Financial Sector Reform Project by Nassim Nicholas Taleb

After completing my book The Black Swan, I spent some time meditating on the fragility of systems with the illusion of stability. This convinced me that the banking system was the mother of all accidents waiting to happen. I explained in the book that the best teachers of wisdom are the eldest, because they may have picked up invisible tricks that are absent from our epistemic routines and which help them survive in a world more complex than the one we think we understand. So being old implies a higher degree of resistance to "Black Swans" (events with the following three attributes: they lie outside the realm of regular expectations; they carry an extreme impact; and human nature makes us concoct explanations for their occurrence after the fact).

Take Mother Nature, which is clearly a complex system, with webs of interdependence, non-linearities and a robust ecology (otherwise it would have blown up a long time ago). It is a very old person with an impeccable memory. Mother Nature does not develop Alz­heimer's - and there is evidence that even humans would not easily lose brain functions with age if they took long walks, avoided sugar, bread, white rice and stock-market investments, and refrained from taking economics classes or reading the New York Times.

Let me summarise my ideas of how Mother Nature deals with the Black Swan. First, she likes redundancies. Look at the human body. We have two eyes, two lungs, two kidneys, even two brains (with the possible exception of company executives) - and each has more capacity than is needed ordinarily. So redundan­cy equals insurance, and the apparent inefficiencies are associated with the costs of maintain­ing these spare parts and the energy needed to keep them around in spite of their idleness.

The exact opposite of redundancy is naive optimisation. The reason I tell people to avoid attending an (orthodox) economics class and argue that economics will fail us is the following: economics is largely based on notions of naive optimisation, mathematised (poorly) by Paul Samuelson - and these mathematics have contributed massively to the construction of an error-prone society. An economist would find it inefficient to carry two lungs and two kidneys - consider the costs involved in transporting these heavy items across the savannah. Such optimisation would, eventually, kill you, after the first accident, the first "outlier". Also, consider that if we gave Mother Nature to economists, it would dispense with individual kidneys - since we do not need them all the time, it would be more "efficient" if we sold ours and used a central kidney on a time-share basis. You could also lend your eyes at night, since you do not need them to dream.

Almost every major idea in conventional economics fails under the modification of some assumption, or what is called "perturbation", where you change one parameter or take a parameter henceforth assumed to be fixed and stable by the theory, and make it random. Take the notion of comparative advantage, supposedly discovered by David Ricardo, and which has oiled the wheels of globalisation. The idea is that countries should focus on "what they do best". So one country should specialise in wine, another in clothes, even though one of them might be better at both. But consider what would happen to the country if the price of wine fluctuated. A simple perturbation around this assumption leads one to reach the opposite conclusion to Ricardo. Mother Nature does not like overspecialisation, as it limits evolution and weakens the animals.

This explains why I found the current ideas on globalisation (such as those promoted by the journalist Thomas Friedman) too naive, and too dangerous for society - unless one takes into account the side effects. Globalisation might give the appearance of efficiency, but the operating leverage and the degrees of interaction between parts will cause small cracks in one spot to percolate through the entire system.
The debt taboo

The same idea applies to debt: it makes you very fragile under perturbations. We currently learn in business schools to engage in borrowing, against all historical traditions (all Mediterranean cultures developed over time a dogma against debt). "Felix qui nihil debet", goes the Roman proverb: "Happy is he who owes nothing." Grandmothers who survived the Great Depression would have advised doing the exact opposite of getting into debt: have several years of income in cash before any personal risk-taking. Had the banks done the same, and kept high cash reserves while taking more aggressive risks with a smaller portion of their port­folios, there would have been no crisis.

Documents dating back to the Babylonians show the ills of debt, and Near Eastern religions banned it. This tells me that one of the purposes of religious traditions has been to enforce prohibitions to protect people against their own epistemic arrogance. Why? Debt implies a strong statement about the future, and a high degree of reliance on forecasts. If you borrow $100 and invest in a project, you still owe $100 even if you fail in the project (but you do a lot better in case you succeed). So debt is dangerous if you are overconfident about the future and are Black Swan-blind - which we all tend to be. And forecasting is harmful since people (especially governments) borrow in response to a forecast (or use the forecast as a cognitive excuse to borrow). My "Scandal of Prediction" (bogus predictions that seem to be there to satisfy psychological needs) is compounded by the "Scandal of Debt": borrowing makes you more vulnerable to forecast error.

Just as Mother Nature likes redundancies, so she abhors anything that is too big. The largest land animal is the elephant, and there is a reason for that. If I went on a rampage and shot an elephant, I might be put in jail and get yelled at by my mother, but I would hardly disturb the ecology of Mother Nature. On the other hand, my point about banks in my book - that if you shot a large bank, I would "shiver at the consequences" and that "if one falls, they all fall" - was subsequently illustrated by events: one bank failure, Lehman Brothers, in September 2008, brought down the entire edifice.

The crisis of 2008 provides an illustration of the need for robustness. Over the past 2,500 years of recorded ideas, only fools and Platonists have believed in engineered utopias. We shouldn't think that we can correct mistakes and eliminate randomness from social and economic life. The challenge, rather, is to ensure that human mistakes and miscalculations remain confined, and to avoid them spreading through the system - just the way Mother Nature does it. Reducing randomness increases exposure to Black Swans.

My dream is to have a true "epistemocracy"; that is, a society robust against expert errors, forecasting errors and hubris, one that can be resistant to the incompetence of politicians, regulators, economists, central bankers, bank­ers, policy wonks and epidemiologists.Here are ten principles for a Black Swan-robust society.

What is fragile should break early while it's still small: Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks become the biggest.

No socialisation of losses and privatisation of gains: Whatever may need to be bailed out should be nationalised; whatever does not need a bailout should be free, small and risk-bearing. We got ourselves into the worst of capitalism and socialism. In France, in the 1980s, the Socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

People who drove a school bus blindfolded (and crashed it) should never be given a new bus: The economics establishment lost its legitimacy with the failure of the system in 2008. Find the smart people whose hands are clean to get us out of this mess.

Don't let someone making an "incentive" bonus manage a nuclear plant - or your financial risks: Odds are he would cut every corner on safety to show "profits" from these savings while claiming to be "conservative". Bonuses don't accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives.
Time to definancialise

Compensate complexity with simplicity: Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. Complex systems survive thanks to slack and redundancy, not debt and optimisation.

Do not give children sticks of dynamite, even if they come with a warning label: Complex financial products need to be banned because nobody understands them, and few are rational enough to know it. We need to protect citizens from themselves, from bankers selling them "hedging" products, and from gullible regulators who listen to economic theorists.

Only Ponzi schemes should depend on confidence: Governments should never need to "restore confidence". Cascading rumours are a product of complex systems. Governments cannot stop the rumours. We just need to be able to shrug off rumours, to be robust to them. Do not give an addict more drugs if he has withdrawal pains: Using leverage to cure the problems of too much leverage is not homoeopathy, it's denial. The debt crisis is not a temporary problem, it's a structural one. We need rehab.

Citizens should not depend on financial assets as a repository of value and rely on fallible "expert" advice for their retirement: Economic life should be definancialised. We should learn not to use markets as warehouses of value.

Make an omelette with the broken eggs: The crisis of 2008 was not a problem to fix with makeshift repairs. We will have to remake the system before it does so itself. Let us move voluntarily into a robust economy by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here and teaching people to navigate a world with fewer certainties. Then we will see an economic life closer to our biological environment: smaller firms and no leverage - a world in which entrepreneurs, not bankers, take the risks, and in which companies are born and die every day without making the news.

Extracted from the postscript to "The Black Swan: the Impact of the Highly Improbable" by Nassim Nicholas Taleb (Penguin, £9.99)
© Nassim Nicholas Taleb 2008 penguin.co.uk

Convergence by Mark Helprin

Teilhard de Chardin's recognizably Hermetic concept that salvation comes through the development and convergence of human capabilities with the divine is a doctrine with a dark side that he chose optimistically and faithfully to ignore, a side that Yeats ( he of balancing this life with this death) expresses with customary and disconcerting beauty:

There all the barrel-hoops are knit,
There all the serpent-tails are bit,
There all the gyres converge in one,
There all the planets drop in the Sun.


That something is very wrong with the notion of convergence in even its most elevated formulation is supported by its most eloquent critique. In “Everything That Rises Must Converge”, a simple and profound short story by Flannery O'Connor, a mother and son travel on a city bus in the newly integrated South. The mother clings to the old ways and is clearly wrong in doing so, but, in practice, she is kind and good. The son is the apostle of progress and justice, but in practice he is smug and cruel. He represents pride in achievement, faith in emerging perfection, reason, justice, the linear concept of history. She – humility, tradition, conservation, circularity, mercy, and forgiveness.


It is no coincidence that in the interplay between the two in the context of their individual struggles he finds that his actions have “assured entry into the world of guilt and sorrow.” And it isn't a coincidence that the title of the story, which Flannery O'Connor wrote to address the great French philosopher, is from Teilhard, for it is a velvet demolition of his belief that mankind can evolve to perfection.


If salvation is the function of perfectibility, what does this imply about the lame, the weak, the befuddled, and the oppressed? Are they by implication less beloved of God? In one spare short story, mortally ill Flannery O'Connor, with the Southern and the Celtic knowledge of hubris and defeat running naturally in her blood, checkmated Teilhard's great erudition, multiple volumes, and splendid dreams. This she did with the same kind of totally unexpected, breathtaking power of the Maid of Orleans, or Anne Frank. She, who would never know temporal glory, or be rewarded in this world, who died without husband or children, who suffered and had no sway, she knew the simple truth that salvation is ultimately a matter of grace. That is, when all is said and done, man is simply unable to construct the higher parts of his destiny, and must know this to survive even the simpler challenges that he is expected to meet.

At least since the Enlightenment, man has modeled himself and his society upon the machine. Slowly shorn of his knowledge of and feel for nature and human nature, he has been brought over to the principles ( and, often, the mere effects) of speed, efficiency, economy, and emotional detachment: doing the most with the least; just-in-time inventory; lack of feeling; absence of commitment; neutrality of conscience; all the techniques common to a business, an organization, a mechanical contrivance, or a modernist novel. But neither nature nor man are machines, and, treated as machines, they sicken.

Convergence is not a fact on the horizon but a contrivance of human vanity. It will not come from a hand-held toy, an electronic network no matter how powerful., or a machine that sits on a desk. It will not come by virtue of universal or near-universal agreement or by virtue of the new. Wait as long as you wish, it will not come.

Orphans of the Revolution by Harvey Sachs

1824

Between 1789 and 1815, the French revolutionary and Napoleonic wars had torn Europe apart. From the Atlantic's eastern shores all the way to Moscow, clashing ideologies had been transformed into clashing armies; the liberty-equality-fraternity banner was quickly bloodied by the revolutionaries' excesses, and its motto was then subverted by Napoleon, who used the ideal of exporting the Revolution as a tool for domination of the whole Continent. However shocking the effects of the infant French Republic's guillotine may have been, the eighteen to forty thousand chopped-off heads that it produced during the Terror of 1792-96 were a statistical trifle in comparison to the foreign wars that followed. Between 1796 and 1815, an estimated two and a half million soldiers and one million civilians met their deaths in the Napoleonic Wars. In the battle of Borodino alone, 7 September 1812, Russian and France lost far more soldiers than the United States would lose in the entire 15 years of the war in Vietnam. The revolutionary and Napoleonic War lasted twice as long as the Vietnam War, four times as long as the Second Word War, and six times as long as the First World War.

Little wonder, then, that in April 1814, when Napoleon was sent into exile on the island of Elba, an enormous sense of relief pervaded millions upon millions of Europeans, including many of those who had approved the emperor's goals or had in any case opposed the restoration of power to their countries' most reactionary forces. Entire peoples were worn out, entire nations drained, by warfare that had begun to seem eternal, and the Old World's old leaders did not fail to grasp the fact that their power, so long threatened or usurped, would soon be secure again. They arranged to meet in Vienna to decide how the “liberated” Continent was to be carve up among them. The tyranny of absolutism raised its ugly head once again.

During the period from 1815 to 1848, Europeans did not know that within a few generations freedom of speech, of the press, and of religion would be available to a significant portion of humanity. Members of Beethoven's generation witnessed the last years of the Enlightenment and then the birth, transformation, and demise of the Revolution, and members of the following generation had the still more depressing experience of witnessing only the phases of subversion and demise.

Anyone who has lived under repressive regimes in more recent times will understand the phenomena: In order to survive, you are forced to pretend to believe in something in which you do not believe and that you may, in fact detest; at the same time, you cannot help but wonder of what possible use or consequence your survival could be under such circumstances. Although the despair factor was as present in the human psyche in the early nineteenth century as it is today and as it has been throughout human history, artists who later became identified with what is called the “Romantic movement” , who lived not only before Hitler and Stalin but also before Darwin, Marx, Freud and Einstein, did not possess as vast a gamut of uncertainties – not to mention nihilistic beliefs and attitudes- as later generations would have at their disposal.. Two hundred years ago the search for absolute meaning was still a reasonable option.

Many commentators have described Romanticism as the inspiration behind Europe's striving towards freedom but that notion seems to me less sustainable than the converse: The European aspiration for freedom was the inspiration for Romanticism. The writer Marie-Henri Beyle ( Stendhal) became one of the first literary figures to perceive the relationship between the death of the Revolution and the flowering of Romanticism- Romanticism understood as a sublimation of a revolution that had first exploded across Europe, imploded upon itself, and then replaced by autocracy and repression. What Stendhal seemed to grasp earlier than anybody else is the fact that the Romantics were not the children of the Revolution, but rather its orphans.

The seething magma of protest in the German-speaking world would eventually erupt in the revolution of 1848, but through-out the 1820s and 30s it remained mostly subterranean. In three short lines, the poet August Heinrich Hoffman broadly satirized the timid, cafe-frequenting rebels of the day: “And they chatter, leaf through the gazettes, search and finally come to the conclusion: another little piece of apple pie.” No matter how intensely artists and intellectuals detested the political situation in which they found themselves- under constant surveillance by the police apparatus of the state- they could express their aversion in only the most oblique ways. Aversion led to introversion, to the concentration on intensely personal thoughts, feelings and states of being and the transformation of them into artistic expression- to Romanticism, in a word.


Beethoven was such an orphan – child of the Revolution, grandchild of the Enlightenment. His relatively liberal sympathies, love of freedom and contempt for authority were well known, though he was considered too socially eccentric and out of touch to be potentially dangerous; other were not so fortunate.

If there is a hidden thread that connects Beethoven's Ninth Symphony to the works created in and around 1824 by other significant artists, it is precisely this quest for freedom: political freedom, freedom from the repressive conditions that dominated Europe after the Congress of Vienna, and freedom of expression, certainly, but above all freedom of the mind and spirit. To a hypothetical observer who, in 1824, had heard of Beethoven, Byron, Pushkin , Heine and the other major figures who appeared in those years, the points of contact among them would have seemed tenuous, perhaps even non-existent. But from the twenty-first century perspective, the connection seems almost too obvious.

In a sense, every human being who has ever used his or her brain for non-destructive purposes counts as a brave soldier in humanity's War of Liberation, but the conjunction of Beethoven's last symphonic masterpiece with crucial works or events in the lives of so many other outstanding artists made 1924 a particularly fertile year in the history of that struggle. The fact that the Ninth Symphony, Byron's death, Pushkin's Boris Godunov and “To the Sea”, Delecroix's Massacres at Chios, Stendhal's Racine and Shakespeare, and Heine's Harz Journey and North Sea Pictures all furthered, in one way or another, Romanticism's rear-guard action against repression underlines the significance of that speck in time. And perhaps brief glances at those artists and their states of being at that moment will help to remind readers that spiritual and intellectual liberation requires endless internal warfare against everything in ourselves that narrows us down instead of opening us up and that replaces questing with certitude.

The uniquely vital expressive power of the Ninth Symphony, which is one of the most striking products of human beings' attempt to continue the struggle, as well as to deepen their individual relationships to life, is the subject of this book.

Beethoven Visits Cleveland by Harvey Sachs

1958

When I was eleven and half and on the verge of adolescence, my parents gave me a box that would determine my future. It was gray and white, made mainly of laminated wood, and I set it on top of the chest of drawers in my bedroom. From that exalted position, it began to confer understanding and solace on me – dim understanding , at first, and only a glimmer of solace, but a hint, at least, that this dying child, this embryonic grown-up, this odd new I , might survive, proceed, and perhaps even learn to assuage from time to time the nameless, incomprehensible ache, or to fill in part of the vast pit of unintelligible sadness that had suddenly and for no apparent reason opened up in the center of life's territory.

Maybe, the box said, the ache and the pit would not be adulthood's sole offerings. Maybe something could happen, during the years that stretched forward in an unimaginably long line, to compensate for the ambiguity of existence, something to counterbalance the attractively horrible dreams, strange yearnings, and stranger physical changes that had begun to inhabit me.

The box- a portable, four-speed record player with a single speaker no larger than a grapefruit – seemed to be telling me something important about the world in a language that I felt I had always known, and I sensed that if I gave the box enough of my attention, much that was obscure would be illuminated. I was amazed that there could be such fullness in the midst of such emptiness, such solidity amid such confusion, such immutability amid such an onrush of time.

The box didn't soften or sweeten the conflicts within me. On the contrary, it highlighted them and revealed that they were still deeper and more intricate than I had suspected. But it also stated them boldly, filled me with the powerful sensuality of thought, and made me feel that one day I might at least be able to grapple with my problems instead of lying stunned at their feet. The music's ambiguous specificity spoke directly to me and forced me to respond. I “conducted it”, jumped around to it, and imagined that I was explaining it to the girl I was secretly in love with, talking to her about life and about Beethoven, who was my alpha and omega. I spent my best hours familiarizing myself with a newly discovered region: inner life.

Yes: alpha and omega. There was plenty of room for all the letters in-between, too, but my listenings generally began and ended with Beethoven...Beethoven spoke to me more clearly, more directly, than anybody else, and I often thought about him, about his existence. His music, but also the simplified yet no wholly erroneous published accounts of his life that I devoured, gave me sustenance and courage.

Never for a moment did I identify with his genius, and I probably already sensed that my fundamental gregariousness would prevent me from becoming as unbalanced in my human relationships as he had been; yet I was always a crowd shunner, and the idea of the fist-shaking Beethoven making a cry of protest, of nonacceptance, for all to hear, appealed to me overwhelmingly. The “older” Beethoven ( younger than I am now) – the Beethoven who sought transcendence – was a discovery I wasn't capable of making at so tender an age. What nourished me was the heaven-storming “Middle Period” Beethoven. He was my constant companion

I still think of him as my alpha and omega; the author of the music that transformed my existence at the onset of adulthood continues to enrich it more than any other. His music still gives me as much sensual and emotional pleasure as it gave me fifty years ago, and far more intellectual stimulation. It adds to the fullness when life feels good, and it lengthens and deepens my perspective when life seems barely tolerable. It is with me and in me. And I suppose that this book is a vastly over-sized and yet entirely inadequate thank-you note to Beethoven.

The Ninth; Beethoven and the World in 1824 by Harvey Sachs; Random House, 2010

Fairly Flawless by Scott Selby and Greg Campbell

Leonardo Notarbartolo set the world's greatest diamond heist into motion on a cold gray autumn day in 2000 with a smile and a polite 'merci beaucoup,' as the building manager at Antwerp's Diamond Center granted him free reign of the place he planned to rob. Renting a small office several floors above the vault that contained hundreds of millions of dollars worth of diamonds, jewels, gold and hard cash didn't even require a background check, which would have instantly revealed Notarbartolo's long-standing connections to a group of Italian robbers and thieves known as the 'School of Turin”.

In other respects the Diamond Center's 24/7 surveillance and anti-theft measures were impressive. It took Leonardo 27 months of careful observation and planning to crack the security and gain entrance to the vault. Actually, getting the garage door open and picking the lock to the door from there into the Center during off-hours was a snap. Disarming the light, heat and motion detectors was just a matter of a little duct tape, hairspray and a styrofoam box. Magnetic alarms on the face of the vault were clamped together, unbolted and moved to the side. The main key to the vault was extracted from a locked-box in a nearby storeroom by means of a crowbar. No one is sure how they got the combination to the safe but it might not have been necessary because the guards who were responsible for closing it at the end of the day rarely spun its dial to reset its tumblers.

Once inside the vault Notarbartolo's team of four faced the daunting task of opening the the deposit boxes. Actually, they invented an ingenious device that hooked a probe through their keyholes and, bending their dead bolts to a 45% angle, ripped their doors open. In four hours they opened 110 of the 180 boxes in the vault. On the way out they entered the security center and removed the VHS tapes that might of identified them in the subsequent investigation.

The perfect crime? Unfortunately, disposing of the refuse of tools used in the crime and the household effects that had accumulated in their 'hideout' a few blocks from the Diamond Center was not a simple matter. The folks in Antwerp don't appreciate strangers making use of their dumpsters and keep a close watch. The thieves dumped their mess in an out-of-the-way nature reserve whose caretaker had 'a thing' about garbage dumping and discovered the thieves discarded bags the very next morning. Inside the bags, along some old coffee grounds, was a torn-up invoice which pointed directly to Mr. Notarbartolo. Several days later, completely oblivious to what the police had discovered, Leonardo returned to the Diamond Center to wrap up his affairs and was detained.

In today's prices the estimated value of the loot from this heist may be as high as $650 million. Of the four men eventually convicted of this crime Leonardo Notarbartelo- the alleged mastermind- served the longest- six years. Only a small handful of diamonds, jewels, gold and cash was ever recovered nor likely ever will be. This kind of wealth is not easy to trace and, for the most part, the 'School of Turin”, which had to fence its take at a steep discount, is careful about the way it spends its money.

Interestingly, during the course of the investigation- sorting through all the useless papers and low value jewels discarded by the thieves as they emptied the safe-deposit boxes in the vault, police found plenty of evidence of the black-market activities of many of the diamond traders who stowed their stuff at the Center. In consideration of the great personal losses suffered by many depositors and traders- insurance eventually covered only about $21 million- it was decided not to pursue any of these cases of grievous tax evasion. It is likely if not absolutely certain, that all of the diamonds lifted by the “School of Turin” have been recycled through the Diamond Center in Antwerp, 80-90% of all the diamonds in the world are. The trade itself is the largest single business monopoly on the planet and that accounts for the fabulous prices , extraordinary profits and immunity from the law it commands.

Water by Peter H. Gleick

By now most people are aware of the huge growth in the consumption of bottled water since 1976 both in the U.S.( 9 billion gallons per year in 2009) and around the world ( 45 billion), and the many problems associated with it, including the approximately 160 million barrels of oil required to make the bottles and how few of those bottles are recycled ( at best around 40% even in the eleven States that have enacted container-deposit laws- though a handful of European countries have obtained better results).

Many will have heard that in the U.S. regulations governing the testing of bottled water for contamination and content labeling are very loose, minimally applied and without any of the strict public notification and consumer warnings and recalls that apply to public water supplies. Nor have any of the rules against deceptive marketing and false advertising been exercised consistently or on a broad base against this highly lucrative product.

Some people may even be aware of the possible and sometimes already established long term negative environmental consequences- especially local- of massive withdrawal of ground water resources for commercial purposes.

In blind taste tests ( on non-mineral, non carbonated water) most subjects end up preferring municipal water (whose chlorine content can be removed quickly by taking simple measures), and chemical tests invariably show that the tap water has fewer biological or heavy metal contaminants. The author of this book, an expert in such matters, and a popular media consultant, covers all this ground quite thoroughly- and moderately- in this book.

The author concludes his lengthy report in the following manner:


All our engineered water-treatment processes that flocculate, coagulate, precipitate, condense, and distill water are mechanical imitations of the natural process. We build massive sand or charcoal or mechanical filters that mimic the purification role played by soils. We run water through reverse-osmosis membranes that imitate the way cell walls separate salts from solution. We pass water under high- intensity ultraviolet lamps that replicate the purifying effects of the sun. We grow vats of naturally occurring waste-eating bacteria that take the biological products we excrete and consume them, producing fertilizers, oxygen, and energy. We use fossil fuels to distill water in massive boilers and condensers that are concentrated mechanical reproductions of the hydrologic cycle.

All of these artificial interventions are necessary because the population of the planet has outgrown the ability of nature to provide adequate water for our needs and to purify our wastes. They have been of enormous benefit but have ultimately proved inadequate the growing need. Billions of people still suffer unnecessary water-related diseases because they lack safe water and sanitation.


Aquatic ecosystems are dying due to our use, diversion and contamination of the fresh water they need to survive. The risks of political, economic and military conflicts over water resources are growing. Climate change is already starting to alter basic hydrological conditions around the world. The technological “hard path” fixes we have so far applied seem less and less likely to solve these problems by themselves. The growing and wasteful use of bottled water is evidence that the old ways of managing water challenges are putting us on the wrong side of history.

Bottled water is a consequence of the failure of the “hard path” approach and the growing backlash against it is a symptom of the need for a new paradigm. We must do more than just “more of the same” if we are going to truly address our own and global water problems. I have called for a new “soft path” approach for the management and development of water resources.


If everyone on the planet had access to affordable safe tap water, bottled water would be seen as unnecessary. If government regulatory agencies actually worked to protect the public from poor-quality water, false advertising, misleading marketing, and blatant hucksterism, the sales of magic elixirs would be halted. If public sources of drinking water ( i.e. fountains) were more common and accessible, arguments about the convenience of bottled water would seem silly. And if bottled water companies had to incorporate the true economic and environmental costs of the reduction and disposal of plastic bottles, as well as the extraction and use of sensitive groundwater, into the price of their product, sales would plummet.

Machiavellian motives can be inferred from the dramatic expansion of bottled water in the last decade: Some claim that it is an orchestrated effort to privatize precious water resources and to turn water from a natural right into a luxury, a commercial product. Certainly, the bottled water industry is successfully capitalizing on, and profiting from, the decay of our comprehensive safe drinking water systems, or, in the poorer countries of the world, their complete absence. But motives aside, society must not abandon municipal systems, or let the rich fall back on individual point-of-use systems that purify water just for those who can afford it, or try to provide everyone with bottled water for their potable water needs.

The answer is to continue to build new and innovative water and wastewater systems, expand and maintain the remarkable systems we've already got, get the failing pipes and lead contamination out of the old building, and learn to manage water for the long-term future, not the next quarterly earnings period.

Pursuing these goals won't eliminate the bottled water industry. Consumers will always seek a diversity of choices, including the choice to buy in convenient, single-serve containers. But the bottled water industry itself is in need of serious reform and comprehensive regulation in order to safeguard human health, reduce the impacts of bottling and transporting water, and protect the public from misrepresentations and lies about unproven health benefits of bottled water.

Support and expand state-of-the -art tap water systems
Develop, pass and enforce smarter water regulations
Require truthful labeling
Protect consumers fraud and misrepresentations
Reduce bottled water's environmental impact

If we are thoughtful we will see bottled water for what it is – the result of a failure to provide satisfactory public water systems and services for everyone- and realize that our obsession with bottled water can be overcome if we address the reasons people seek it out.

The Author's Blog:
http://www.sfgate.com/cgi-bin/blogs/gleick/index?


[ Maintaining and developing our water and wastewater systems both at home and abroad is exactly the sort of public works project that provided the economic stimulus and and growth that settled the huge national debt that the United States labored under in the immediate aftermath of World War II, as represented among other things by the interstate highway development program under President Eisenhower, only better, of course.

What economists call the positive “knock-on” effects of such a program are virtually incalculable- opening all kinds of opportunities for sound and environmentally sustainable economic growth and development.

The idea that the sorts of government programs and regulations envisioned by the author to achieve his goals would “unnaturally” and “dangerously” stymie the “free-market” forces that “made America great” and vouchsafes a prosperous future for all its citizens is patently absurd and, in light of all that has occurred in this country in the last thirty years leading up to the collapse of the housing bubble, the extremely slow pace of recovery, massive unemployment and the devastating oil-platform blow-out in the Gulf, defies the real record of the entire history of this Republic and verges on willful blindness if not mendacity.]

The Power of Positive Thinking by Barbara Ehrenreich

In the middle of the first decade of the twenty-first century, positive thoughts were flowing out into the universe in unprecedented volumes, escaping the solar system, rippling through vast bodies of interstellar gas, dodging black holes, messing with the tides of distant planets. If anyone - deity or alien being – possessed the means of translating these emanations into comprehensible form, they would have been overwhelmed by images of slimmer bodies, larger homes, quick promotions, and sudden acquisitions of great wealth.

Nothing new about this in America, beginning with Phineas Parkhurst Quimby and his most famous patient, Mary Baker Eddy. The rationale of the positive thinkers has been that the world is not, or at least no longer is, the dangerous place we imagined it to be. This is how the founder of Christian Science saw it: the Universe was “Supply” and “Abundance” made available to everyone by a benevolent deity. Sin, crime, disease, poverty - all these were “errors” wrought by minds that had fallen out of resonance with the cosmic vibration of generosity and love. A hundred years later, Martin Seligman, founder of positive psychology, was describing anxiety and pessimism as unhelpful vestiges of our Paleolithic past, when our ancestors scrambled to avoid predators, flood and famine. Today, however, goods and services are plentiful”, as he put it; there is enough to go around, and we can finally let our guard down. Any lingering dissatisfaction is, as Eddy would have said, a kind of error – correctable through the right self-help techniques and optimism exercises.

But has the human outlook really been improving over time? Has the universe played its assigned role as a “big mail order department” accessible to all through “the laws of attraction” as propounded by the gurus of positive thinking? For affluent individuals in peaceful settings, decidedly yes, but for most Americans things have been getting worse and the overall situation more perilous.

The poor, including those who sought spiritual leadership from prosperity preachers like Joel Osteen and Creflo Dollar, remained poor and even increased in numbers. Between 2002 and 2006, as the economy grew briskly, the number of officially “low-wage” families shot up to 25% of all families with children. The traditional working class saw its wages decline and decent manufacturing jobs disappeared . The white-collar middle class – prime target for self-help books, motivational products, and coaching services- found itself subject to the same forces compression; tossed about by “income volatility”: lay-offs as well as cutbacks or elimination of pension and health benefits.


To many people who had long been denied credit on account of their race or income, the easy mortgages of the middle of the decade must have indeed come as a miracle from God - “God caused the bank to ignore your credit score and bless you with your first house” Pastor Osteen would argue. By 2006 dicey subprime and Alt-A categories of mortgages – requiring little or no income documentation or down payment- had expanded to 40% of the total. No wonder that within a year more and more Americans were finding themselves in over their heads!

But the gullibility and optimism of ordinary individuals go only so far in explaining the collapse of the housing bubble and the financial crisis. Someone was offering tricky mortgages to people of dubious means, someone was bundling up those mortgage debts and selling them as securities to investors throughout the world. In fact, the reckless optimism of the borrowers was far exceeded by that of the lenders, with some finance companies involved in subprimes undertaking debt-to-asset ratios of 30 to 1. American corporate culture had long since abandoned the dreary rationality of professional management for the emotional thrills- and quick profits- of mysticism, charisma, and sudden intuitions. Pumped up by paid motivators and divinely inspired CEOs, American business entered the midyears of the decade at a manic peak of delusional expectations, extending to the highest level of leadership. The once sober financial sector was not immune to the “virus” of positive thinking.

Furthermore, even some of the most positive-thinking evangelical pastors have recently acknowledged the threat of global warming. The notion of “peak oil” is no longer the exclusive province of a few environmentally minded kooks. Everywhere we look, the forests are falling, the deserts are advancing, the supply of animal species is declining. The seas are rising, and there are fewer and fewer fish in them to eat. But over the last couple of decades, as the icebergs sank and the levels of debt mounted, dissidents from the prevailing positive-thinking consensus were isolated, mocked, urged to overcome their perverse attachment to negative thoughts and fired. Within the U.S. any talk of intractable problems like poverty could be dismissed as a denial of America's greatness. Any complaints of economic violence could be derided as the “whining” of self-selected victims.

It is easy to see positive thinking as a uniquely American form of naivete, but it is neither uniquely American nor endearingly naive. American preachers of positive thinking would no doubt be appalled to find themselves mentioned in the same breath or even the same book as Stalinist censors and propagandists. The reality is, however, that in the Soviet Union, as in the Eastern European states and North Korea, the censors required upbeat art, books, and films, meaning upbeat heroes, plots about fulfilling production quotas, and endings promising a glorious revolutionary future. Czechoslovakian literature was suffused with “blind optimism”, North Korean short stories still beam with “relentless optimism. In the Soviet Union being charged with lack of historical optimism meant being charged with distortion of truth or transmission of false truths. Pessimism and ideological wavering meant the same thing.

In his 1968 novel, The Joke, the Czech writer Milan Kundera has a character send a postcard bearing the line “optimism is the opium of the people,” for which the character is accused of being an enemy of the people and sentenced to hard labor in the coal mines. Kundera himself was punished for daring to write The Joke. He was expelled from the Communist Party, saw his works removed from libraries and bookstores, and was banned from traveling to the West.

The big advantage of the American approach to positive thinking has been that people can be counted on to impose it on themselves. Stalinists regimes used the state apparatus – schools, secret police, and so on – to enforce optimism; capitalist democracies leave this job to the market . Yet even among American proponents of positive thinking, you can find a faint uneasiness about its role as a mental discipline, a form of self-hypnosis involving affirmations, visualizations, and tightly focused thoughts. “Don't think of 'thought control' as a repressive tool out of George Orwell's 1984”, John Templeton advised readers of one of his self-help books. “Rather, think of it as a positive force that will leave your mind clearer, more directed, and more effective.”

The great irony in all this, as a story in the January 2009 issue of Psychology Today acknowledged, the American infatuation with positive thinking has not made us happier : “as a nation we've grown sadder and more anxious during the same years that the “happiness movement”- promoted by positive psychology academics and an ever growing host self-appointed experts- has flourished; perhaps why we've so eagerly bought up its offerings.” Neither is there any evidence that positive-thinking cures disease, strengthens the immune system, prolongs life or makes us wealthy. No study has been able to convincingly separate mental attitude from circumstance and education as an independent variable for an individual's prospects in life.

Positive thinking encourages us to worry about negative expectations themselves and subject them to continual revision. It ends up imposing a mental discipline as exacting -as that of the Calvinism it replaced – the endless work of self-examination, and self-control or self hypnosis. It requires, as historian Donald Meyer puts it, “constant repetition of its spirit lifters, constant alertness against impossibility perspectives, constant monitoring of rebellions of body and mind against control.”


This is a burden that we can finally, in good conscience, put down. The effort of positive “thought control”, which is always presented as such a life preserver, has become a potentially deadly weight - obscuring judgment and shielding us from vital information. Sometimes we need to heed our fears and negative thoughts, and at all times we need to be alert to the world outside ourselves, even when that includes absorbing bad news and entertaining the views of 'negative' people. As we should have learned by now, it is dangerous not to. A vigilant realism does not foreclose the pursuit of happiness; in fact, it makes it possible. How can we expect to improve our situation without addressing the actual circumstances we find ourselves in?

It is true that subjective factors like determination are critical to survival and that individuals sometimes triumph over nightmarish levels of adversity. But mind does not automatically prevail over matter, and to ignore the role of difficult circumstances – or worse, attribute them to our own thoughts- is to slide towards the kind of depraved smugness Rhonda Byrne expressed when confronted with the tsunami of 2006. Citing the law of attraction, she stated that such disasters can happen only to people who are “on the same frequency of the event.” The threats we face are real and can be vanquished only by shaking off self-absorption and taking action in the world. Build up the levees, get food to the hungry, find the cure, strengthen the 'first responders'! We will not succeed at all these things, certainly not all at once, but, if I may end with my own personal secret of happiness – we can have a good time trying.