Bottom Line: Al Gore’s talk was one of the more inspirational I’ve heard. He indicted the short term thinking found in “Quarterly Capitalism” which is infecting “Quarterly Democracy,” and leading us to make poor choices about necessary investments for our future (yes, mostly environmental). Will our children be asking us “What were you thinking?” (if we ignore the warnings of 98% of climate scientists who say the time for action is now) or can we avert a crisis, and have them ask instead “Where did you find the moral courage to act?”
Silicon Valley Community Foundation Turns 5
I’ll admit that I’m biased against Community Foundations. I favor a global outlook in my charitable activities and I typically assume Community Foundations are about, well, the community. The “Regional Meeting” held by the Silicon Valley Community Foundation today caused me to take a bit broader perspective. One way they serve the community is by being a resource to donors in the community, even if those donors choose to give internationally.
Things I admire about Silicon Valley Community Foundation
- They do a great job with donor education. They’ve got programs targeted at kids, they’ve got an informative web site, a print magazine, and events (like today’s) open to the community for free.
- They raise the awareness of the role of philanthropy in the community. Their presence is a gravitational center that pulls in people who are interested in or are thinking about philanthropy. They do a good job of marketing and outreach to bring more donors into the fold.
- They have a good staff (79 employees!) and know the community issues. Grants made by the foundation (in contrast to the donor-advised or corporate-advised funds it administers) address the strategies of:
- Economic Security
- Immigrant Integration
- Regional Planning
- Safety-net Services (85M pounds of food distributed to 9M clients in 2010)
Silicon Valley Community Foundation Scoreboard:
In the 5 years since the merging of the Peninsula Community Foundation and the Community Foundation of Silicon Valley (which they admitted had some rough patches, including the financial meltdown of 2008 and subsequent recession):
- $1B worth of grants have been made (nearly matches the total dollars granted by both parent organizations in their ~50 year histories prior to the merger)
- $1B worth of donors funds have been raised
- $500M have been added to the asset base, bringing the total assets under management to $2B
- $150M of contributions in 2010 alone
Al Gore’s Keynote Address
[Although I had registered late and only had a “live simulcast” ticket, there were enough no-shows for the main ballroom that they let us dozen-or-so procrastinators join the other thousand-or-so people at the main event. Thanks SVCF!]
Al Gore gave a good talk. I suspect that he has had a lot of practice at it–this was probably pretty similar to other talks that he gives, two or three times a day, probably 15 days/month. It was a good mix of humor, scientific evidence, collective questioning of how we got here and encouragement on choosing a new path forward.
What was most surprising to me was the sharpness of the rebuke of politicians, fund raising, and the impact of special interest money.
“American Democracy has been hacked,” Gore said.
[From my notes, not a transcript, so what follows are not exact quotes….]
“To add to the problem of ‘short-term-ism’, there is the tendency of too many officeholders to think not as much of what the long term impact to the country will be–but human nature being what it is, and the need to raise ever-increasing amounts of money per election cycle, at levels provided only by special interest lobbies–what will be the impact of my vote at tomorrow’s fundraiser?”
Gore had started off by decrying our lack of long term thinking, wondering “What has caused us to lose our abundant ability to look ahead?” and longing for the wisdom of an (unnamed) World War II general who said that it was “time to steer by the stars, and not the lights of each passing ship.” He said that short-sightedness had afflicted our corporations, citing a study where 80% of the CEO’s and CFO’s said that they would not make an investment that would meet their internal rate of return goals over the long term (and all other criteria for being a good investment) if it would cause them to slightly miss their current quarterly earnings estimate. That short term view of “quarterly capitalism” causes our corporations to bypass many investments that they should, rationally, make.
The quarterly time horizon is infecting politics as well, with incumbents having daily fund-raising goals from the day they take office. The quarterly Federal Election Commission reports are deemed as snapshots to show momentum, so the days before a report deadline become a flurry of solicitations. More worrying, the special interest lobby fund-raisers are scheduled the day after key votes, so politicians are held hostage by the prospect of losing key financing if they don’t support a particular position on a vote.
Gore cited some examples from the business world suggesting that we really have become over-dependent on speed. In the “Flash Crash” of May 2010, the market lost 20% of its value in 20 minutes (and recovered most of it before market close). The investigatory committee considered adding the requirement that any buy or sell order would be required to remain open for at least one second (presumably would be closed before that if filled). That duration was determined to be too hazardous, since 55-60% of the volume is high-speed, high-frequency trades. A second example was an investment opportunity for a $1B capital investment laying fiber optic cable to lower Manhattan so that the orders would have a 2 millisecond advantage over the alternative.
He next trained his criticism on the banking sector and its behavior during the subprime mortgage crisis, with the emblematic email acronym of “IBGYBG” standing for “I’ll be gone; You’ll be gone [before the problems caused by this proposed transaction surface].” But, he implied, we are all taking that excuse when we deal with the environmental problem we are causing with carbon emissions. We have $7 Trillion in “subprime carbon assets” (in the coal and gas industry) keeping us from taking the action we need. (Gore’s recommendation which he made implicitly rather than explicitly, was a carbon tax, offset by tax cuts in other areas. Here he is consistent with suggestions from his tenure as Vice President.)
But the “IBGYBG” assumption is a fallacy in the environment case, he argues. We’re already seeing extreme weather, species extinction, and the first environmental refugees, with more of each yet to come. While individual weather events can’t be tied to climate change, our actions are impacting the odds that they occur. “We’re not just loading the dice… We’re painting more dots on them. We’re rolling 13’s and 14’s now…” The 235 km/hour wind speeds in the Philippines storm, the second in a week are causing climatologists to wonder how to add a “Category 6” to our current 5-point scale.
He cited other extreme weather examples:
- 95% of Texas in “extreme” or “exceptional” drought, fires in 252 of 254 Texas counties
- an Australian region the size of France & Germany combined entirely flooded
- 20M Pakistanis driven from homes due to flooding last year, it doesn’t even make the news when 8.5M are affected this year
- worst Russian drought/fires on record
and then traced the chain of impacts of the last one:
- Due to the drought, the Russian wheat crop failed;
- Russia (and surrounding former republics) pulled their production off the global market for domestic use
- Food prices spiked, stressing lower income people who spend a greater percentage of their income on food;
- One particular Tunisian food vendor was particularly affected (leading to the Tunisian protests and the start of the Arab Spring).
He closed with some reason for optimism:
When President John F. Kennedy challenged our country to go to the moon, many doubted our capability. Eight years later, when Neil Armstrong landed, the average age of the engineers in the control room was 26, meaning that they had been only 18 when Kennedy issued his challenge. We have similar potential today, we have the financial resources to address the problem, the only thing that we lack is the political will to do it. “And that,” Gore closed, “is a renewable resource.”