> 00:10:14,780 You won't understand what I'm describing to you if you don't hold this firmly in 145 00:10:14,780 --> 00:10:15,382 your head. 146 00:10:15,382 --> 00:10:21,423 The internalized cost life cycle net value of a system, which is sustaining and 147 00:10:21,423 --> 00:10:27,840 circular, is vastly bigger than what we're doing, which is exhaustion. 148 00:10:27,840 --> 00:10:32,720 This is bigger than this, which means we can't afford to get it right, 149 00:10:34,060 --> 00:10:35,870 because the model we're using doesn't get it right. 150 00:10:35,870 --> 00:10:39,030 And it wastes stuff hand over fist. 151 00:10:39,030 --> 00:10:41,480 And it creates risk hand over fist. 152 00:10:41,480 --> 00:10:43,850 So this is what we call the foundational idea. 153 00:10:43,850 --> 00:10:49,550 The net whole system value delivered by a stewardship economy is a vastly richer, 154 00:10:49,550 --> 00:10:51,590 more secure, exciting, beautiful, fun and 155 00:10:51,590 --> 00:10:56,350 profitable enterprise if you can internalize the system costs. 156 00:10:56,350 --> 00:10:57,440 So that's the question, how do you do that? 157 00:11:00,478 --> 00:11:01,751 Familiar with mountaintop removal? 158 00:11:01,751 --> 00:11:05,126 You know why they didn't remove the top of that one? 159 00:11:05,126 --> 00:11:09,374 >> [INAUDIBLE] >> [LAUGH] 160 00:11:09,374 --> 00:11:10,477 >> Cuz they needed the cell tower there? 161 00:11:10,477 --> 00:11:14,044 >> This is the famous- >> [LAUGH] 162 00:11:14,044 --> 00:11:15,215 >> There's a system finger there. 163 00:11:15,215 --> 00:11:21,470 [LAUGH] Actually that's called the general plot. 164 00:11:21,470 --> 00:11:27,206 That was a four generation of mountain family that had its ancestry buried there. 165 00:11:27,206 --> 00:11:29,308 And they had a clever lawyer. 166 00:11:31,731 --> 00:11:36,291 And they still haven't blown the top of that mountain because 167 00:11:36,291 --> 00:11:38,049 of the cultural value. 168 00:11:38,049 --> 00:11:41,414 In 11 years, if they went on doing this, 169 00:11:41,414 --> 00:11:47,220 West Virginia which is a huge carbon sink will become a net carbon export. 170 00:11:49,251 --> 00:11:51,420 That's just the price. 171 00:11:51,420 --> 00:11:53,560 This is of course is what it looks like in Montana. 172 00:11:54,870 --> 00:11:59,395 This is of course what it looks like when they finished with the now Living Planet, 173 00:11:59,395 --> 00:12:00,784 picture's worth a lot. 174 00:12:00,784 --> 00:12:05,988 This is one of the externalities of systems of that kind. 175 00:12:05,988 --> 00:12:08,792 These are classes of cancer, locations for 176 00:12:08,792 --> 00:12:13,660 classes, cancer disability, life years adjusted for hundred thousand. 177 00:12:14,860 --> 00:12:19,481 Lance it that that is an externalized cost of inappropriate energy, and 178 00:12:19,481 --> 00:12:22,430 resource management policy. 179 00:12:22,430 --> 00:12:28,197 These are a few of the system boundaries of famous Johan Rockstrom histogram. 180 00:12:28,197 --> 00:12:32,729 Essentially showing us flashing lights on the dashboard but, 181 00:12:35,517 --> 00:12:39,830 It's an alarm but it's not a tool for problem solving. 182 00:12:41,200 --> 00:12:43,430 This is the front end of the tool for 183 00:12:43,430 --> 00:12:46,120 problem solving from our software called out composer. 184 00:12:46,120 --> 00:12:48,500 It's a suite out composer in any composer. 185 00:12:48,500 --> 00:12:49,245 This is a dummy slide. 186 00:12:49,245 --> 00:12:54,157 The histogram allows you to look at classes of an outcome, 187 00:12:54,157 --> 00:12:58,367 security water, if it's inside the threshold, 188 00:12:58,367 --> 00:13:02,592 it turns red meaning it's a net loss cost or risk. 189 00:13:02,592 --> 00:13:07,213 So it allows you to look at the Black Mesa Mojave Generating Station 190 00:13:07,213 --> 00:13:11,506 1,500 megawatts and there's some good stuff going on, 191 00:13:11,506 --> 00:13:15,221 that they have almost 1,600 California homes, 192 00:13:15,221 --> 00:13:19,283 have electricity and there's a reliable baseline grid. 193 00:13:19,283 --> 00:13:22,783 305 people employed until I got laid off because, 194 00:13:24,643 --> 00:13:28,736 16,000 acre feet of Colorado River and 195 00:13:28,736 --> 00:13:36,290 40,000 air opacity violations [LAUGH], I mean, 40,000 violations. 196 00:13:36,290 --> 00:13:40,770 But finally the lawyers stopped them because they were breaking the law. 197 00:13:40,770 --> 00:13:43,250 >> So I mean, the red is all internal? 198 00:13:43,250 --> 00:13:47,864 >> Everything red is a externalized cost. 199 00:13:47,864 --> 00:13:48,809 >> Externalized cost. 200 00:13:48,809 --> 00:13:51,110 >> And everything green is the good stuff. 201 00:13:51,110 --> 00:13:52,298 So if you just look at the green, 202 00:13:52,298 --> 00:13:54,810 you're looking at the public relations version of Mojave dinner. 203 00:13:54,810 --> 00:13:57,331 And these are just first order effects. 204 00:13:57,331 --> 00:13:59,064 This is crude. 205 00:13:59,064 --> 00:14:00,628 We did that almost ten years ago. 206 00:14:00,628 --> 00:14:08,850 But what I want you to remember is that nonlinear change is a real thing. 207 00:14:09,952 --> 00:14:18,310 It's easy not to get pregnant, [LAUGH] up to a point, and then it's not so easy. 208 00:14:18,310 --> 00:14:21,560 And once you get into a risk point, there is a moment of escape. 209 00:14:21,560 --> 00:14:23,850 It's easy not to get obese. 210 00:14:23,850 --> 00:14:28,240 It's easy not to pick one, but as you move along the curve, 211 00:14:28,240 --> 00:14:29,910 the cost and the risk goes up. 212 00:14:29,910 --> 00:14:33,420 If you take that same curve and address it to obesity, 213 00:14:33,420 --> 00:14:36,462 you've got big prices, you can't get a job, 214 00:14:36,462 --> 00:14:41,845 quality of life goes way down to the point where intervention doesn't even work. 215 00:14:41,845 --> 00:14:45,745 But if you catch the child when he's four, and 216 00:14:45,745 --> 00:14:51,375 the mayor of New York tried to do when he outlawed Big Gulp, right? 217 00:14:51,375 --> 00:14:56,280 Regulation's a challenging point to intervene in a system, but 218 00:14:57,540 --> 00:15:01,740 in the absence of other ways, it's important, but let's look at a new model. 219 00:15:03,600 --> 00:15:06,660 Let's think about the possibility, 220 00:15:06,660 --> 00:15:11,820 that instead of being our victim, the future might be our client. 221 00:15:13,300 --> 00:15:19,020 What if there was a very large new class of green bond 222 00:15:19,020 --> 00:15:24,160 that basically was interested in anything beyond 10 or 15 years. 223 00:15:24,160 --> 00:15:27,270 The government don't worry about business today, but 224 00:15:27,270 --> 00:15:31,983 they do worry about how business managers it's gonna affect in the future. 225 00:15:31,983 --> 00:15:37,286 Obviously, you need science because if you don't have science, 226 00:15:37,286 --> 00:15:41,746 you don't know what these guys are doing to these guys. 227 00:15:41,746 --> 00:15:46,380 So, that's what the millennium development goals were all about. 228 00:15:46,380 --> 00:15:50,710 So we can understand the erosion of ecosystem services. 229 00:15:51,880 --> 00:15:56,880 And metrics you will find is Essentially, the message that I'm gonna leave you 230 00:15:56,880 --> 00:16:01,840 with the end of the day today, is without good metrics you cannot make markets. 231 00:16:01,840 --> 00:16:06,362 So this is data today using good metrics, 232 00:16:06,362 --> 00:16:09,728 now suddenly has two clients. 233 00:16:09,728 --> 00:16:13,492 The contemporary client which is us, potato chip, but 234 00:16:13,492 --> 00:16:18,777 also future generations, to whom we sell soil conservation having that car, 235 00:16:18,777 --> 00:16:24,062 non genetically, non-DNA pollution quality of life in rural communities, 236 00:16:24,062 --> 00:16:29,613 that means the schools function the kids understand what the Constitution says. 237 00:16:29,613 --> 00:16:33,540 So they don't elect people who want to break the law and other useful functions. 238 00:16:35,230 --> 00:16:37,272 This is what a clean system looks like. 239 00:16:42,550 --> 00:16:44,070 This is Mojave generating station. 240 00:16:45,170 --> 00:16:51,300 At every point with practically no exceptions, 241 00:16:51,300 --> 00:16:55,970 you have the opportunity of capturing back. 242 00:16:55,970 --> 00:17:00,210 If we go back, which I should do, because I want you to see the actual thing again, 243 00:17:00,210 --> 00:17:00,850 it costs. 244 00:17:01,960 --> 00:17:06,604 This is data from the Secretary of Health in Indiana. 245 00:17:06,604 --> 00:17:13,056 Mental retardation mercury, over 3,000 bucks a pound per annum, 246 00:17:13,056 --> 00:17:18,554 total of almost a third of a billion annual, mercury IQ loss, 247 00:17:18,554 --> 00:17:25,940 mercury early male cardiac arrest, your annual costs almost $4 billion. 248 00:17:25,940 --> 00:17:31,721 These are hidden costs of so called clean energy, system cost. 249 00:17:31,721 --> 00:17:37,576 So, what happens when you get to the point where you have a clean alternative, 250 00:17:37,576 --> 00:17:39,360 you can suddenly sell. 251 00:17:41,370 --> 00:17:43,336 Let's see if I can do this correctly. 252 00:17:46,073 --> 00:17:50,554 Excellent, that was the slide I was gonna move that will look at them. 253 00:17:50,554 --> 00:17:55,172 You can actually sell the delta. 254 00:17:55,172 --> 00:17:59,066 In other words, it's cheaper for Obamacare or 255 00:17:59,066 --> 00:18:04,129 a health insurance company to buy the avoided mercury piece of 256 00:18:04,129 --> 00:18:09,109 a clean energy plant than it is to fix the people who get sick. 257 00:18:09,109 --> 00:18:14,719 In other words, if you can parse or partition out using science, 258 00:18:14,719 --> 00:18:20,641 the good stuff you deliver to the future by getting the system right. 259 00:18:20,641 --> 00:18:25,810 You're gonna market and the global finance community understands that. 260 00:18:25,810 --> 00:18:31,760 Their problem is due to costs at less than 300 million bucks are too high. 261 00:18:31,760 --> 00:18:34,640 So you've got to be able to aggregate 300 million bucks 262 00:18:34,640 --> 00:18:39,270 worth of avoided heart attacks using rigor so that it's not 263 00:18:39,270 --> 00:18:42,890 doesn't become a securitized nightmare like the subprime housing crisis. 264 00:18:42,890 --> 00:18:47,070 Just to clarify yourself- >> The transaction costs are high. 265 00:18:47,070 --> 00:18:50,805 >> Yeah, well then what happens is they call it story box and 266 00:18:50,805 --> 00:18:54,490 I'm probably not the expertise in this community but 267 00:18:54,490 --> 00:18:58,275 in global finance, they really like sure things. 268 00:18:58,275 --> 00:18:59,383 >> [LAUGH] >> And 269 00:18:59,383 --> 00:19:05,330 a sure thing is in certain classes is quite easy to prove. 270 00:19:05,330 --> 00:19:11,484 In other classes, it's very difficult but a sovereign contract. 271 00:19:11,484 --> 00:19:15,235 For others if Obamacare said we will buy 50 years worth of avoided heart attacks, 272 00:19:15,235 --> 00:19:18,235 because we know that when you take mercury out of energy plants, so 273 00:19:18,235 --> 00:19:20,020 it's hard to actually kind of go away. 274 00:19:21,160 --> 00:19:24,890 Nashville finances crushing it goes into that spreadsheet and they said that's 275 00:19:24,890 --> 00:19:32,580 a contract for 50 years from a triple A rating agency and there are others. 276 00:19:32,580 --> 00:19:38,090 And what that does is it begins to push up the yield on large 277 00:19:38,090 --> 00:19:41,550 scale financial instruments, I'll show you the transactional framework in a moment. 278 00:19:41,550 --> 00:19:43,741 So you can see the implications of that. 279 00:19:43,741 --> 00:19:48,614 But what I don't know how many of you have read through the 17 280 00:19:48,614 --> 00:19:52,644 SDGs that were approved in September of 2015, 281 00:19:52,644 --> 00:19:56,410 just before the climate conference last year. 282 00:19:57,900 --> 00:19:59,327 But that's a lot. 283 00:19:59,327 --> 00:20:05,800 That's 17 goals and they're very political and complicated. 284 00:20:07,200 --> 00:20:11,450 Goal 10, reducing inequality is the goal within and among. 285 00:20:11,450 --> 00:20:14,305 I mean, that is an incredibly complicated thing to do. 286 00:20:14,305 --> 00:20:19,790 What we need to remember when we look at large social 287 00:20:19,790 --> 00:20:25,030 policy commitments at global scale is that, 288 00:20:25,030 --> 00:20:29,520 it's in the individual elements. 289 00:20:31,200 --> 00:20:35,360 We just take one of these, health. 290 00:20:35,360 --> 00:20:37,010 Another classic in here. 291 00:20:38,470 --> 00:20:42,150 Gender equity is a classic resilience. 292 00:20:42,150 --> 00:20:48,363 These are lovely words with huge, complex system implications and 293 00:20:48,363 --> 00:20:53,595 to expect sovereign states on narrow budgets to go out and 294 00:20:53,595 --> 00:20:59,591 get this stuff in any meaningful way is a pretty bold assumption. 295 00:20:59,591 --> 00:21:02,665 Particularly when they don't have budgets to do what they're doing now, 296 00:21:02,665 --> 00:21:04,244 let alone doing something like this. 297 00:21:04,244 --> 00:21:10,403 But the value of getting healthy lives right is huge from an intergenerational 298 00:21:10,403 --> 00:21:15,162 perspective, the value of sending women to school girls and 299 00:21:15,162 --> 00:21:18,880 giving them a safe way to walk to school. 300 00:21:18,880 --> 00:21:23,090 It's an unbelievable household asset to the plan. 301 00:21:25,100 --> 00:21:28,040 Suddenly, they get elected President, so 302 00:21:28,040 --> 00:21:33,760 what we can anticipate in this is, as we see in habitat tree and 303 00:21:33,760 --> 00:21:38,745 as we see obviously in count 21, is some kind of a science based. 304 00:21:39,940 --> 00:21:45,070 That allows the $100 trillion of available capital that is 305 00:21:46,260 --> 00:21:51,280 being used right now for some fairly silly things, overnight currency 306 00:21:51,280 --> 00:21:56,980 speculation, and huge amounts of capital sloshing around the planet because. 307 00:21:56,980 --> 00:22:02,870 If you can capture 0.001 and you put $5 billion into that overnight, 308 00:22:02,870 --> 00:22:06,010 you can make some money, but that's not real. 309 00:22:06,010 --> 00:22:07,260 That's not real. 310 00:22:07,260 --> 00:22:12,370 What is real is that we have a new paradigm emerging right now. 311 00:22:13,650 --> 00:22:15,580 And it's characterized by it. 312 00:22:15,580 --> 00:22:19,580 I think what all of us in the room would recognize that stewardship is 313 00:22:19,580 --> 00:22:22,060 an attractive word trusteeship, 314 00:22:22,060 --> 00:22:25,180 the sense of we need to act as though the future matter. 315 00:22:25,180 --> 00:22:26,330 We know that's happening. 316 00:22:27,530 --> 00:22:31,000 Thanks to people like Amory Lovins and Hazel Henderson. 317 00:22:31,000 --> 00:22:35,100 The idea of the demand side, not using something. 318 00:22:35,100 --> 00:22:42,070 Maybe it's valuable and it required Dr. Boyd in the conservation law foundation 319 00:22:42,070 --> 00:22:47,630 years to sue the state of Massachusetts before you could build a conservation 320 00:22:47,630 --> 00:22:52,620 power plant that could compete with a bricks and mortar power plant. 321 00:22:52,620 --> 00:22:56,770 Even though the kilowatt hour coming out of the plug, the exact same kilowatt hour. 322 00:22:58,080 --> 00:23:01,305 This battle was talking to electric utility here in Oregon and I have- 323 00:23:01,305 --> 00:23:01,818 >> All the time. 324 00:23:01,818 --> 00:23:02,370 >> Yeah. 325 00:23:02,370 --> 00:23:06,881 [INAUDIBLE] actually, and you have to be a system thinker. 326 00:23:06,881 --> 00:23:12,180 Yeah, you have to be a system thinker to understand what a nega gallon is. 327 00:23:13,550 --> 00:23:17,430 A nega gallon is, that's a complicated thought. 328 00:23:17,430 --> 00:23:18,040 Can you drink it? 329 00:23:18,040 --> 00:23:19,540 Of course you can. 330 00:23:19,540 --> 00:23:24,290 In California, when they started to 331 00:23:24,290 --> 00:23:30,850 require developers to go get water by conserving it in the community 332 00:23:30,850 --> 00:23:35,415 before this assistance problem here. 333 00:23:35,415 --> 00:23:38,245 So here comes the Bilberry knocks on the door and 334 00:23:38,245 --> 00:23:41,225 says, ma'am, you have a low flow toilet? 335 00:23:41,225 --> 00:23:44,145 And she says, no I don't, he says, well look at under your fridge, 336 00:23:44,145 --> 00:23:48,775 she says, I hear you guys need water, what's it worth to you? 337 00:23:48,775 --> 00:23:51,775 >> [LAUGH] >> You could wind up writing a check for 338 00:23:51,775 --> 00:23:58,030 $100 to give the lady because in the system of consequences Your money ahead. 339 00:23:58,030 --> 00:23:58,880 I mean, 340 00:23:58,880 --> 00:24:03,100 you can't build the place without giving away the $100 because you need that water. 341 00:24:03,100 --> 00:24:05,620 These markets that avoid the outcomes, very interesting, and 342 00:24:05,620 --> 00:24:08,180 we call those intergenerational service. 343 00:24:09,330 --> 00:24:12,160 Obviously, we're seeing international policy mandates, but 344 00:24:12,160 --> 00:24:13,140 we got a huge problem. 345 00:24:14,310 --> 00:24:18,350 And it's not just a problem, it's a set, it's a fabric of problem. 346 00:24:18,350 --> 00:24:22,140 Most of the thinking that's being done is subsystem in scale, 347 00:24:22,140 --> 00:24:24,900 meaning it's just not as big as what's going on. 348 00:24:26,570 --> 00:24:28,750 Solutions tend to be end of pipe. 349 00:24:28,750 --> 00:24:34,120 Meaning, you, can we put a filter on cold combustions or carbon cola, 350 00:24:34,120 --> 00:24:39,310 that CCS, Carbon capture and storage. 351 00:24:39,310 --> 00:24:39,810 My God. 352 00:24:41,050 --> 00:24:44,044 I mean, any system analyst just laughs. 353 00:24:44,044 --> 00:24:47,134 There's very little incentive for 354 00:24:47,134 --> 00:24:51,666 you to spend more money to make your product better, 355 00:24:51,666 --> 00:24:55,892 unless you can get a real public relations crew. 356 00:24:55,892 --> 00:25:00,457 But if the guy across the street is selling potato chips with conflict, 357 00:25:00,457 --> 00:25:02,967 palm oil, and the people don't care, 358 00:25:02,967 --> 00:25:07,375 why would you pay twice as much for your palm oil if you want to sell it, 359 00:25:07,375 --> 00:25:11,900 I mean the incentive to internalize conflict in palm oil purchasing. 360 00:25:11,900 --> 00:25:15,110 We know that there's a community, particularly in this town, 361 00:25:15,110 --> 00:25:19,230 which is a foodie town that might actually buy the more expensive potato chip, but 362 00:25:19,230 --> 00:25:23,770 the point is in the largest business world, 363 00:25:23,770 --> 00:25:28,610 internalizing cost, building a life cycle clean product is expensive, and 364 00:25:28,610 --> 00:25:31,970 your competitor is probably not gonna do it to you. 365 00:25:31,970 --> 00:25:35,150 It's if you could sell the system consequences. 366 00:25:36,150 --> 00:25:37,200 This is the implication. 367 00:25:37,200 --> 00:25:40,310 So what I said to you earlier, that's a different deal. 368 00:25:42,900 --> 00:25:44,860 There is, this is huge. 369 00:25:44,860 --> 00:25:47,790 If you own a petroleum refinery, what are your choices? 370 00:25:48,790 --> 00:25:52,417 You're just, say, Dad, you shouldn't do this. 371 00:25:52,417 --> 00:25:58,366 Dad'll reply, well, so on Thursday afternoon are you gonna shut it down? 372 00:25:58,366 --> 00:26:02,851 Or you're gonna hire a political action committee to prevent carbon taxes, 373 00:26:02,851 --> 00:26:04,770 is more likely. 374 00:26:04,770 --> 00:26:06,200 But what are your other choices? 375 00:26:06,200 --> 00:26:10,870 And so politics is locked up, because there's no mechanism for this, 376 00:26:10,870 --> 00:26:17,270 these huge trillions of assets that are stuck in old infrastructure. 377 00:26:17,270 --> 00:26:18,890 Just to give you one example, 378 00:26:18,890 --> 00:26:23,310 Prince Charles chairs the climate wise reinsurance alliance, 379 00:26:23,310 --> 00:26:27,340 run by John Coomber who used to be the head of Swiss Re insurance. 380 00:26:28,860 --> 00:26:32,970 They should call it Durban, which I mentioned in the summary of the seminar, 381 00:26:32,970 --> 00:26:38,250 in which they pointed out their actuaries could see that 382 00:26:38,250 --> 00:26:41,840 the fixed assets that they own, over three and a half trillion, were 383 00:26:41,840 --> 00:26:46,090 causing the climate change and the super storms that they're gonna have to fix. 384 00:26:46,090 --> 00:26:52,080 Other words, they have a actuaries themselves saying we have a train wreck. 385 00:26:52,080 --> 00:26:54,700 We're causing the storms that our assets are supposed 386 00:26:55,970 --> 00:26:59,280 to be owned to generate revenue to attack. 387 00:26:59,280 --> 00:27:02,370 So, that's called the trifectory problem. 388 00:27:02,370 --> 00:27:03,150 And yes sir? 389 00:27:03,150 --> 00:27:05,610 >> Does that touch on the, 390 00:27:05,610 --> 00:27:10,470 there's also been some speculative report saying that some of those assets are so 391 00:27:10,470 --> 00:27:15,380 far out, and the uncertainty of climate change that far out. 392 00:27:15,380 --> 00:27:19,010 Meaning that some of those assets might actually be stranded and 393 00:27:19,010 --> 00:27:22,220 not accessible at all, or vulnerable if they were accessible. 394 00:27:22,220 --> 00:27:25,679 >> Yeah, this is exactly the problem that an idiot is- 395 00:27:25,679 --> 00:27:27,326 >> Treating value today and 396 00:27:27,326 --> 00:27:29,750 selling it on market. 397 00:27:29,750 --> 00:27:32,590 It's like- >> That's a very insightful question and 398 00:27:32,590 --> 00:27:35,530 it's arguably why the Saudis continue to move so 399 00:27:35,530 --> 00:27:39,220 much farther, because at any price today is a lot better than never. 400 00:27:40,610 --> 00:27:47,580 And I think that that is an example of a purging that will occur if an orderly and 401 00:27:47,580 --> 00:27:51,710 profitable relocation mechanism is not brought into public policy and 402 00:27:51,710 --> 00:27:55,200 financial policy, which is what I'm about to describe to you. 403 00:27:55,200 --> 00:27:59,370 And there is no biddable set of metrics for 404 00:27:59,370 --> 00:28:04,765 that histogram of consequences that we showed you in a draft form. 405 00:28:04,765 --> 00:28:11,202 Biddable names, if I want to avoid health problems in the state of Indiana, 406 00:28:11,202 --> 00:28:18,145 and we invite proposals to redevelop energy facilities ignore make people sick, 407 00:28:18,145 --> 00:28:23,074 asthma, PM 10 as the policy lead, whatever, you bid to 408 00:28:23,074 --> 00:28:27,629 deliver as a part of your energy package- >> Are they competitive or? 409 00:28:27,629 --> 00:28:33,494 Well, you will see how big, thank you for, actually I appreciate the question, 410 00:28:33,494 --> 00:28:38,260 because as I present the mechanism to you, biddable is a key word. 411 00:28:38,260 --> 00:28:42,080 So, because what we're going to show is it the future comes. 412 00:28:42,080 --> 00:28:44,170 Remember that a three part in a transaction? 413 00:28:44,170 --> 00:28:48,100 If future comes into the market, with trillions of capital 414 00:28:48,100 --> 00:28:52,000 through a long bond structure, they are gonna want those health outcomes. 415 00:28:53,070 --> 00:28:56,740 They've been up there and I want to shut down coal power plants and oil, 416 00:28:56,740 --> 00:29:01,590 petroleum refineries, pipelines as quickly as possible, the faster the better. 417 00:29:01,590 --> 00:29:03,425 Fast is a biddable outcome. 418 00:29:03,425 --> 00:29:05,562 No mercury is a biddable outcome. 419 00:29:05,562 --> 00:29:10,540 Redevelop council capacity in the Indian Reservation where the power plant was, 420 00:29:10,540 --> 00:29:11,990 is a biddable outcome. 421 00:29:13,520 --> 00:29:17,710 So, that's why I said I'm gonna land on metrics because how you, 422 00:29:17,710 --> 00:29:23,240 know developing those metrics is an unbelievably sophisticated, a challenge, 423 00:29:23,240 --> 00:29:27,850 and it's a huge privilege that future that understands to me 424 00:29:27,850 --> 00:29:32,170 that is contemplating a process for doing precisely that. 425 00:29:32,170 --> 00:29:38,140 So, this is all by itself is a humongous set but here, check this out. 426 00:29:38,140 --> 00:29:40,360 There's no compensation structure for 427 00:29:40,360 --> 00:29:43,570 the good stuff that we could do for the future. 428 00:29:43,570 --> 00:29:45,600 You're a volunteer, pretty much, 429 00:29:45,600 --> 00:29:49,490 and you're competing against people who are not volunteer, and 430 00:29:49,490 --> 00:29:53,670 selling products that have a lot of salt and sugar are very attractive. 431 00:29:53,670 --> 00:29:58,330 So these kinds of outcomes, avoided risk, system efficiency. 432 00:29:59,620 --> 00:30:03,780 The structural challenge of resource circularity, 433 00:30:03,780 --> 00:30:07,550 whatever make up your mind now, did not worry about taking back. 434 00:30:09,110 --> 00:30:10,840 That is a system problem. 435 00:30:10,840 --> 00:30:14,930 When you make a table, there's a lot of stuff in there that sooner or 436 00:30:14,930 --> 00:30:18,950 later, I'll be back in the resource pool. 437 00:30:18,950 --> 00:30:20,690 You don't do that with a filter at the back end. 438 00:30:23,230 --> 00:30:27,660 Forests, soils, water ecosystem services, wellness, security, community resilience, 439 00:30:27,660 --> 00:30:31,570 employment, family wage earner. 440 00:30:31,570 --> 00:30:35,680 Who rewards you for doing that stuff, even though it's incredibly valuable? 441 00:30:35,680 --> 00:30:40,380 So there's no compensation structure for intergenerational services. 442 00:30:40,380 --> 00:30:41,930 But what was the foundation idea? 443 00:30:43,840 --> 00:30:44,670 Write the product. 444 00:30:45,860 --> 00:30:46,555 >> This is a pop quiz. 445 00:30:46,555 --> 00:30:47,338 >> Wrap it. 446 00:30:47,338 --> 00:30:54,820 >> [LAUGH] >> Regarding the assumptions you make. 447 00:30:54,820 --> 00:30:55,610 >> Yeah, that's true. 448 00:30:55,610 --> 00:30:57,630 Well, what's the, remember that. 449 00:30:57,630 --> 00:31:01,520 Tight little formula is a big one and a small one in the center. 450 00:31:01,520 --> 00:31:04,410 Managing resources as other future matter, 451 00:31:04,410 --> 00:31:07,330 creates more wealth than the model we're using. 452 00:31:08,560 --> 00:31:10,650 So it's not that we can't afford it. 453 00:31:10,650 --> 00:31:13,218 It's that we haven't got a transactional framework for awarding 454 00:31:13,218 --> 00:31:15,360 >> Yeah it makes you more wealth overall, 455 00:31:15,360 --> 00:31:18,700 but it doesn't make more well for the already very well. 456 00:31:18,700 --> 00:31:23,490 >> Well they already that's, well now, that's true. 457 00:31:23,490 --> 00:31:29,280 But, what if you could retire legal dirty assets and get credit for the avoided bet? 458 00:31:30,950 --> 00:31:31,470 I'm not kidding. 459 00:31:31,470 --> 00:31:35,568 You know, not poisoning the water is a very valuable thing not to do. 460 00:31:35,568 --> 00:31:39,280 And there are people who have illegal permits that have poisoned the water. 461 00:31:42,488 --> 00:31:47,992 So, the bottom line, there is no market for system outcomes, but there could be. 462 00:31:47,992 --> 00:31:53,460 So, here's a new slide that 463 00:31:53,460 --> 00:31:57,280 I want you to hold with that underlined- >> We need a buyer. 464 00:31:58,450 --> 00:31:59,070 Well, that's it. 465 00:31:59,070 --> 00:32:03,910 And we're bringing the future in the market as a buyer, with through the- 466 00:32:03,910 --> 00:32:05,650 >> Snoozing on your buyer. 467 00:32:05,650 --> 00:32:08,907 >> Thank you, there we go, and- >> [LAUGH] 468 00:32:08,907 --> 00:32:10,661 >> Somebody help me with the three 469 00:32:10,661 --> 00:32:12,690 irresistible G's on the planet. 470 00:32:12,690 --> 00:32:13,190 What are they? 471 00:32:14,760 --> 00:32:15,465 There's one of them. 472 00:32:18,194 --> 00:32:18,840 There's another one. 473 00:32:19,950 --> 00:32:21,505 It's a living planet, what's the third? 474 00:32:23,667 --> 00:32:24,489 How about that one? 475 00:32:24,489 --> 00:32:27,372 >> [LAUGH] >> We've got another word for it. 476 00:32:27,372 --> 00:32:34,570 >> [LAUGH] >> So here's the status quo. 477 00:32:34,570 --> 00:32:38,120 And these are what we call the seven domains of intergenerational service. 478 00:32:39,600 --> 00:32:44,945 As you use your buyer, somebody proposes scenario, 479 00:32:44,945 --> 00:32:53,036 a, will take whatever my school garages with hydrogen fuel cell battery packs. 480 00:32:53,036 --> 00:32:57,790 And somebody proposes this one, which is via gas, whatever. 481 00:32:57,790 --> 00:33:01,670 And you need to compare the two of them, some of the wellness outcomes and 482 00:33:01,670 --> 00:33:04,860 this one is fatter, so I mean, better, well, less outcome. 483 00:33:04,860 --> 00:33:09,232 This one's skinnier, and you go through and look at the seven domains. 484 00:33:09,232 --> 00:33:14,034 You have to compare these possibilities from a market perspective that 485 00:33:14,034 --> 00:33:15,600 not doing that. 486 00:33:15,600 --> 00:33:21,300 Presently, is not illegal, not a particularly good idea. 487 00:33:21,300 --> 00:33:25,230 Doing that is, looks clean, expensive. 488 00:33:26,430 --> 00:33:28,456 That's the one, that's the other. 489 00:33:28,456 --> 00:33:36,980 Here's the buyer, so, you take the dirty system and the clean system. 490 00:33:36,980 --> 00:33:42,510 And at each Delta, you have a contract metric, 491 00:33:42,510 --> 00:33:46,470 the cost on the margin for cardiovascular disease in Indiana. 492 00:33:46,470 --> 00:33:47,608 This is real data. 493 00:33:47,608 --> 00:33:52,641 Annual US is $34,000 a pound. 494 00:33:52,641 --> 00:33:55,381 That's the cost we're paying. 495 00:33:55,381 --> 00:33:56,380 >> Annual costs. 496 00:33:56,380 --> 00:33:58,875 >> Annually, and that's just one. 497 00:33:58,875 --> 00:34:02,498 We've got other versions of mercury. 498 00:34:02,498 --> 00:34:09,370 I chew off, what's the value of a child who doesn't mind talking about it? 499 00:34:09,370 --> 00:34:11,470 A disservice to the future. 500 00:34:11,470 --> 00:34:14,360 Of composer allows you to use the history of histogram, 501 00:34:14,360 --> 00:34:19,090 to capture these specific classes of outcome and developing those classes, 502 00:34:19,090 --> 00:34:21,680 is what we're discussing the future advisedly. 503 00:34:21,680 --> 00:34:25,100 Revenuizing is to turn the outcome into revenue. 504 00:34:25,100 --> 00:34:29,700 And this is the income poser sheet that drops off with the outcome poser diagram. 505 00:34:29,700 --> 00:34:36,464 And these are specific outcomes, minimal, that wind up being purchasable, 506 00:34:36,464 --> 00:34:40,573 because the deal size is about 300 million. 507 00:34:40,573 --> 00:34:45,518 And the betting on the outcome has sufficient rigor that you can capture 508 00:34:45,518 --> 00:34:50,540 the triple A, that a global finance committee would require. 509 00:34:50,540 --> 00:34:54,400 And the because of the rigor in the science, and 510 00:34:54,400 --> 00:34:58,289 the fact that many of the buyers will be sovereigns national governments. 511 00:34:59,740 --> 00:35:01,210 This becomes what we call, 512 00:35:01,210 --> 00:35:06,440 adjunct revenue to the traditional revenues of a bar, which is very small. 513 00:35:06,440 --> 00:35:10,790 If you can build a spray, this is a really important idea. 514 00:35:10,790 --> 00:35:15,140 If you could fill the spread between the present yield of a bond, 515 00:35:15,140 --> 00:35:19,400 which is low, typically a high rated bond. 516 00:35:19,400 --> 00:35:23,022 And what the Pension industry and 517 00:35:23,022 --> 00:35:28,850 the investor community wants very high, 5 to 7%. 518 00:35:28,850 --> 00:35:33,653 You can still add with these kinds of agile revenues, 519 00:35:33,653 --> 00:35:37,290 including qualities like resilience. 520 00:35:39,000 --> 00:35:44,440 Which are purchasable avoided unemployment purchasing or purchasing 521 00:35:45,600 --> 00:35:50,800 security issues lead in the school system issues. 522 00:35:51,850 --> 00:35:55,910 Obviously, purchasable that you might also put solar collectors on schools, right? 523 00:35:55,910 --> 00:35:59,016 Both food and have a biomass digester, and 524 00:35:59,016 --> 00:36:03,849 those purchasable outcomes allow you to use Sovereign capacity, 525 00:36:03,849 --> 00:36:07,657 including what's called, quantitative easing. 526 00:36:07,657 --> 00:36:10,850 Which has hundreds of first of all qualitative easing. 527 00:36:10,850 --> 00:36:13,328 That means printing money [LAUGH] but 528 00:36:13,328 --> 00:36:16,467 instead of just throwing out a helicopters, 529 00:36:16,467 --> 00:36:21,024 you would buy intergenerational services based on the science. 530 00:36:21,024 --> 00:36:27,850 And once you push that from 1% to 5, 6, 7%, you don't have to worry. 531 00:36:27,850 --> 00:36:31,050 Because the global finance community can't afford to do this stuff. 532 00:36:31,050 --> 00:36:32,715 They just can't afford to lose their shirt. 533 00:36:32,715 --> 00:36:36,750 >> Not a lot of post Keynesian monetary term. 534 00:36:36,750 --> 00:36:37,970 >> Sir? 535 00:36:37,970 --> 00:36:42,659 Post Keynesian monetary theory says your sovereign buyers have 536 00:36:42,659 --> 00:36:44,842 an infinite capacity to buy. 537 00:36:44,842 --> 00:36:46,230 It's a testable hypothesis. 538 00:36:46,230 --> 00:36:51,340 [LAUGH] so if I understand that maybe I should wait for the Q and A, 539 00:36:51,340 --> 00:36:56,720 but you're saying make the good stuff more valuable, don't penalize the bad stuff. 540 00:36:56,720 --> 00:36:58,790 I'm saying, they're making a market for the whole bloody system. 541 00:36:58,790 --> 00:37:02,920 So here, let's just walk through the mechanics of it here. 542 00:37:02,920 --> 00:37:07,560 And I pushed your brains, are probably all kinda flopping around in pain right now, 543 00:37:07,560 --> 00:37:10,150 but here's the basic status quo. 544 00:37:11,390 --> 00:37:13,690 We own this stuff already, it's built. 545 00:37:14,890 --> 00:37:17,050 Built around expensive, you don't want to do that. 546 00:37:18,240 --> 00:37:25,000 If somebody comes to your restaurant, a lot of people have had glass here in town. 547 00:37:25,000 --> 00:37:27,780 When the person showed up at the air quality test, 548 00:37:27,780 --> 00:37:32,280 the owner of that business was probably not thrilled, you can pretty much presume. 549 00:37:32,280 --> 00:37:36,360 So information is unwelcome. 550 00:37:36,360 --> 00:37:38,030 It's not valuable, it's expensive and 551 00:37:38,030 --> 00:37:41,660 could threaten Johnson drug, that this is the status quo. 552 00:37:41,660 --> 00:37:43,980 There's a lot of uncertainty, is it gonna be taxed? 553 00:37:43,980 --> 00:37:45,370 Is it gonna be regulated? 554 00:37:45,370 --> 00:37:49,820 So, get on with it, raise the price for your cash, milk, and especially in Canada. 555 00:37:50,920 --> 00:37:54,112 All the monitorings right now, present essentially indicators, 556 00:37:54,112 --> 00:37:56,040 which are retrospective. 557 00:37:56,040 --> 00:38:00,300 As opposed to biddable metrics prospector, there's little capital or 558 00:38:00,300 --> 00:38:03,470 profit in long term stuff. 559 00:38:03,470 --> 00:38:05,870 It's the quarterly report, this is the way it's run right now. 560 00:38:05,870 --> 00:38:09,970 So Jupiter has absolutely no agency, they're not in the market as a buyer. 561 00:38:09,970 --> 00:38:14,990 Contrast the new option, you get credit for voluntarily retiring, 562 00:38:14,990 --> 00:38:18,180 a dumb, toxic, but legal asset. 563 00:38:19,740 --> 00:38:23,961 So information, certainly not that information something valuable. 564 00:38:23,961 --> 00:38:29,850 Hey boy, do I have a voice [INAUDIBLE] >> [LAUGH] 565 00:38:29,850 --> 00:38:31,830 >> So, we call it prepared 566 00:38:31,830 --> 00:38:35,300 early retirement, replacement of legal dirty assets. 567 00:38:35,300 --> 00:38:38,700 You're looking at net lease costs for all of the integrated outcomes. 568 00:38:38,700 --> 00:38:40,780 It's radically efficient by design. 569 00:38:40,780 --> 00:38:44,030 Accurate information is valuable, and therefore, encouraged. 570 00:38:44,030 --> 00:38:48,124 Associated with the fund that makes that possible, 571 00:38:48,124 --> 00:38:53,624 are these long-term irrevocable contracts before those outcomes. 572 00:38:53,624 --> 00:38:57,055 For the wellness outcomes, the employment outcomes. 573 00:38:57,055 --> 00:38:58,120 You go down the list. 574 00:38:59,930 --> 00:39:03,820 The investors have contract certainty in a uniquely large and 575 00:39:03,820 --> 00:39:07,990 stable global market for measurable outcomes and intergenerational service. 576 00:39:07,990 --> 00:39:10,810 The standards are engineered, so 577 00:39:10,810 --> 00:39:15,930 they're third party vetted, ended a premise capitalization system scale. 578 00:39:15,930 --> 00:39:17,880 Have you ever talked about that? 579 00:39:17,880 --> 00:39:24,890 And suddenly, you're looking at investors willing to move into these whole systems. 580 00:39:24,890 --> 00:39:30,760 It's not subsystem scale, you replace it you're taking a big dirty asset, getting 581 00:39:30,760 --> 00:39:34,260 credit for retiring it, and replacing it with a life cycle clean system. 582 00:39:34,260 --> 00:39:39,840 It's a huge employment opportunity for people to work. 583 00:39:39,840 --> 00:39:45,330 And it's based on, this is not just throwing money out of helicopters. 584 00:39:45,330 --> 00:39:47,900 So, now you're looking at a redevelopment historic model, 585 00:39:47,900 --> 00:39:51,940 the community is a healthy part of the ecosystem. 586 00:39:51,940 --> 00:39:55,810 It's competitive, it's transparent, you got both primary and secondary markets for 587 00:39:55,810 --> 00:39:56,358 social. 588 00:39:56,358 --> 00:40:00,448 Environmental outcomes, and the future is now in the present with a checkbook. 589 00:40:02,163 --> 00:40:06,413 So this, Michael will remember, 590 00:40:06,413 --> 00:40:11,843 we did at PSU, in what year was that, 12? 591 00:40:11,843 --> 00:40:12,751 >> I think it was 11. 592 00:40:12,751 --> 00:40:14,100 >> 11 or 12, yeah. 593 00:40:14,100 --> 00:40:19,139 So the puzzle we put forward is, here's a laundromat and here's and here 594 00:40:19,139 --> 00:40:25,600 a greenhouse, not too far from each other, classic externalized waste and so forth. 595 00:40:25,600 --> 00:40:29,960 Purchased carbon, purchased carbon, transported, I mean all those stuff. 596 00:40:29,960 --> 00:40:32,484 What can you do with that as a system puzzle? 597 00:40:32,484 --> 00:40:33,544 And here's what the kids came up with. 598 00:40:36,774 --> 00:40:41,054 And this is the kind of redevelopment that could be funded by 599 00:40:41,054 --> 00:40:45,430 an intergenerational partnership with the future, okay? 600 00:40:47,930 --> 00:40:49,730 All right, so laundromat has dryers that create heat. 601 00:40:49,730 --> 00:40:53,800 [LAUGH] There's more, I don't want to wear you all out. 602 00:40:53,800 --> 00:40:56,480 The basic insight is that 603 00:40:56,480 --> 00:40:59,370 this is a little bag of money that we're using around the world. 604 00:40:59,370 --> 00:41:01,600 And this is what we're leaving on the table. 605 00:41:01,600 --> 00:41:06,570 The partnership of the future is a vastly richer, more secure, resilient, 606 00:41:06,570 --> 00:41:10,402 more fun, it's more beautiful than the one we're using. 607 00:41:10,402 --> 00:41:14,186 And the reason why we do that instead of this is because we don't have a way of 608 00:41:14,186 --> 00:41:15,390 partnering. 609 00:41:15,390 --> 00:41:19,525 We don't have a transactional frame [INAUDIBLE]. 610 00:41:19,525 --> 00:41:23,580 Are there any questions [COUGH]? 611 00:41:23,580 --> 00:41:26,012 >> [LAUGH] >> But 612 00:41:26,012 --> 00:41:30,536 after you tell us the politics, they love it. 613 00:41:30,536 --> 00:41:35,048 >> [LAUGH] >> Well, because this is not tax and 614 00:41:35,048 --> 00:41:35,898 spend. 615 00:41:35,898 --> 00:41:38,760 This is an opportunity for 616 00:41:38,760 --> 00:41:43,950 the private sector to move and to deliver valuable services. 617 00:41:43,950 --> 00:41:48,715 It's a way of lowering the cost of running schools and public facilities. 618 00:41:48,715 --> 00:41:53,720 IGF can be used to bid increases in efficiency. 619 00:41:53,720 --> 00:41:58,603 So you could actually, the University could use an IGF instrument to solicit 620 00:41:58,603 --> 00:42:03,334 proposals from tables like this, for ways the institution can rebuild and 621 00:42:03,334 --> 00:42:06,565 redesign and create efficiencies, avoid waste, 622 00:42:06,565 --> 00:42:12,240 certain resource management, committed resilience, health issues. 623 00:42:12,240 --> 00:42:14,680 And because the metrics are common, 624 00:42:14,680 --> 00:42:19,410 the University doesn't get stuck with a cost they sell off to a global or 625 00:42:19,410 --> 00:42:24,840 a regional or national buyer, the system outcomes, that are presently 626 00:42:24,840 --> 00:42:30,130 posed as total outcomes by the STGs or top 21. 627 00:42:30,130 --> 00:42:33,207 But it's local control, global standards, but 628 00:42:33,207 --> 00:42:36,510 it would be up to teams of students to propose to do it. 629 00:42:38,830 --> 00:42:43,551 The chairman of the Washington State Senate Energy Committee wants to put 630 00:42:43,551 --> 00:42:46,901 a pioneer redevelopment district in his district, 631 00:42:46,901 --> 00:42:50,951 because she can have more fun talking about than tax and spend. 632 00:42:50,951 --> 00:42:52,770 Nobody wants to hear tax and spend. 633 00:42:52,770 --> 00:42:55,403 But they love to hear that the future has arrived in town and 634 00:42:55,403 --> 00:42:58,307 wants to build cleaner, smarter, more beautiful things, and 635 00:42:58,307 --> 00:43:01,463 make sure that kids are educated properly and they're eating well. 636 00:43:01,463 --> 00:43:03,405 You have to give credit to the buyer. 637 00:43:03,405 --> 00:43:08,640 When you say sovereign buyer, I know enough about post Keynesian money theory, 638 00:43:08,640 --> 00:43:13,580 so I know that's a plausible answer. 639 00:43:13,580 --> 00:43:17,170 But I'm trying to think about, sometimes you talk about it and 640 00:43:17,170 --> 00:43:19,410 we could apply it at a local level. 641 00:43:19,410 --> 00:43:25,480 So we've got all these public schools in Portland, that have lead in the pipes, 642 00:43:25,480 --> 00:43:30,910 and it costs a certain amount to do the whole reconstruction of that. 643 00:43:30,910 --> 00:43:33,340 It's gonna totally bankrupt the school system. 644 00:43:33,340 --> 00:43:38,065 >> And if it's just lead, that is a sub system. 645 00:43:38,065 --> 00:43:43,155 >> They've got a shorthand way of saying, it's a big expensive problem. 646 00:43:43,155 --> 00:43:46,180 It's an expensive problem to fix. 647 00:43:46,180 --> 00:43:53,350 The long term benefits of fixing it far outweigh even the large expense. 648 00:43:53,350 --> 00:43:58,216 But I'm not quite sure where, the City of 649 00:43:58,216 --> 00:44:06,040 Portland's problem is they have to somehow raise that money to pay for that. 650 00:44:06,040 --> 00:44:10,790 Even though in the very, very long run, it's certainly practical. 651 00:44:10,790 --> 00:44:17,040 >> So I mean, I'm a long scholar of the work of AB Levinson. 652 00:44:17,040 --> 00:44:19,740 And he classically says, you're stuck in the box. 653 00:44:21,040 --> 00:44:25,570 In order for us to think of a solution that can afford to capture that, 654 00:44:25,570 --> 00:44:26,330 you have to get out of box. 655 00:44:26,330 --> 00:44:29,993 The reality is, there's absolutely no reason for 656 00:44:29,993 --> 00:44:32,740 there to be lead in the school pipes. 657 00:44:32,740 --> 00:44:34,930 It's a free good, you get the design right. 658 00:44:34,930 --> 00:44:36,590 So the trick is, 659 00:44:36,590 --> 00:44:41,910 it's a co benefit of getting other outcomes right at the same time. 660 00:44:41,910 --> 00:44:46,558 So there's obviously a short-term issue, 661 00:44:46,558 --> 00:44:53,418 which is that kids cannot be allowed to drink water with lead in it. 662 00:44:53,418 --> 00:44:55,084 >> [CROSSTALK] plastic water bottles. 663 00:44:55,084 --> 00:44:58,037 >> There you go, and another system problem. 664 00:44:58,037 --> 00:45:01,654 >> [LAUGH] >> [INAUDIBLE] to send a reusable 665 00:45:01,654 --> 00:45:05,420 water bottle with your child to school. 666 00:45:05,420 --> 00:45:08,545 >> [CROSSTALK] >> So 667 00:45:08,545 --> 00:45:12,772 part of the box here is that kids- >> When we 668 00:45:12,772 --> 00:45:16,920 were talking about the problems with the assumptions we make on day one, 669 00:45:16,920 --> 00:45:21,900 one of them is that schools work, I don't think they work very well. 670 00:45:21,900 --> 00:45:28,030 Washington state has a 7000 teacher shortage, 7000 teacher shortage. 671 00:45:28,030 --> 00:45:33,225 And the reason why, David, we had six universities, teacher colleges out of 672 00:45:33,225 --> 00:45:38,420 the land trust, really looking at how you can redesign the learning process, 673 00:45:38,420 --> 00:45:43,643 is because teachers don't want to teach what they're being forced to teach. 674 00:45:43,643 --> 00:45:46,430 And the kids don't want to learn what they're being forced to learn. 675 00:45:46,430 --> 00:45:50,010 There is no connectivity to the landscapes upon which everything depends. 676 00:45:50,010 --> 00:45:54,231 >> We get the house birds, I would agree. 677 00:45:54,231 --> 00:45:58,511 >> [LAUGH] [CROSSTALK] [LAUGH] 678 00:45:58,511 --> 00:46:01,100 >> Give me a second, I'm getting there. 679 00:46:01,100 --> 00:46:06,400 So that the issue really is, what kind of 680 00:46:06,400 --> 00:46:12,280 a school environment produces both healthy water and healthy kids? 681 00:46:12,280 --> 00:46:17,600 That is resilient, that provides excitement and cultural riches and 682 00:46:17,600 --> 00:46:23,335 that is a much bigger value creation proposition than just fixing a pipe. 683 00:46:23,335 --> 00:46:27,510 So busing, tanking the water, getting a big stainless tank and 684 00:46:27,510 --> 00:46:30,698 putting it on the top of every school with a lead problem, and 685 00:46:30,698 --> 00:46:35,820 filling it once a month or once a week is a cost associated with 686 00:46:35,820 --> 00:46:39,590 the larger issue, which is how do we redesign a school? 687 00:46:39,590 --> 00:46:44,944 So that they're joyful, rich, multilingual, inclusive, gender equal, 688 00:46:44,944 --> 00:46:50,376 full of fabulous food and putting these kids who want to work on these problems, 689 00:46:50,376 --> 00:46:52,342 giving permission to do it. 690 00:46:52,342 --> 00:46:56,957 We had Andrea at Spencer building, and we sent around, 691 00:46:56,957 --> 00:46:59,615 this is before your time, Michael. 692 00:46:59,615 --> 00:47:03,929 But we sent around to the schools a challenge, give us a system for 693 00:47:03,929 --> 00:47:08,480 your school that would make it a richer, more fun, more beautiful, 694 00:47:08,480 --> 00:47:10,760 productive wonderful place. 695 00:47:10,760 --> 00:47:13,291 Then we had Avery give the prize here. 696 00:47:13,291 --> 00:47:18,291 And this beautiful little nine year old girl, she's getting her prize. 697 00:47:18,291 --> 00:47:22,598 She designed this incredible organic garden with the cafeteria, and 698 00:47:22,598 --> 00:47:26,450 the compost system, a really elegant thing that she did. 699 00:47:26,450 --> 00:47:31,366 But what was cool, the reason why I mentioned that is, ask the kids. 700 00:47:31,366 --> 00:47:33,680 They were part of the challenge. 701 00:47:33,680 --> 00:47:37,265 How do we make this school healthy, clean, more fun? 702 00:47:37,265 --> 00:47:40,872 Give them engineering tools. 703 00:47:40,872 --> 00:47:46,046 Show them that math is useful when you're designing really fun places 704 00:47:46,046 --> 00:47:50,970 to study music and science, and allow them to begin to propose. 705 00:47:50,970 --> 00:47:53,450 I think we discovered that you could double it. 706 00:47:53,450 --> 00:47:58,440 I know we, cuz we won a prize for it back when I was in the Portland system. 707 00:48:00,120 --> 00:48:02,900 Just taking the time to figure out what kids are interested in. 708 00:48:04,270 --> 00:48:09,558 And feeding them the skills that you want them to get through the personal window 709 00:48:09,558 --> 00:48:15,300 on enthusiasm was doubled and tripled the test of life span. 710 00:48:15,300 --> 00:48:19,239 And made all of this little problems go away because Marvin wanted to learn math 711 00:48:19,239 --> 00:48:21,130 with rattlesnakes. 712 00:48:21,130 --> 00:48:26,390 And Darla wanted to learn math with barns, it doesn't matter. 713 00:48:26,390 --> 00:48:28,290 That was what they wanted to do. 714 00:48:28,290 --> 00:48:31,049 They got so excited about it and they have ownership, and 715 00:48:31,049 --> 00:48:34,105 I think we should ask the kids what the school should look like. 716 00:48:34,105 --> 00:48:38,424 Meanwhile, there's gonna be contract metrics that allow you to sell 717 00:48:38,424 --> 00:48:41,290 the co-benefits that those designs get. 718 00:48:41,290 --> 00:48:42,890 And the kids are gonna look at those metrics and 719 00:48:42,890 --> 00:48:47,550 realize that, my goodness, if I hit that one, I can create this value. 720 00:48:47,550 --> 00:48:51,400 And if I hit that one, so it's a net carbon or net energy positive, 721 00:48:51,400 --> 00:48:53,620 I can go get that one. 722 00:48:53,620 --> 00:48:55,415 And it goes on from there. 723 00:48:55,415 --> 00:48:59,790 >> Yeah, I think maybe again, part of the, we're missing a mark in the, 724 00:48:59,790 --> 00:49:04,580 we mentioned like retiring assets, like industrial assets. 725 00:49:04,580 --> 00:49:06,317 And I immediately think, built systems, 726 00:49:06,317 --> 00:49:08,910 but I think there's policies that need to be retired, too. 727 00:49:08,910 --> 00:49:13,200 >> Good idea. >> And so like the whole teaching a test 728 00:49:13,200 --> 00:49:19,347 for public schools, like that is dictating how the classrooms are set, right? 729 00:49:20,550 --> 00:49:21,691 But looking at, 730 00:49:21,691 --> 00:49:26,675 back to the lead issue like that was a building thing at one point in time. 731 00:49:26,675 --> 00:49:33,370 And now, I don't know, I just see that those things are tied together. 732 00:49:33,370 --> 00:49:38,395 And I don't know that retiring large assets without 733 00:49:38,395 --> 00:49:46,173 requiring certain policies like your producer take back policies, we don't. 734 00:49:46,173 --> 00:49:47,603 >> I think you're right. 735 00:49:47,603 --> 00:49:52,417 But what we've done with this system is to recognize that assets, or 736 00:49:52,417 --> 00:49:56,940 fixed assets are a huge piece of the way capitalism works. 737 00:49:56,940 --> 00:49:58,904 >> Yeah. >> That's where you get your rents, and 738 00:49:58,904 --> 00:50:04,400 regulations procedure is a threat to revenue and 739 00:50:04,400 --> 00:50:07,570 fixed asset ownership. 740 00:50:07,570 --> 00:50:11,823 So creating a way of reload, what will be call the orderly, 741 00:50:11,823 --> 00:50:14,820 profitable early retirement. 742 00:50:14,820 --> 00:50:16,270 Opens up a real opportunity. 743 00:50:16,270 --> 00:50:21,200 The same mechanism applies to policy, and good, so 744 00:50:21,200 --> 00:50:23,210 I think it's perfectly reasonable. 745 00:50:23,210 --> 00:50:27,750 For example, everyone in your homes will have hot water heaters. 746 00:50:27,750 --> 00:50:30,400 You will notice that even though it's insulated well, 747 00:50:30,400 --> 00:50:33,630 they don't put insulation on the pot cozy. 748 00:50:33,630 --> 00:50:37,350 They are the brass thing. 749 00:50:37,350 --> 00:50:41,620 If you look at your water heater with an infrared scanner, 750 00:50:41,620 --> 00:50:45,370 it's like a flame on top of your water, and it's just radiating heat. 751 00:50:45,370 --> 00:50:49,956 And the reason is, you don't want to cover that because if the tank overheats, it's 752 00:50:49,956 --> 00:50:54,240 gonna blow that valve and you don't want it to be trapped inside the container. 753 00:50:54,240 --> 00:51:00,996 Well, that's a reasonable regulation policy, but it's not immutable. 754 00:51:00,996 --> 00:51:05,820 And there's ways to get around it, but nobody touches because of it. 755 00:51:05,820 --> 00:51:09,830 It's embedded in a bureaucracy or a policymakers. 756 00:51:09,830 --> 00:51:14,800 So I think the issue you raised is very interesting one, 757 00:51:14,800 --> 00:51:18,520 it's harder than some of the other ones. 758 00:51:18,520 --> 00:51:23,581 But if you can invite a bureaucracy to turn its wisdom about how 759 00:51:23,581 --> 00:51:30,760 bureaucracies work inward on itself, so that you can redeem inefficiencies. 760 00:51:30,760 --> 00:51:34,920 And by the way, you don't want to get your tire slashed out in the parking lot 761 00:51:34,920 --> 00:51:36,560 by putting a lot of your friends out of work. 762 00:51:37,660 --> 00:51:41,160 So there's feedback loops and systems, and that's one. 763 00:51:41,160 --> 00:51:45,020 So if you can put somebody's job out of 764 00:51:45,020 --> 00:51:48,160 work without putting the person out of work. 765 00:51:48,160 --> 00:51:49,150 And by the way, 766 00:51:49,150 --> 00:51:53,785 the associated people who might be at risk when something dumb stops happening. 767 00:51:53,785 --> 00:51:58,310 [LAUGH] Because there's no shortage of work to do in the world. 768 00:51:58,310 --> 00:51:59,320 >> I know that. 769 00:51:59,320 --> 00:52:01,917 >> But the mechanism that you're pointing at I think is really important. 770 00:52:01,917 --> 00:52:02,698 You had a question. 771 00:52:02,698 --> 00:52:07,600 >> Yes, I have this question, and 772 00:52:07,600 --> 00:52:13,776 example where you solved your [INAUDIBLE] 773 00:52:13,776 --> 00:52:18,679 addressed as a problem like that 774 00:52:18,679 --> 00:52:23,417 [INAUDIBLE] problem like that. 775 00:52:23,417 --> 00:52:25,770 >> Like the scope problem? 776 00:52:25,770 --> 00:52:28,920 >> Yeah, the water is that, and that is also the problem. 777 00:52:30,280 --> 00:52:35,560 >> We have a group that is working actually presently in Kenya. 778 00:52:35,560 --> 00:52:39,250 >> That is a very intense and more 779 00:52:41,200 --> 00:52:45,660 in Ghana also, where issues related to water supply and 780 00:52:45,660 --> 00:52:50,920 water quality are really high risk. 781 00:52:50,920 --> 00:52:56,016 And it represent a gigantic health and wellness, and security issue. 782 00:52:56,016 --> 00:53:00,211 And it's all tied together because infrastructure sets are not as large 783 00:53:00,211 --> 00:53:02,156 institution, of course. 784 00:53:02,156 --> 00:53:08,900 So, I think when you look at, like the water and 785 00:53:08,900 --> 00:53:15,280 gender security and education elements in the sustainable development goals. 786 00:53:15,280 --> 00:53:22,471 And the fabric of outcomes that are common to any village that 787 00:53:22,471 --> 00:53:27,547 are being turned into biddable outcomes. 788 00:53:27,547 --> 00:53:32,516 I think you will probably be better than I because you're 789 00:53:32,516 --> 00:53:38,108 probably thinking about a place in your own mind where if capital 790 00:53:38,108 --> 00:53:43,402 were available, then solutions would become achievable. 791 00:53:43,402 --> 00:53:49,295 What I mean, and one of the challenges here, and it's on that gender equity 792 00:53:49,295 --> 00:53:54,471 line in many rural development communities, the micro banking. 793 00:53:54,471 --> 00:53:58,746 People have discovered that loaning money to men is a really bad idea, 794 00:53:58,746 --> 00:54:03,900 that loaning money to women works really well, with incredibly high return rates. 795 00:54:03,900 --> 00:54:05,605 I mean, 99.9. 796 00:54:05,605 --> 00:54:10,773 So, also paying in cash is a challenge, 797 00:54:10,773 --> 00:54:15,333 building materials harder turning 798 00:54:15,333 --> 00:54:20,051 into alcohol [LAUGH] rapidly anyway. 799 00:54:20,051 --> 00:54:23,974 [LAUGH] I don't know what your national heritage is, but 800 00:54:23,974 --> 00:54:28,815 you're probably are thinking about some places specific that could 801 00:54:28,815 --> 00:54:33,090 use development capital, and I'd love to talk about that. 802 00:54:33,090 --> 00:54:36,940 >> Well, it's easier to implement 803 00:54:36,940 --> 00:54:40,760 this type of system when [INAUDIBLE] systems are not very complex. 804 00:54:40,760 --> 00:54:43,108 >> Yeah. >> But I was thinking, 805 00:54:43,108 --> 00:54:49,152 solving problems like that in the US, in Kenya it would be easy. 806 00:54:49,152 --> 00:54:50,127 >> Yeah. 807 00:54:50,127 --> 00:54:55,560 >> [INAUDIBLE] You don't have a mature infrastructure 808 00:54:55,560 --> 00:55:00,108 [INAUDIBLE] I believe the environment is not 809 00:55:00,108 --> 00:55:04,970 very complex there, people can change. 810 00:55:04,970 --> 00:55:06,330 But here. 811 00:55:06,330 --> 00:55:12,926 >> Yeah. >> [INAUDIBLE] 812 00:55:12,926 --> 00:55:14,382 >> Well, thank you. 813 00:55:14,382 --> 00:55:17,329 I mentioned, I didn't actually point that, but 814 00:55:17,329 --> 00:55:22,320 I mentioned in the summary that we're working with the Grand Canyon trust. 815 00:55:22,320 --> 00:55:28,032 And a group of analysts, specializing in air quality and 816 00:55:28,032 --> 00:55:35,294 the quality of customer life on the Navajo generating station. 817 00:55:35,294 --> 00:55:40,171 Which employs now about 280, Indians, or people, 818 00:55:40,171 --> 00:55:44,746 in the plant itself, another 500 in a coal mine. 819 00:55:44,746 --> 00:55:47,643 And they culturally, 820 00:55:47,643 --> 00:55:52,828 mining coal is not something that Navajo 821 00:55:52,828 --> 00:55:57,714 have done until about 50 years ago. 822 00:55:57,714 --> 00:56:02,890 But because that is the best job available in that reservation There's a lot of 823 00:56:02,890 --> 00:56:08,097 opposition from the native community to shutting down Navajo. 824 00:56:08,097 --> 00:56:13,600 And therefore, this mechanism of early retirement, 825 00:56:13,600 --> 00:56:16,790 where it's not just a question of shutting down and 826 00:56:16,790 --> 00:56:20,090 letting the people fall where they fall. 827 00:56:20,090 --> 00:56:24,892 Bad luck, you've lost your job, which is not politically okay or 828 00:56:24,892 --> 00:56:29,458 ethically okay because those people needed that kind of work. 829 00:56:29,458 --> 00:56:34,767 So the early retirement of the dirty asset, Navajo, and its replacement with 830 00:56:34,767 --> 00:56:39,996 a culturally sophisticated alternative that has got a hospitality engine, 831 00:56:39,996 --> 00:56:44,582 draws on the amazing artistic heritage of the indigenous people and 832 00:56:44,582 --> 00:56:47,655 their many tribes in that Four Corners area. 833 00:56:47,655 --> 00:56:52,451 Has a huge initiative around water efficiency, and which, 834 00:56:52,451 --> 00:56:58,000 of course, with the Colorado project and the Bureau of Reclamation, 835 00:56:58,000 --> 00:57:01,292 massive crisis coming down on Arizona and 836 00:57:01,292 --> 00:57:06,955 other places because of the fact that the water system is just failing. 837 00:57:06,955 --> 00:57:11,914 So there are a lot of reasons why, and by the way, the decision to extend 838 00:57:11,914 --> 00:57:16,811 that gigantic power plant, it's gonna be made by the new president. 839 00:57:16,811 --> 00:57:22,901 Probably her biggest decision in her first year, 840 00:57:22,901 --> 00:57:26,534 assuming it's not delayed. 841 00:57:26,534 --> 00:57:31,569 And she needs, in fact, one of her top in the transition team, 842 00:57:31,569 --> 00:57:36,604 Brian Dese, has asked privately for implementation briefs, 843 00:57:36,604 --> 00:57:42,969 how this toolbox could be made available to communities like Light Mountaintop 844 00:57:42,969 --> 00:57:47,909 communities and First People communities in the southwest, 845 00:57:47,909 --> 00:57:53,440 need something bigger than just shut me down and sell all the carbon. 846 00:57:53,440 --> 00:57:59,130 And it's very interesting cuz a solar power plant, 847 00:57:59,130 --> 00:58:01,040 you cannot just swap one for the other. 848 00:58:02,300 --> 00:58:06,110 Yeah, people are gonna go around polishing mirrors and wiping the dust off of PVs, 849 00:58:06,110 --> 00:58:07,260 but not 500 of them. 850 00:58:09,520 --> 00:58:13,730 So you need to push out the boundary condition of the replacement. 851 00:58:14,840 --> 00:58:20,160 So that you really do relocate the trapped equity in human capital, 852 00:58:20,160 --> 00:58:22,647 not just industrial capital. 853 00:58:23,930 --> 00:58:27,177 And if you're interested in following that, 854 00:58:27,177 --> 00:58:32,672 it's happening in real time because we have to file, we've been intervening 855 00:58:32,672 --> 00:58:37,607 with the EPA assessing the request to extend the permit of that plant. 856 00:58:37,607 --> 00:58:40,940 We don't think it should be extended. 857 00:58:40,940 --> 00:58:44,610 And I'd be happy to, but that's a big one. 858 00:58:44,610 --> 00:58:52,450 We're talking probably it's multiple billions, it's not a modest undertaking. 859 00:58:52,450 --> 00:58:55,486 >> Before you take the next question, I would like to sort of say thanks. 860 00:58:55,486 --> 00:58:57,580 Cuz some people reminded me to get the audience going. 861 00:58:57,580 --> 00:58:58,712 Thanks very much. 862 00:58:58,712 --> 00:59:04,885 [APPLAUSE] [LAUGH] I'm actually gonna stay, 863 00:59:04,885 --> 00:59:11,578 and I do want people to know that we [INAUDIBLE]. 864 00:59:11,578 --> 00:59:15,319 >> We don't mind if you have to get on with other things on this beautiful 865 00:59:15,319 --> 00:59:16,038 afternoon. 866 00:59:16,038 --> 00:59:22,461 >> [LAUGH] >> [CROSSTALK] 867 00:59:22,461 --> 00:59:23,131 >> Did you have a question? 868 00:59:23,131 --> 00:59:24,101 >> Who me? 869 00:59:24,101 --> 00:59:34,295 >> Yeah. 870 00:59:34,295 --> 00:59:35,280 >> [INAUDIBLE] >> [INAUDIBLE] 871 00:59:35,280 --> 00:59:39,008 >> Yeah, just kind of the same question 872 00:59:39,008 --> 00:59:43,430 about the buyer. 873 00:59:43,430 --> 00:59:50,150 >> [CROSSTALK] >> What 874 00:59:50,150 --> 00:59:54,850 is being proposed is a branding classic green bonds company. 875 00:59:54,850 --> 00:59:58,076 And it will be dedicated to the contract methods. 876 00:59:58,076 --> 01:00:03,531 In other words, you can't use the capital without using the contract or 877 01:00:03,531 --> 01:00:04,970 biddable method. 878 01:00:04,970 --> 01:00:10,113 And it will be a release that we are hoping 879 01:00:10,113 --> 01:00:15,713 that the biggest common issue in the history 880 01:00:15,713 --> 01:00:22,692 of humanity at the divide 2020 we're [INAUDIBLE]. 881 01:00:22,692 --> 01:00:32,692 >> [CROSSTALK] 882 01:00:42,964 --> 01:00:47,429 >> Classically a town like Oregon, which has a decent bond rating, 883 01:00:47,429 --> 01:00:52,311 can move ahead to create redevelopment districts that use this model. 884 01:00:52,311 --> 01:00:57,330 Portland has eco-districts. 885 01:00:57,330 --> 01:01:01,741 The challenge specifically with green bonds is that the metrics 886 01:01:01,741 --> 01:01:05,705 are voluntary and its subsystem's failing [INAUDIBLE]. 887 01:01:05,705 --> 01:01:14,641 >> [CROSSTALK] >> The buyers of the bonds 888 01:01:14,641 --> 01:01:18,820 would be any institution invested who wanted a long term [INAUDIBLE] return. 889 01:01:18,820 --> 01:01:22,180 The bonds are then invested locally using the metrics, and 890 01:01:22,180 --> 01:01:26,589 the local districts would solicit proposal issues. 891 01:01:28,210 --> 01:01:32,760 Projects which get built, and then the consequences of the projects 892 01:01:32,760 --> 01:01:36,960 like avoiding carbon would be bundled and sold in secondary markets. 893 01:01:36,960 --> 01:01:41,740 So, it's a global network of redevelopment districts that are voluntary. 894 01:01:41,740 --> 01:01:46,870 All the participation is voluntary, which I just emphasized as much as [INAUDIBLE]. 895 01:01:46,870 --> 01:01:48,225 >> [INAUDIBLE] >> Lots of money. 896 01:01:48,225 --> 01:01:50,115 [CROSSTALK] >> [LAUGH] 897 01:01:50,115 --> 01:01:51,073 >> No government involvement. 898 01:01:51,073 --> 01:02:01,073 >> [INAUDIBLE] 899 01:02:07,060 --> 01:02:07,890 >> You got that. 900 01:02:07,890 --> 01:02:13,927 >> But then system itself is [INAUDIBLE] transaction of the money, right? 901 01:02:13,927 --> 01:02:19,115 [INAUDIBLE] >> I didn't catch the way she [INAUDIBLE]. 902 01:02:19,115 --> 01:02:24,580 >> [INAUDIBLE] the system [INAUDIBLE] computer model, 903 01:02:24,580 --> 01:02:30,184 and then [INAUDIBLE] making those software to sell. 904 01:02:30,184 --> 01:02:35,053 >> Well I'd love to sit with you and show you how the software 905 01:02:35,053 --> 01:02:39,112 actually works, if you're interested that, 906 01:02:39,112 --> 01:02:42,490 because part of what- >> Certainly. 907 01:02:42,490 --> 01:02:45,350 The software is set up to assess 908 01:02:45,350 --> 01:02:46,780 scenarios- >> Yeah. 909 01:02:46,780 --> 01:02:50,800 >> So that you can compare, point for point what the different 910 01:02:50,800 --> 01:02:55,680 outcomes might be, which is really one of the fundamental, most challenging issues. 911 01:02:55,680 --> 01:02:57,430 I mean, you folks are systems people, so 912 01:02:57,430 --> 01:03:01,540 you know that not all good ideas are a good idea, right? 913 01:03:01,540 --> 01:03:07,752 The rule, the sorts of problems and solutions, right? 914 01:03:07,752 --> 01:03:14,210 So if you're not able to 915 01:03:14,210 --> 01:03:18,210 look at look the first order consequences of an investment, you might wind up. 916 01:03:18,210 --> 01:03:21,840 I mean, nuclear energy is not the solution. 917 01:03:21,840 --> 01:03:24,343 >> Anything with long tail risks that's that expensive, 918 01:03:24,343 --> 01:03:27,790 takes that long to build, that has that many hazards and security. 919 01:03:27,790 --> 01:03:32,540 There's no way it's a solution, but it's still being pushed by some constituencies 920 01:03:32,540 --> 01:03:35,958 because there's not an adequate amount of system thinking going on. 921 01:03:35,958 --> 01:03:44,200 Though clear versions are only really understood if you have a software or 922 01:03:44,200 --> 01:03:50,523 a fairly sophisticated analytical tool allows you to pick the superior scenario. 923 01:03:50,523 --> 01:03:53,910 >> [INAUDIBLE], right? 924 01:03:53,910 --> 01:03:54,770 You can sell it. 925 01:03:54,770 --> 01:03:55,610 >> Yeah, exactly. 926 01:03:55,610 --> 01:04:02,483 And once once you have a vetted Set of metrics that allow you to demonstrably 927 01:04:02,483 --> 01:04:09,060 prove that a design is going to consistently meet a superior opportunity. 928 01:04:09,060 --> 01:04:14,570 Then as it comes with contracts for outcomes, then the investor community 929 01:04:14,570 --> 01:04:19,651 can move on that, and the investing community wants to move on that. 930 01:04:19,651 --> 01:04:27,798 That 3.5 trillion I mentioned, the 95% of their assets have to be rebuilt. 931 01:04:27,798 --> 01:04:33,190 So they are actively seeking ways to move their capital into cleaner systems, 932 01:04:33,190 --> 01:04:35,930 and they have bottomless credit. 933 01:04:35,930 --> 01:04:38,730 But they don't have a transactional framework, 934 01:04:38,730 --> 01:04:40,990 because the future is not in the market as a buyer. 935 01:04:40,990 --> 01:04:43,500 This mechanism breaks the future in the market supplier. 936 01:04:44,640 --> 01:04:49,538 >> How does this compare with just the basic idea of taking things that 937 01:04:49,538 --> 01:04:54,530 are costs, that are externalities today and internalizing them? 938 01:04:54,530 --> 01:05:00,813 Making it so that you will you do a project, when you price your product, 939 01:05:00,813 --> 01:05:06,787 your highrise, whatever the hell it is, you actually have to pay for 940 01:05:06,787 --> 01:05:12,976 all the externalities, one of the words that we use to talk about that. 941 01:05:12,976 --> 01:05:19,050 You kind of talked about that using a much more sophisticated financial discussion. 942 01:05:19,050 --> 01:05:21,900 >> But he isn't talking about a regulatory model, though. 943 01:05:21,900 --> 01:05:22,820 >> Well, that's the problem. 944 01:05:22,820 --> 01:05:24,260 Is that what that has to be, then? 945 01:05:24,260 --> 01:05:29,340 >> Well, I'm saying if you work on that third G, the business one, and 946 01:05:29,340 --> 01:05:36,530 it's profitable to go get that externality because there's now a buyer at the design 947 01:05:36,530 --> 01:05:41,970 stage for the avoided cost, cuz that's the chief point of image. 948 01:05:41,970 --> 01:05:45,581 If the schools that are making people sick have leaden pipe, 949 01:05:45,581 --> 01:05:48,400 the solution is a school that doesn't make people sick with leaden pipes. 950 01:05:48,400 --> 01:05:51,182 But it's not just the leaden pipes that you wanna change, 951 01:05:51,182 --> 01:05:54,470 you wanna get the solar orientation right, you need to have the greenery in there. 952 01:05:54,470 --> 01:05:58,752 The kids, you need the cafeteria design so that the organics are moving, flowing or 953 01:05:58,752 --> 01:05:59,910 are sourced locally. 954 01:05:59,910 --> 01:06:02,861 All these good things, so the kids want to design it themselves. 955 01:06:02,861 --> 01:06:07,322 So the externalized cost of the health effect in this model, 956 01:06:07,322 --> 01:06:13,455 because it's a market for a whole system, not a market part of the system. 957 01:06:13,455 --> 01:06:14,145 >> Yeah, yeah. 958 01:06:14,145 --> 01:06:17,370 >> Yeah, the cheapest possible point. 959 01:06:17,370 --> 01:06:21,210 I mean, Dana Meadows said this famously, then Ella. 960 01:06:21,210 --> 01:06:26,150 She said that the most cost effective place to intervene is between the ears of 961 01:06:26,150 --> 01:06:27,146 the designer. 962 01:06:27,146 --> 01:06:31,118 >> [LAUGH] >> We got a couple of comments from 963 01:06:31,118 --> 01:06:32,530 the crowd on the internet. 964 01:06:32,530 --> 01:06:33,260 >> Okay. 965 01:06:33,260 --> 01:06:36,340 >> Jonathan Scroles said thank you so much for the talk. 966 01:06:36,340 --> 01:06:39,865 I love this idea of making students aware and active stakeholders of their own 967 01:06:39,865 --> 01:06:42,800 community's health, which reminds me of the growing practice of 968 01:06:42,800 --> 01:06:46,670 participatory action research many social science studies. 969 01:06:46,670 --> 01:06:51,430 It seems like a logical next step to existing initiatives, 970 01:06:51,430 --> 01:06:54,050 such as those in some Portland schools that have kids 971 01:06:54,050 --> 01:06:57,110 growing some food that gets served in their cafeteria. 972 01:06:57,110 --> 01:06:59,949 He also goes on to say I may need to spend additional time wrapping 973 01:06:59,949 --> 01:07:03,383 my head around the idea of this extended service economy you're proposing. 974 01:07:03,383 --> 01:07:06,296 Since I tend to think that post employment economy for 975 01:07:06,296 --> 01:07:09,466 a large percentage of people in the future is inevitable, 976 01:07:09,466 --> 01:07:13,495 as we can provision far more goods and services with fewer human workers. 977 01:07:13,495 --> 01:07:19,291 And that came from Jonathan Scroles if you wanna comment on that. 978 01:07:19,291 --> 01:07:20,413 >> I will, I'll quickly comment. 979 01:07:20,413 --> 01:07:25,734 I think there's a huge self-esteem problem and a culture that doesn't 980 01:07:25,734 --> 01:07:31,250 have meaningful work, self-esteem problems cause sickness. 981 01:07:31,250 --> 01:07:38,710 I think the idea of not thinking through the system implementations of presuming 982 01:07:38,710 --> 01:07:41,860 that people can just sit around consuming all day and be healthy and happy. 983 01:07:41,860 --> 01:07:45,130 I just don't buy it, and there's no shortage of work to do. 984 01:07:45,130 --> 01:07:51,890 This planet has a huge need, and meaningful work is a privilege. 985 01:07:51,890 --> 01:07:55,240 And the fact that our money economy has not been able to produce meaningful work 986 01:07:55,240 --> 01:07:59,240 is one of our great bankruptcies. 987 01:07:59,240 --> 01:08:03,795 And the idea that somehow meaningful work is tied to money is bull, 988 01:08:03,795 --> 01:08:07,820 cuz more than half of the work going on is not tied to money. 989 01:08:07,820 --> 01:08:11,850 It's being done by people who care, women, mostly, who are just 990 01:08:11,850 --> 01:08:15,000 taking care of everybody and doing the work that has to be done every day. 991 01:08:15,000 --> 01:08:18,020 Because by the time the day is over, it has to be done again and and 992 01:08:18,020 --> 01:08:19,250 not getting paid for. 993 01:08:19,250 --> 01:08:22,760 So that that I think is a misconstruction. 994 01:08:22,760 --> 01:08:27,480 I think his insight about the school system is quite appropriate, and 995 01:08:27,480 --> 01:08:30,880 I'd if he had wanted to keep up with that, if he's still online, 996 01:08:30,880 --> 01:08:34,360 I'd be delighted the correspond with him. 997 01:08:34,360 --> 01:08:35,000 >> Okay. 998 01:08:35,000 --> 01:08:37,200 >> No shortage of work to do, I have a one-liner. 999 01:08:39,060 --> 01:08:42,250 >> Identifying the need for purpose and 1000 01:08:42,250 --> 01:08:47,170 the need for subsistence are both legitimate human needs 1001 01:08:47,170 --> 01:08:51,310 that don't necessarily need to be conditioned one on the other. 1002 01:08:52,790 --> 01:08:53,830 >> Yeah. 1003 01:08:53,830 --> 01:08:57,507 >> Even if we had basic income and 1004 01:08:57,507 --> 01:09:03,550 everyone could just sort of subsist on their social security check, 1005 01:09:03,550 --> 01:09:07,910 that doesn't mean that we would no longer wanna go out and find some meaningful 1006 01:09:07,910 --> 01:09:11,895 work to do, but it wouldn't be a job for pay in the same sense. 1007 01:09:11,895 --> 01:09:12,640 >> Well, exactly. 1008 01:09:12,640 --> 01:09:17,160 And David, my good fortune that out of this house, 1009 01:09:17,160 --> 01:09:22,170 some really brilliant students who have been working in our land trust. 1010 01:09:22,170 --> 01:09:25,380 And Ilona, who some of you may know, 1011 01:09:25,380 --> 01:09:28,540 one of the hardest working people I've ever met. 1012 01:09:28,540 --> 01:09:33,100 Also a brilliant intellectual, extremely competent, ethical person. 1013 01:09:33,100 --> 01:09:38,125 She made the cheese that I had for breakfast and baked the bread that I ate. 1014 01:09:38,125 --> 01:09:43,090 >> [LAUGH] >> Yeah, and she is working full time, 1015 01:09:43,090 --> 01:09:47,465 and her compensation is access to the tools, 1016 01:09:47,465 --> 01:09:50,790 the classrooms, the capacity, the landscape, the gardens. 1017 01:09:50,790 --> 01:09:55,040 She's buying a permanent residential with labor, not cash. 1018 01:09:55,040 --> 01:10:02,280 So it is possible to run a wholesome local economy with pure goodwill and hard work. 1019 01:10:02,280 --> 01:10:05,791 And I think the harder times get, the more attractive that model becomes. 1020 01:10:05,791 --> 01:10:06,817 What do you really need? 1021 01:10:06,817 --> 01:10:10,024 Water, food, shelter and meaningful work. 1022 01:10:10,024 --> 01:10:10,803 >> Companionship. 1023 01:10:10,803 --> 01:10:11,644 >> Uh-huh. >> Yeah. 1024 01:10:11,644 --> 01:10:13,698 >> I thought I'd just add that in there. 1025 01:10:13,698 --> 01:10:18,527 >> [CROSSTALK] [LAUGH] 1026 01:10:18,527 --> 01:10:19,477 >> Jonathan 1027 01:10:19,477 --> 01:10:23,402 replies that absolutely I think you should seek purposeful things to do, 1028 01:10:23,402 --> 01:10:27,510 perhaps even more so in the absence of economic necessity. 1029 01:10:27,510 --> 01:10:30,410 Then there's another short comment from John Maxwell he says thank 1030 01:10:30,410 --> 01:10:31,580 you for the talk. 1031 01:10:31,580 --> 01:10:35,706 This was a very fascinating subject and I would love to keep up with the research. 1032 01:10:35,706 --> 01:10:36,209 >> Thank you. 1033 01:10:36,209 --> 01:10:37,596 >> Cool. 1034 01:10:37,596 --> 01:10:39,832 Yeah. >> Okay, that's all from online for 1035 01:10:39,832 --> 01:10:41,310 the moment. 1036 01:10:41,310 --> 01:10:42,090 >> So we're good? 1037 01:10:42,090 --> 01:10:43,497 >> We're good. >> All right, very cool. 1038 01:10:43,497 --> 01:10:44,376 >> Thanks once again. 1039 01:10:44,376 --> 01:10:45,398 Really talented. 1040 01:10:45,398 --> 01:10:52,319 >> [APPLAUSE] >> Great group. 1041 01:10:52,319 --> 01:10:54,588 >> Great group. 1042 01:10:54,588 --> 01:10:58,800 [CROSSTALK]