Less Than Revolutionary Finance

I’ve gotten some good natured pushback on the idea of buying oneself out of corporate servitude.  The objection seems to come in two general forms.

  1. Contingency of Financial Autonomy: Deriving financial autonomy from investments in corporations whose operations are fundamentally destructive creates a morally corrosive dependency — your interests end up being aligned with theirs, because your autonomy depends on them remaining profitable.
  2. Opportunity Costs: Even if investing in corporations doesn’t actually give them financial support, there’s an opportunity cost: the same money could be used to invest in small local businesses or social enterprises.  Wouldn’t that be more powerful and potentially transformational?

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Buy Yourself Out

Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need, to impress people we don’t like.
— Tyler Durden (Fight Club)

A slave: someone over 40 who makes more than $100,000 but still has a boss.
— Nassim Taleb

A couple of weeks ago I ran a workshop on retirement investing for some other co-op folks.  I’ve run this workshop before, but lately I’ve been thinking about it differently.  Turns out calling it “retirement” investing can be a turn-off when you’re talking to a bunch of mission driven people who are working on things they love, and think they’ll never want to “retire.” The word can have a connotation of hedonism or idleness.  The permanent worthless vacation.  Or just sitting around waiting to die.  “Early retirement” serves no purpose when the work you do is done primarily because you believe in it.  There’s also a sense with “retirement investing” that you can’t touch the money until you’re old.  Which is a long-ass time if you’re in your early twenties.

So I’ve started thinking about it as “autonomy investing” instead — becoming financially autonomous quickly, so that you can do the work you’re compelled to do. Without having to worry about whether your political activism will put your job at risk.  Without caring if your mission is compatible with the Nonprofit Industrial Complex and their funding metrics.  Without having to work a soul-sucking day job that leaves you too fried to spend your evenings and weekends on civic engagement and organizing. Or alternatively… without having to beg investors to pay your living expenses while you work on the early stages of your startup idea.

This is, essentially, the project of buying yourself out of corporate servitude.

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Is profit driven affordable housing possible?

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Last week at the Better Boulder Happy Hour (B2H2) we tried to talk about affordable housing.  The little nook at the Walnut Brewery was so packed that it was hard to even have a face-to-face conversation with folks, let alone do any kind of presentation that didn’t sound like an attempt at crowd control.  Which is good I guess… but not exactly what we’d planned.  I think a good chunk of the attendance was due to all the buzz generated by last Tuesday’s City Council meeting, and the talk of a citywide development moratorium.  Anyway, it was a learning experience.  We want these events to be informative, but also to get people talking to each other, and have it be more fun and social and network-building than a brown bag seminar or lecture that’s mostly going to appeal to the Usual Suspects, who are already engaged.  We need to get more “normal” people to show up and engage on these issues.

In any case, Betsey Martens, director of Boulder Housing Partners (the city’s housing authority) got up and said a few words to the assembled crowd.  She made a point which is in retrospect obvious, but that got me thinking anyway.  The costs of creating additional housing in Boulder (or anywhere, really) can be divided up into three categories:

  1. Hard development costs — the cost of actually building the housing.
  2. Soft development costs — e.g. the financing and permitting costs, carrying costs associated with regulatory delay, organizational overhead, etc.
  3. The cost of land.

She pointed out that you can do all the work you want to reduce hard and soft development costs — using standardized designs, prefabricated buildings, streamlined permitting for affordable housing — but ultimately those optimizations just nibble around the edges of affordability.  The real driver of housing costs in a desirable place is the cost of the land, which is pretty irreducible.  If you’ve got a funding stream (as we do here from our inclusionary housing policy), then you can buy up a bunch of land and create housing on it, but there’s still an opportunity cost to be had for using the land inefficiently — the same money might have created more affordable housing.

The obvious way to attack this problem is to spread the fixed land cost across more dwelling units.  You may not be able to reduce the price of the land, but you can share it with more people, decreasing per unit costs, and increasing density.  Naysayers are quick to point out that all the density in Manhattan and Tokyo has not made them cheap.  A common response is that they’re cheaper than they would have been if they hadn’t been more densely developed, but I’m not sure this is really the right answer (even if it’s true).

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Humans as Curators in Troubled Times

We had some of that golden evening light tonight just after house meeting.  The kind that makes you think maybe an apocalypse is just over the horizon.  That the mountains are on fire.  That the gods are angry.  This Saturday I went for a long bike ride up to the Peak to Peak highway with Amy from Picklebric.  At the Sunshine Saddle she pointed out the cheat grass — an invasive species that she works on.  Studying disturbed ecosystems, and how to assemble new approximations of the originals from the parts at hand.  You can’t get rid of the invasives, but maybe you can influence which ones thrive.  Just beyond the divide above us, the mountains covered with red trees, a forest being transformed in a lifetime.  500 years from now will they be the Aspen mountains?  Tim applied for a job at the Nature Conservancy as a landscape ecologist in a similar vein — understanding and managing wild and semi-wild lands for their own sake.  Like the Colorado river pulse.  All this made me think of the ecopoesis that Kim Stanley Robinson portrayed in his Mars books, especially Green Mars.  Humans as gardeners of the no longer quite wild.  From here on out, it’s all gardening. Mandatory gardening.  It’s just what kind of garden do we want?  What will grow in this climate?

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Alone in the Wilderness

I’ve been thinking a lot about risk tolerance and discount rates lately, and how they profoundly shape our perception of the economic costs associated with minimizing climate change.  Basically… if you’re willing to vary your preference for the present over the future or the level of uncertainty you’re willing to accept, then you can make mitigation cost whatever you want.  All else being equal, low discount rates and low risk tolerance make taking action cheap, while high discount rates and high risk tolerance make it expensive.

Unfortunately, we live in a society with high discount rates and high risk tolerance.  Or at least, that’s what you’d infer from our collective behavior.  It’s also what you’d gather from a lot of the rhetoric around climate action, and our obsession with trying to make it “economically efficient”, to the point of maybe not doing it at all.  Our risk tolerances and discount rates aren’t really objectively measurable.  They are fluid, and context sensitive.  The same person in different situations will not behave consistently.  Different people in the same situation may come to different conclusions.  How we deal with uncertainty and the value of the future is a personal as well as cultural decision.

For some reason, I find myself with a low pure time preference, and an aversion to many kinds of risk.  This is part of why I find our unwillingness to act on climate infuriating, and why I’m working on climate policy.  I got to wondering, how did I end up this way?  Why isn’t it more common?

Discount rates determine time horizons.  How quickly does the future fade away?  I spent a huge part of my education studying astronomy and geology and planetary science.  I was obsessed with the Pleistocene as a kid.  These are my timelines.  Four and a half billion years since the Earth was shattered and the moon coalesced. 700 million years since the first charismatic megafauna arrived on the scene. 65 million years since the dinosaurs vacated the premises and our warm fuzzies took over.  73,000 years since Mt. Toba erupted in Indonesia nearly wiped the humans out.  The Long Now stretches forward too — into deep civilizational time, if we’re both wise and lucky.  To work on robotic space exploration and dream of our sentience drifting between the stars requires a long view, a hope or expectation of indeterminate future.  With that hope comes a pure time preference that’s close to zero, at least for species-scale decisions.  The value of this enterprise is not cut in half every 7 years, or even every 70.  You cannot invest a generation out, let alone a thousand years out, if you are constrained by your weighted average cost of capital.  In some kinds of enterprise, our markets fail utterly.

My risk aversion I chalk up to time spent traveling under my own power in the wilderness, far from any hope of rescue.  When you know you will not see another human being for weeks, and you are truly on your own, in an environment that is not benign, risk looms large.  The penalty for a minor screw up can be death.  Kayaking in the Sea of Cortez, at the whim of the winds and waves, pinned down for days on the beach by the crashing surf.  In a desert by the sea with no roads and no communication.  We started running out of water when the storms kept us from reaching our destination on time.  A stubbed toe got infected.  My boat was damaged and began to leak.  But we had the parts to make a still, we had soap and antibiotics, fiberglass and resin.  Because we were prepared, we could just wait out the storms.  We were never forced to paddle in dangerous weather.

It’s interesting that my risk aversion doesn’t keep me from traveling in the wilderness.  There’s something about that kind of experience, where the risk is real and self-reliance is mandatory, that I find invigorating.  To some degree it’s the awareness of the risk that makes the experience feel hyperreal.  The joy of the challenge isn’t in the elimination of risk, but in its thoughtful mitigation.  Successfully thinking through many possible failures, and how to make them graceful instead of catastrophic.  How to keep them from cascading.

As social animals, I think we’re naturally a little insulated from the risk that comes from isolation.  There’s usually someone there to help in an emergency.  Certainly in the modern society of the global north, it’s quite rare to experience that kind of mandatory self-reliance.  I think this dulls our sense of risk.  Instead we suppose that we’ll muddle through somehow.  That we can play it by ear.  That there will probably be someone to lean on if need be.

Unfortunately, we are alone in our own wilderness as a civilization.  As a species.  As a biosphere.  We are trapped here on Earth, surrounded by the unfathomably vast and hostile depths of space.  There is no help for us.  There is nobody to lean on or learn from.  The penalty for even a minor alteration of our atmosphere’s chemical composition and optical properties might just be extinction.  Aversion to risk under these circumstances doesn’t seem so unreasonable.

Our task isn’t to optimize and run our civilization as efficiently as possible.  Our task is to ensure that come hell and high water, we make it through alive.  If you agree, then minimizing climate change isn’t expensive but worthwhile — those values actually mean that climate action is cheap!

A Carbon Price for Colorado

In May of 2013 I gave a talk at Clean Energy Action’s Global Warming Solutions Speaker Series in Boulder, on how we might structure a carbon pricing scheme in Colorado.  You can also download a PDF of the slides and watch an edited version of that presentation via YouTube:

What follows is a more structured written exploration of the same ideas.

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The 2013 Rad-ish Council Candidate Forum

Last night seven Boulder city council candidates visited the Rad-ish Collective, an activist co-op that does a lot of volunteering behind the scenes of Boulder Food Rescue.

Candidate Literature by Zane Selvans on flickr

The candidates had some motley seating, including one stool made out of the back half of an old bike frame (Andrew Shoemaker) and a chair upholstered in what appeared to be a faux Yeti pelt (Sam Weaver). Half the walls were covered with murals, and the other half with event flyers, political literature, and all the daily household bookkeeping that goes into making a co-op run smoothly.

The crowd’s median age was probably under 25, and most of us sat on the floor. As the event progressed, more and more people filtered in, and those sitting shoulder to shoulder in the front slowly scooted forward until we were within reach of the candidates’ feet. Sam Weaver remarked at some point that it was probably the largest or second largest audience of any forum they’d attended, even though it was being held in a living room!

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