Doughnut Economics - Kate Raworth - Part 5 of 8

2020 Reading Challenge - Day 213

August 2, 2020

Book 58 - Doughnut Economics
Kate Raworth
Chapter 4 - pages 111-138

I have ditched the "Reading Time" metric in my titles because it's getting too hard to track that as well as everything else!

This chapter is entitled "Get Savvy with Systems" and demonstrates how economic models based on mechanical equilibrium need to shift to dynamic complexity. The market is not so much a mechanism as an organism. The market is described as if it were a stable, mechanical system but it's really a complex adaptive system.

Our brains tend to cope best when things are near, short-term and responsive. We do well with linear change, not so well with exponential change (just look at the Covid-19 numbers and graphs).

Early economists tried to make economics as mathematical as physics but their models were based on a bunch of flawed assumptions that aren't even real. Raworth points to the traditional supply vs demand graph as a perfect example. That diagram doesn't work for the economy as a whole. Economics is really an area of organized complexity which is one of the least understood areas of science... and requires systems thinking.

In the dance of complexity, there are three things to keep in mind: stocks and flows, feedback loops and delay - these are at the heart of systems thinking. The interplay of these three gives rise to complex adaptive systems which are unpredictable and evolve over time. What might look like a sudden event (like what happened to the financial markets in 2008) is really built up over time.

The two curves of supply and demand need to be twisted into feedback loops and things that are called externalities (external to the traditional economic models) prove to be key. The problem with the financial markets in 2008 was that regulators missed some key indicators, like the fact that it wasn't just about what individual banks were doing... it was the entanglement of individual banks.

On top of that... there is the dynamics of inequality in which success goes to the successful or the rich get richer and the poor get poorer. This leads to monopoly not competition and isn't so much based on merit or talent as it is on luck at key points. Raworth introduces us to the real story behind the game of Monopoly, which blew my mind. It was designed by a woman in 1904 who wanted to show the unfairness associated with land ownership. The game could be played two ways, one in which a tax on land purchases and rents is distributed among the other players and the traditional way that we all know (and hate) so well. The success to the successful is a feedback loop and it needs to be weakened if we are ever to deal with the acceleration of inequality.

Similarly, with climate change... we're into a feedback loop and it is not enough to just stop the rising CO2 emissions, we actually need to cut emissions in half if we hope to have any impact. If we don't... systems thinking shows us what will happen.

The twin dynamics of social inequality and deepening ecological degradation have played out before.... just look at Easter Island and the Greenland Norse. "Today's economy is divisive and degenerative by default. Tomorrow's economy must be distributive and regenerative by design."

The shift needs to be from economists as mechanics, to economists as pruners or gardeners. And... it needs to evolve over time with little experiments. Most systems have a healthy hierarchyand are resilient with self-organisation. We would do best to avoid jumping in with both feet but rather ease in and test and evolve.

Raworth concludes with suggesting that economists need the equivalent of a Hippocratic Oath - to act in service, to respect autonomy, to be prudential in policy making and to work with humility.

The Ease of a Capsule Wardrobe

Did you hear about the Australian news anchor, Karl Stefanovic? He was in the news last fall after he revealed that he had been wearing the same blue suit during his news spots... not for a few weeks or months, but for a whole year!

He had become fed up with how people always gave advice to his female co-anchor about her wardrobe. He wanted to make a point that sexism was alive and well. Even though he wore the exact same suit for a year, not one person noticed or commented on his attire. Interesting, no?

They say that "clothes make the man"... but clearly the truth is that clothes make the woman. Nobody really notices what the man is wearing as long as he's wearing something presentable. They also say "don't judge a book by its cover", but clearly that too only works for men... not for women. Although... things are changing.

Sincere Spaces blogpost on Capsule Wardrobe

There's a movement in the minimalist world to move in the direction of what's called a capsule wardrobe. A certain number of clothes that work well together and make around 20-30 outfits. Think about it... who needs more than 30 outfits? There are about 30 days in a month and only 20 working days. At that rate, you'd wear each outfit once a month. In most cases, nobody would notice if you wore the same outfit once a week.

I know this goes against the modern trend of consumerism - buy more and more and more. Some people have dozens of shoes, hats, purses, scarves and what not. But really... do we need all of that? What are we telling the world when we feel that we only get noticed based on our clothing? Good question... isn't the book more important than the cover? As long as we look presentable, shouldn't that be enough?

I think it's interesting that most people on home-improvement shows (think HGTV) drool over walk-in closets. The wife usually walks into the closet and coos in excitement: "Ooooooohhhhh, this would be perfect for all my clothes! Oh... and Honey, you can have the hall closet." Seriously? When I was growing up, my parents made do with a standard closet. It says something about our society that closets and houses keep getting bigger while storage lockers are doing a rip-snorting business. Stuff, stuff and more stuff.

When I look at my own closet (or rather half-closet), I have a bunch of long-sleeved shirts that I never wear anymore. I have a few dress shirts and dress pants that I used to use when I facilitated workshops. But I never wear them anymore. I have about 15 pairs of jeans but only wear 3 on a regular basis. My standard attire for the day is usually t-shirt and jeans. If it's cool out, I throw a fleecy sweater on top of it all. Done. Which means that of late I have been eying the clothes in my closet and wondering... do I really need all of them?

Because even in terms of t-shirt and jeans, I am starting to notice that I am favouring black t-shirts above the other colours. My three jeans are beige, brown and blue... and black t-shirts go with all three. It seems that I am moving in the direction of a wardrobe uniform. The idea is to find a look that works for you and then stick with that. One writer wears black turtle-neck sweaters with skinny jeans. As she says " It’s almost never inappropriate, and it has the magical quality of taking on the connotations of its surroundings. In a bookstore, I look bookish. At an art gallery, I look arty. On the subway, I am invisible. I can look young or old, rich or poor, cool or humble. In my uniform, people see me as they want to." And it's not just unknown writers. Steve Jobs (of Apple fame) always wore black turtle necks and jeans. Rumour has it that Einstein bought several versions of the same grey suit so that he wouldn't have to waste brainpower on choosing an outfit each morning. Same with President Obama, except he mixes it up by having blue and grey suits. That's what I want. Something simple.


Now, the hosts of "What not to Wear" might have a conniption fit but... they don't have to live my life. Yeah, sure, I could look like a million bucks if I got a fancy haircut, wore make-up and bought clothes from high-end boutiques. Meh... that's not me. I buy my black t-shirts and my jeans from Value Village. I have one pair of shoes, one pair of sandals, one pair of hiking boots. And that's good enough for me.

Am I going to declutter my closet? That is a good question. I hang onto things in there because I think that someday I might need some long-sleeved shirts... even though I live in a mild climate. I think that someday I might need a dress suit, even though I have no intention of ever wearing it again.I think it's time to take a look and start paring.

A Nomadic Minimalist

I have to admit, I'm strangely attracted to the nomadic minimalist lifestyle. The idea of travelling the world with only a minimal amount of stuff... not being tied down by a house or a car or "stuff".... very appealing in a suprising kind of way.

I came across Raam Dev who left it all and travelled around southeast Asia for 6 months with only a backpack... a backpack of stuff... amazing. His life transformed, and as he says, he become spontaneous and fearless.

There's lots of stuff out there on minimalism... Dave Bruno wrote a book that challenged people to get their possessions down to 100 things (yep, 100). He's written a blog on minimalism as well. There's great advice on how to live with less. Lots of stuff out there... to encourage us to have less stuff!

Space

So, I've lived in a lot of apartments, student dorms, houses, etc. Six hundred square feet, 960 square feet, 1800 square feet. Wherever I lived, I always thought I had more than enough space. Mind you, I've been more or less moving to larger places everytime, so that might be part of it! I've been reading various things on how to declutter and live with less. There's the whole idea of living with 100 items or less. There's the idea of renting vs. owning. If you own a house or condo, you generally need more "things" to maintain the place. I came across this other link the other day on tiny places. So there's this guy who lives in Barcelona in 258 square feet. That's 16 ft by 16 ft... or 12 ft by 20 ft. He has a kitchen, a bathroom, a double bed, a dining area and storage in that space. I wouldn't have believed it if I hadn't seen it... so check out the youtube link. http://www.youtube.com/watch?v=juWaO5TJS00&feature=youtu.be



Now, that is a little extreme, but it makes me wonder, how little space can we actually get away with?? Do we actually need the reams and reams of space that we currently have? Or is there a different way to live that has a smaller footprint? I'm not sure that I could live in a place that small... Definitely have to declutter everything more! But nowadays with ipods and ebooks readers... you don't need a lot of room for things like cds and books and dvds and photo albums even. It's all digital and that takes up so little space! Even cookbooks can be digital... TV's are slimmer than they used to be so take up less space.



It would be an interesting experiment to take a look at a minimalist lifestle... I'd have to let go of nic-nacs... and pictures... and house plants... and various things that just seem to be needed, but not really... would be an intersting experiment!

House-Sitting

I was reading an article in a magazine the other day about a couple from the interior of BC who don't own a house or rent a property, but who pet-sit and house-sit permanently. They run a small publishing company, and when they moved from the Lower Mainland to the interior, they stayed with friends while they looked at properties. Then, they heard about some people, Snowbirds, who were looking for someone to house-sit and pet-sit while they spent the winter down south. So this couple moved in and had a 4 bedroom, 4 bathroom house at their disposal for 6 months. It took off from there, and they've been doing it every since. They house-sit or pet-sit and their payment is free accomodation. All they have to do is pay electricity, gas, telephone, etc. Which seems reasonable. It's a win-win situation for the home-owners and for the couple.

So, there are websites out there that link up homeowners and housesitters. Go figure. It's apparently a hot new trend. A great way to find a holiday home if you want to go to Europe and plan to stay put in one place. A great way to see the world... Hmmm... what to do with all your own furniture though? Storage locker? Or sell it and start anew at some point? All sorts of possiblities.

http://www.housecarers.com/
http://www.mindmyhouse.com/
http://www.canadianhousesitters.com/

Rent vs. Own

I've been reading some minimalist blogs and here's the thing. Lots of them travel a lot for business, so they've actually given up their apartments or houses and live out of a suitcase... Is that even possible?? I could see how you could save a lot of money on rent... and probably even more on a house... What is the difference anyhow, between renting and owning?? We all think that owning is the way to go, because your equity goes up, but my financial planner actually told me that historically, over time, property only goes up 2% per year. So if interest rates are more than that... you're actually losing money! Plus... you put a lot of maintenance into a home... So... what is it... better to rent or own? Since lots of people nowadays buy condos because they are well within their price range... let's take a look at them first...

Own:
Mortgage - $1600/month
Condo Fees - $350/month
Prop Taxes - $2000/year
Maintenance - $1000/year (everything from furnace, vent, fireplace cleaning to rainyday fund for a new furnace)
Prop Ins - $350/year
Heating - $120/month
Electricity/phone/cable/internet - you'd probably need to pay in a rental anyways, so let's leave them out of the equation for now...
So that is a grand total of: $2239 per month... I had to do the math twice because that seemed ridiculous.
That is the cost of owning a condo... Owning a house would be slightly less, around $1900/month because there aren't the condo fees.

Rent:
No mortgage or condo fees
No Prop Taxes or maintenance
No Heating as usually it's hot water heat and included.
Contents Insurance - sure... maybe $250/year
So out of all that what could you rent for under $1900 or $2200 a month?? And what could you do with the leftover money? Invest it at 8%/year?? Or even 6%... Huh... Sure, you get part of your mortgage back when you sell the house, but really, when you look at it, you're paying an awful lot of interest in those first 10 years of a 25 year mortgage, which you'll never get back.

Now... if you don't own or rent... but live out of a suitcase and travel for business... what could you do with all that money? Quite a bit I think!

Minimalism

Hmmm... this idea that I came across on the web struck me as interesting. The idea of living with 100 items or less. Can you imagine trying to pare down your possessions to 100 items or less? And yet apparently people are doing this. They are selling their house and their car and most of their possessions and living with less. They are renting apartments, using laundromats, buying Kindle e-book readers, ditching their TV and cablevision. In today's digital world, there are all sorts of ways to downsize. If you have a laptop, you don't need photoalbums or cds or a music player or bookshelves or books. You can have it all digitally. That in and of itself reduces an enormous amount of clutter, much of it sentimental.

I came across the article on http://www.lifehack.org/ where she talks about the 100 items or less lifestyle.(http://www.lifehack.org/articles/lifestyle/6-easy-tips-for-living-with-100-items-or-less.html).

Then there is a guy named Andrew Hyde who travels a lot as an IT professional and who has gone to 15 items or less (http://www.lifehack.org/articles/lifestyle/extreme-minimalism-andrew-hyde-and-the-15-item-lifestyle.html). I've travelled to Europe for 4 weeks with a bit more than that. It's true, you can get by with quite little for quite a long time, but I'm not sure I would want to do that for years and years. Mind you... it would free up a lot of financial resources to travel and do the things that I love. Think of the time saved in not having to do home repairs, or dishes or mowing the lawn.... There are possiblities in this...