Honolulu Weekly

Having been complicit, as a U.S. citizen, in the spending of what might be considered the worst $1 trillion in history, a geopolitical petro-fundamentalism-driven military folly of proportions that only those blinded by the Great Jingoist in the Sky could love, I am hereby calling on the candidates in the 2008 presidential race to develop a plan for the next trillion’a good trillion, and, yes, maybe even, in the great historical sweep of things, the best trillion dollars ever spent.

Well, not exactly spent, and this is what is so portentous about the current opportunity.

We have the opportunity to invest a trillion dollars in a way that can affirmatively influence the future of life on earth.

The next trillion dollars can mark a turning point not only for the United States, but for all of mankind’away from security through wealth and conquest and fundamentalism, and toward security through health and restoration and a new sense of whatever it is that comes after fundamentalism on humanitys journey toward compassion and non-violence.

Security through wealth made sense when the worlds natural resources seemed limitless, global population small and the environmental impacts of economic growth easily assimilated. Security through conquest made sense in the world before nuclear weapons and global terrorism. Fundamentalism made sense in a world that had yet to see the picture of the earth rising over the moon.

We stand, today, on the threshold of a different world, and our survival depends upon our ability to recognize this new reality and respond to it appropriately. The old worldviews, the old weapons, the old economic institutions are no longer adequate.

We can stand, here, frozen like deer in the headlights of this new reality, or we can leap. We can affirm the definition of insanity’ doing the same thing over and over again, but hoping for a different outcome (that is, using the violence-prone economics of wealth and conquest over and over again, but hoping for social equity, ecological balance and peace), or we can use the same American boldness, the same spirit of risk taking, the same sense of moral urgency that impelled our ill-fated invasion of Iraq and turn it in a fundamentally new direction.

We can demonstrate, once and for all, even now, at this 11th hour, that homo sapiens is finally capable of the sapience that is its destiny on this little blue planet of theirs (you know, as in, them: all those other living things out there who are not us.)

Patient capital

And it’s as simple as . . . patient capital.

It’s as simple as putting the first trillion dollars of patient capital to work, starting the global economy down a path that leads away from speeding up and heating up and toward breaking the fever, the path that leads beyond globalization or bust and toward localization and boom.

What do we mean by patient capital?

Economic observers Thomas Friedman and Bill McKibben are among the many who have begun calling for just that.

Celebrating the vibrant entrepreneurial energy that he observed at the community level in Africa, Friedman has recognized the need for patient capital, a new form of investment that will not push small enterprises to the margins in pursuit of maximum financial gain. Similarly, Bill McKibben outlines in Deep Economy the need for a new kind of risk capital that is willing to accept a longer term, lower rate of return, in order to support the generation of enterprises that will be the backbone of healthy local economies’ not just in developing countries, but in developed countries, as well.

A sane analysis of the modern, global economy recognizes that the financial return to which members of the club of beneficiaries became accustomed in the latter decades of the 20th century depends upon rates of growth’growth in population, acceleration of technological change, acceleration of capital flows, growth in consumption, increasing pollution, widening wealth gaps’ that are unsustainable.

Patient capital is not the answer, but it is the key to a family of answers that can begin to reorient the juggernaut of production, consumption and pollution that is threatening to unravel the web of life.

Here’s how we might invest the next trillion:

$250 billion in clean energy

Technological innovation is at hand to dramatically lower the ecological footprint of manufacturing, transportation and housing. Renewable energy, distributed energy, clean tech, green building a boom is already beginning in the venture capital markets. But it is not nearly enough. (If it were determined that one could only make 10% investing in fuel cells or 8% supporting the proliferation of small scale, decentralized renewable energy projects, would this mean we shouldnt do it?)

$250 billion in carbon sequestration and bioremediation

The Presidents Committee of Advisors on Science and Technology (PCAST) underscores the importance of carbon sequestration: A much larger science-based CO2 sequestration program should be developed. . .This is very high-risk, long-term R&D that will not be undertaken by industry alone without strong incentives. A farm of humungous radiators-on-goal-posts that pull carbon from the atmosphere? Bacteria that eat radioactive waste? Municipal waste treatment technologies that produce no sludge? (If it were determined that one could only make 5% investing in carbon sequestration technologies and bioremediation, would this mean we shouldnt do it?)

$250 billion in sustainable food, fiber and forests

We have been mining soil fertility for 10,000 years, and, in the last 50 years, doing so at an alarming rate, using an industrial model that: depends upon synthetic chemicals and large-scale, input-intensive monoculture; turns food into a cheap, additive laden, highly processed commodity; reduces genetic diversity; drives small farmers off the farm; and centralizes food production and distribution in ways that are increasingly vulnerable to adulteration and contamination. Organics, Slow Food, sustainable timber management, local food enterprises are the beginning of a life-affirming, fertility-enhancing response they must be nurtured and recognized as central to a healthy economy. (If it were determined that one could only make 3 percent investing slow money in the food sector, would this mean we shouldnt do it?)

$250 billion in social entrepreneurship

Beyond the energy, bioremediation and food sectors, a new generation of social entrepreneurs and socially responsible investors is emerging more broadly, integrating social and environmental concerns into corporate culture and bringing entrepreneurial discipline to sustainability-oriented non-governmental organizations around the world. There is enormous dynamism here: companies that improve access to healthcare, that create jobs in economically disadvantaged communities, that improve education, that develop independent media; companies that give back 100% of their profits; intermediaries that support microfinance in developing countries; mission-related investing by foundations; a Fourth Sectorù network, heading from the traditional definitions of for-profit, non-profit and public sector towards a new vision of for-benefit corporations. (If it were determined that one could only make a 0% return, or even a minus 20% return, investing in a blended portfolioù of for-profit and non-profit social enterprises, would this mean we shouldnt do it?)

The assiduous reader will have noticed in the above a central theme of innovation and entrepreneurship. This is not just about technology. This is not just about wealth. This is about entrepreneurship. And not just a spirit of entrepreneurship that exists as a kind of national aspiration, a reflection of Americas historic, pioneering role in bringing democracy and free markets to fruition.

It is about tens of thousands of entrepreneurs and early stage companies, each of which is making decisions every day, taking real risks, daring to bring new technologies to market, creating products and services that deliver market solutions to pressing needs. It is about a new breed of company that is restoring the relationships between commerce and community and bioregion. It is about focusing the peculiarly powerful engine of entrepreneurship on the major social and environmental challenges of our time.

Faced with the urgency of the global situation, a trillion dollar investment in such collective enterprise is not bold. It is merely appropriate. It is sufficient. It is prudent. Anything less is a derogation of our moral and fiduciary duty to future generations, writ large.

Now, the assiduous reader will also have noticed the parenthetical questions above, leading to following confession: we cannot know at the outset how much or how little financial return will be made from the next trillion.

Warning: This isnt Google

It is highly unlikely, in the aggregate, to generate returns competitive with those sought by todays Google-giddy venture capitalists. Which means, in the parlance of the modern fiduciary, that very high risks would not always be offset by very high returns. This may be so.

I would be comfortable, however, and I think we should all be comfortable with no, more than comfortable with, wildly enthusiastic about allocating a portion of our assets using patient capital hurdle ratesù of anywhere from minus 20 percent to plus 10 percent. For just as no amount of war reparations can undo the damage that has been caused by war, no amount of philanthropy can clean up after the excesses of global capitalism and economic growth run amok. We can no longer rest comfortable in the process of making as much money as possible, so that we will have more to give away. Every investment, as well as every grant, must be made in full consciousness of long-term costs. In a world that no longer knows any wayù where it can throw its waste, there is no longer any place for externalities.ù

We need to catalyze the emergence of the next stage of capitalism, a more integral form of capitalism, what Peter Barnes has called “Capitalism 3.0. We need to invent new patient capital markets. We need to invent a new kind of investing, one that can effectively support a new kind of entrepreneurship.

This is a wildly important moment. It should impel us to use maximum social and environmental benefitù rather than profit maximization as a measure of investment success. It should impel us not to be afraid to integrate care for the health of future generations into our daily investment decisions. It should impel us to act courageously on the wisdom of E.F. Schumacher, who observed that the wealthier a society becomes, the more difficult it becomes to do things that do not have an immediate payback.

Some portfolios of patient capital could be wildly profitable. Others would be long on social return on investment. Others, designed around the concept of living returns.ù

But let us not get lost in the details. They will be legion; and, they can be dealt with. A trillion dollars of patient capital invested by the United States of America will attract legions of talented portfolio managers and financial entrepreneurs and economic theorists. There will be plenty to learn, plenty of mistakes to be made along the way.

But none so egregious as the mistake that we have just witnessed. Or the mistake of inaction, faced with the daunting challenges of the task at hand.

Lets talk Iraq

Now, we cannot continue with this call for The Next Trillion without addressing the issue of Iraqi reconstruction. The United States annual military budget of over $439 billionnot counting the costs of the wars in Iraq and Afghanistan’ is almost half that of the entire globe, and more than that of the next six countries combined, including China. It must be adjusted to include the costs of cleaning up after itself. Just as we want companies to take into account the so-called externalities that are created when they seek to maximize shareholder wealth and economic growth, we must see to it that the military internalizes the costs of its so-called collateral damage. We must include in our military expenditures the costs of reconstructing Iraq.

At the same time, we need to address the systemic problems that created the conditions for such conflict. We need to reconstruct the world in which financial markets, capital flows, technological innovation, consumer appetites and environmental impacts are accelerating beyond our ability to manage them, destabilizing societies and straining natural systems to the limit.

In the wake of 65 gigawatts per year of increasing Chinese energy generation (equivalent to a new energy grid the size of Californias), most of it from highly polluting coal-fired power plants, we need to reconstruct the global economic model that is complicit in Chinas spectacular but unsustainable trajectory of industrialization and urbanization. In the wake of 380 ppm of carbon in the atmosphere, we need to reconstruct our energy systems. In the wake of GMOs and factory farms and food miles and aquifer depletion, we need to reconstruct local food communities and local economies.

So, let the war in Iraq become useful in an unexpected way: let it mark the beginning of the end of the age of petrodollars and the era of the triumph of capitalism (yes, it has triumphed, but we are very much in danger of that hollowest of all triumphs, the Pyrrhic victory). Let it mark the inception of a new spirit of stewardship and American leadership toward the restorative economy.

The Invisible Hand

And if a trillion dollars still seems like a lot, then view it in the context of the $2 trillion dollars a day that speeds through Wall Street. Or view it in the context of the $14 trillion U.S. economy. Many observers have pointed out that the war in Iraq has been, in terms of a percentage of U.S. GDP, one of the least expensive wars in our history. If we can afford to spend a trillion dollars on an Iraqi nightmare, then we can afford to spend a trillion dollars on a new American dream.

The Invisible Hand of the marketplace has been very good to many of us in the West and the North over the past few hundred years, and, more recently, to many in emerging pockets of affluence around the world. But in these early years of the 21st century, the Invisible Hand is pointing in a new direction. It is pointing past climate change, past toxics, past the loss of biodiversity, past depleted topsoil and over-fished fisheries, past megalopoli and suburban sprawl, past the favelas of the underclass and rural poverty, past the cul-de-sacs of consumerism and the gated communities of affluence.

It is pointing to the next trillion.

New Deal, Marshall Plan, Manhattan Project, Apollo Program: when America sets its mind to it, anything is possible.

Let us set our mind, then, to The Next Trillion.

Deployed with the requisite courage, vision and entrepreneurial acumen, it will unleash a commercial force of reconstruction, restoration and healing a new era of sustainability and prosperity the likes of which the world has never seen.

And fit for a new president.

Woody Tasch is Chairman of Investors Circle, a non-profit network of individual investors, venture capital funds and foundations dedicated to patient capital for a sustainable future. Since 1992, IC has facilitated the flow of more than $112 million into over 180 early-stage companies and venture funds that are accelerating the transition to a restorative economy. He was in Monterey recently attending Renaissance Weekend.

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Global Warming: So What About Us?

On the eve of a global warming conference to be held in Hawaii next month, residents may consider whether, due to rising seas, our children’s children will be confronted with the sort of land loss and relocation our remote Pacific island neighbors, such as Tuvalu, are facing now. While, thanks to our islands’ greater land mass and high volcanic spines, our immediate descendants won’t likely face evacuation to the Mainland, it’ll probably get a lot more crowded mauka. Hawaii will host more cases of malaria and dengue fever as a warmer climate favors disease-bearing mosquitos, a worldwide trend being tracked by by the Center for Health and the Global Environment at the Harvard School of Public Health. And increased prevalence of island fever may be expected as our coastlines shrink.

Over the next hundred years, according to scientists at the UH-Manoa School of Ocean and Earth Science and Technology, the Pacific is projected to rise by approximately three feet, engulfing Waikiki Beach, restoring Kapiolani Park to wetlands and turning downtown Honolulu into a grid of canals. Coral reefs, already dying off due to warmer waters, will provide less protection and less habitat for fish and wildlife. Seventy-five percent of the Northwestern Hawaiian Isles marine sanctuary could be submerged, putting endangered monk seals, green sea turtles and sea birds at far greater risk. Man-made structures such as sea walls, breakwaters and Hawaiian fishponds will be breached, further exposing our coastal city to storm surges and high waves. There will be more floods and ocean pollution as we had in winter 2006, due to sewer and storm drain overflow.

Looking on the bright side, the UH Manoa football fields, like most mauka property, should stay dry enough for the Warriors to keep in fighting trim. With the Honolulu airport underwater they won’t have much chance to play Mainland teams, but the good news is, that increases their odds of staying undefeated. And even if sea levels rise 70 meters, some significant sites will remain above water: the Pali, Mauna Kea and Mauna Loa, including the summit sensors that will continue to measure increasing levels of carbon dioxide in Earth’s atmosphere.

As for tourism, more episodes of extreme weather, as predicted by the National Oceanic and Atmospheric Administration, may mean more snow on Mauna Loa and potential for expanding Hawaii ski resorts. Down on the submerged coastal plain, Honolulu could brand itself as the Venice-or even the Atlantis– of the Pacific.

If you don’t feel like gambling the welfare of your descendants, here are some tips for reducing your contribution to greenhouse gas emissions of carbon dioxide (CO2), measured in pounds, as follows:

1. Recycle/reuse paper, plastic and glass, and you’ll save 1,000 lbs/ yr. Start with that pile of holiday greeting cards and wrap.

2. Drive less. Taking Da Bus will shave 804 lbs off the 2,750 lbs spent on the average 12-mile car commute. Instead of trying to starve off those holiday pounds, walk and bike and lose carbon weight, too.

3. Turn the airconditioner down-or off. Save 121 lbs for every degree above 72 you raise your thermostat.

4. Lower your water heater temperature from 140 to 120 degrees F and lose 479 lbs.

5. Shower for 2 minutes less and keep 342 lbs of CO2 out of the atmosphere, while saving water, a very precious resource in our islands.

You get the picture. Every energy-conserving step we take helps make Hawaii more self-sufficient, and reduces the need to build more power plants. For more tips, go to [www.stopglobalwarming.org].