Green is the Colour of Money $$$$$$$$

There is definite mood shift about the Green Revolution advocated by Friedman in Hot, Flat and Crowded (see my review). Just a year or so ago the predominant attitude in mainstream business to the whole ‘sustainable, green, environment, manage your waste’ thing was a begrudging acceptance and fear that it would inevitably spoil the party. We now detect the green shoots (pun intended) of investor excitement. Revolutions are an opportunity to make money, that is how we now see the agrarian revolution, the industrial revolution, the information revolution, and it is how more and more people are seeing the Green Revolution. “Hang on a moment, if we get first mover advantage on renewable energies, efficient waste disposal technology, new recyclable materials we can make a killing”. The smart money (which in these equity markets has nowhere else to go) is shifting towards anything green. Suddenly people with crazy little green ideas don’t seem so crazy and private investors are stepping forward to back them (I know of at least two such private investment groups, serious players, who are chasing such opportunities the way they would have chased internet start-ups).

Friedman’s argument is that the USA is uniquely placed and particularly motivated to lead the Green Revolution and thereby retain its place as world economic leaders. Perhaps, but the evidence of past revolutions is that they result in new world orders and new players. It was, after all, the industrial revolution that propelled the USA to where it is now and built the fortunes of new upstarts like J.D. Rockefeller (oil) and Andrew Carnegie (steel).

Who will be the new winners in the Green Revolution – answers on a postcard (or better still a comment to me which I will post).

Settle Down – We are all Traders at Heart

If you are feeling seasick they tell you it helps to look at the horizon. If these astonishingly bad economic times are making you feel sick the equivalent of looking at the horizon is to take a long range historic view of the world. That is what William J. Bernstein does in his book, ‘A Splendid Exchange – How Trade Shaped the World’. Bernstein goes back 15,000 years to the origins of trade and tracks it all the way through to the present day. This fabulous book thoroughly entertains the reader with fascinating insights and perspectives on how trade developed. It explains what drove trade throughout the ages, who the key players were, both nations and individuals, the set-backs and the unintended consequences, the evolution of trading routes and value add exports. As the author says “Globalization, it turns out, was not one event or even a sequence of events; it is a process that has slowly been evolving for a very, very long time”.

But how does it help with economic sea-sickness? What comes though very clearly is that we are all born traders. Our natural instinct is to exchange goods, services and of course ideas. Nothing ever has, nor will ever, change that. However bad it feels right now, the global trading community has weathered much worse storms. One unintended consequence of trade was the spread of disease. The Conquistadors brought small pox to South America and wiped out the Aztecs. Trade with Asia brought the Black Plague to Europe and wiped out an estimated 100 million people. Toxic debt has spread financial instability and wiped out a few banks but it feels pretty insignificant in a historic context. It will prove to be a temporary blip in the progress of global trade.

Columbus and Vasco de Gama opened up mind blowing trading possibilities as a consequence of their explorations respectively West and East  – all achieved at a time when most of the world, aside from the educated few, thought the world was flat. The internet is doing the same thing right now, at a time when most of the world thinks it is analogue.

You can’t trade without banks and a monetary system so we can stop worrying about their collapse. They will never collapse they will just evolve – albeit with painful consequences for some in the process. And without wishing to stray into dangerous waters we can stop worrying about the growing schism between the West and Islam. The prophet Muhammad was born into a tribe of traders and Islam was the engine behind global trade up to the 17th century – it may well become so again. The Infidels and Islam will find an accommodation eventually because they want to trade with each other. We should, of course, learn the lessons of history. Bernstein quotes Frederic Bastiat, “When goods are not allowed to cross borders, soldiers will”.

Protectionism is never the answer. The Great Depression of the 1920’s resulted in congress passing the short-sighted Smoot-Hawley Tariffs only to replace them 4 years later with The Reciprocal Trade Agreements under the free trader, Roosevelt.

The evolution of trade when looked in retrospect has been incredible – literally incredible since at any point in history no-one would have believed what was going to happen had they been told. From exchanging animal skins to exchanging perfumes and oils to exchanging silk then cotton to exchanging human labour and slaves to oil and now to buying books over the internet from amazon. From the Greeks to the Persians to the Spanish, Dutch, English, Americans – with the Chinese there throughout. From mules to ships to trains to planes to the ether. The evolution of trade has been both remarkable and relentless.

We are all traders at heart and we will continue to find new things to trade in new ways. Columbus faced worse storms than this – just focus on the horizon.

Is “Hot, Flat and Crowded” a Business Book?

Thomas L. Friedman’s book ‘The World is Flat’ won the 2005 inaugural Financial Times/Goldman Sachs Business Book of the year award. This award recognizes business books that offer, “the most compelling and enjoyable insight into modern business issues, including management, finance and economics”. You can check out the judges panel, the shortlists and subsequent winners on the FT web site for the awards. I am keeping an eye on this for additions to my Top 10 Business Books (to read before you waste any more shareholders money) feature. My criteria go beyond just being insightful, although I agree this is important. I look for durable, seminal best sellers that a broad range of business people found to be useful and I ensure that consistently great writers and thought-leaders have at least one of their books represented. Having read Friedman’s latest book, ‘Hot, flat and crowded’ I think he deserves to be on my  Top 10 list (which is actually 25, now 26, books)

But is ‘Hot, Flat and Crowded’ actually a business book? ‘The World is Flat’ dealt with the new age of globalization being ushered in by the technological revolution and its implications for more than just business. However, its relevance and value for anyone in business is unquestionable and it deserved its accolades in this respect. In ‘Hot, Flat and Crowded’ Friedman broadens his view to look at the convergence of 3 global trends (crises in the making) of globalization, climate change and the population explosion. He details how we got where we are, just how bad it is and what we need to do about it. By ‘we’ he means very specifically America and that is a criticism that could be leveled at him. Friedman is very explicit that as world leaders only the USA can lead the way by driving the green revolution he advocates (implores) his countrymen to join.

Friedman is a good writer and is very well connected, travelled and read. He rams home every aspect of his message – the history, the status report and the diagnosis – with numerous anecdotes, analogies and bits of evidence gleaned from a dazzling list of experts. It is shocking, alarming and often entertaining but a second criticism is that it is long winded. In my normal style I will encourage you to read the book itself (it is a good read) but will also summarize the main messages.

Our dependence on oil combined with exponential population growth and in particular a burgeoning middle class who all aspire to live ‘like Americans’ means we are doomed unless we (America) changes track and leads a green revolution. Oil is creating dangerous levels of CO2 and putting power and money in the hands of undemocratic extremists. The weather and the politics are fast approaching the stage of being hazardous to our survival. In fact one of the main issues is that whilst we are programmed to think linearly the convergence of ‘hot, flat and crowded’ is creating exponential leaps into dangerous and unchartered waters.
Up until very recently there have only been 2 of what Friedman calls ‘Americums’, that is a block of circa 350 million materialistic, ambitious, wasteful consumers – America obviously and old Europe. In just a couple of decades there will be 8 or 9 and that is totally unsustainable.

He offers many different aspects of the solution but there is one central theme. We have to replace oil as far as possible with widely available sustainable energy sources. The place most motivated and most able to do this is America. Rather flippantly he describes a talk he gave in China where he actively encouraged the Chinese to carry on developing along traditional lines based on dirty fuels and widespread pollution because this will give the USA the head start it needs to develop the green technology it can sell to the world and thus reinforce its position as world leaders.

International readers may not share his mission that America must lead the green revolution but he is convincing about the overall problem and solution. We used to rely on coal/steam and horses. We now rely on oil. This must change and fast. Being optimistic by nature I believe we will. There is no reason to believe that with the science and technology available to us now, let alone what might be just around the corner, we have the tools to wean us off oil. (Check out Amory Lovins on TED.com if you don’t believe me). There is now a sense of urgency, probably heightened by the financial crisis and a growing realization that it can never again be business as usual. Friedman’s book is a huge best seller and one must therefore believe has made a major contribution to the global ‘wake up call’ that is needed. Go to any airport, take any flight and you will find someone with their nose buried in this book.

Is it a business book? Yes it most certainly is for two reasons. Most of the noses buried in this book belong to people in business and fundamentally it will be business, American or otherwise, that will lead this green, sustainable revolution. Why? Because as Friedman points out, there is big money to be made out of the green revolution just as there was in the industrial revolution that caused the problems in the first place. It may be arrogant and myopic to assume that the money will all be made in America, however.

Business Book Bollocks

I cannot believe Sherrington has published his ’10 Best Business Books to read’ and not included mine (which can be downloaded from this site here). Mine are more honest, more useful and are mercifully short. In ‘10 uncomfortable truths’ I even make it clear why you should be wary of all the bollocks you read in business books (other than mine).

Do yourself a favour, download my stuff and learn why innovation is bullshit, consensus sucks and who you have to watch out for in business (short people, anyone from Yorkshire, HR wankers and many more).

Up yours.