This post was orginally featured on GreenBiz.com
By Joel Makower, Chairman and Executive Editor, GreenBiz Group
Sometimes, an idea comes along that you just can’t pass up. It may be that the messenger behind the idea is charismatic, or that the timing seems exactly right, or that the idea itself just feels important, or that it is exactly the challenge you needed at this point in your life.
Sometimes, it’s all of the above.
That’s as close as I can come to explaining why I decided to push aside so many things two years ago to co-author a book about grand strategy, sustainability and America’s future: the messenger, the timing, the topic, the challenge and a gut feeling that this just might be the culmination of everything that I’ve been doing for the past, well, 40 years.
That book — “The New Grand Strategy: Restoring America’s Prosperity, Security, and Sustainability in the 21st Century” — is just out and I couldn’t be more excited to share it with the world.
I wasn’t looking to write another book. I’d checked that box several times — this is, depending on how you count, somewhere between the 20th and 24th book with my name on the cover, dating to 1981 — and I wasn’t necessarily interested in adding yet another link to my Amazon page. The immediacy of the Web and the event stage fulfills most of my communications needs these days.
But then I met Mark “Puck” Mykleby — on stage, actually, at our VERGE conference in Boston, in May 2013, where we had a 30-minute conversation about some breakthrough work he had done at the highest levels of the Pentagon. The retired Marine colonel described how sustainability could be the organizing principle for America’s economic revival and how doing so could address a vast array of social and environmental challenges, all while improving global, national and regional security and resilience.
I was all in. So was the audience that day, which gave him a standing ovation. He got a second such reception a few months later for his presentation at another VERGE conference.
Sustainability as an organizing logic
I teamed up with Mykleby and Patrick Doherty — with whom Mykleby founded an institute to further this vision — to write this book. Together, we quickly realized that while we had all come from different disciplines, perspectives, political leanings, even generations, we had all arrived at pretty much the same intellectual space. (How different? For starters, Mykleby is a career Marine who flew bombing missions over Bosnia and Iraq. Doherty is a foreign policy and macroeconomics expert who worked for more than a decade in conflict zones, from the Middle East to sub-Saharan Africa. I’m a Vietnam-era antiwar protestor and a registered conscientious objector to the draft, a Berkeley-educated journalist writing and speaking about sustainability, and who previously produced an oral history about Woodstock.)
“The New Grand Strategy” is the product of this unlikely partnership.
The gist of the book is this: Sustainability must be the organizing logic for a new growth scenario for America, one that can make us economically stronger, more secure and resilient, improve our standing in the world (and, not insignificantly, restore our faith in government at home) while addressing climate change and other critical environmental and resource issues.
It’s a compelling path forward, one that combines the best of both the political Left and Right, that aligns sustainability with America’s enduring interests of prosperity and security, and that creates a vast opportunity space, leveraging market forces to reinvigorate our nation, from our infrastructure to our political engagement to the next iteration of the American Dream.
This is a tall order, to be sure, but I was inspired by the vision. For one thing, it addressed a frustration that I’d been talking about for more than a decade (and which I wrote about in my last book): No leaders — business, political or cultural — are telling a compelling story about what happens if we get sustainability right.
It’s kind of funny to think about. We know what happens if we get it wrong — thank you, sincerely, Al Gore, Bill McKibben, Rachel Carson and scores of others who have sounded the alarm.
But no one with any public pulpit has told an irresistible story of success: the potential for sustainability to create jobs and a thriving economy; to improve public health; to ensure energy security, food security, water security, housing security and other things that can improve our individual and collective well-being; all while taking on the climate crisis and restoring our planetary wealth — topsoil, wetlands, fisheries, aquifers and other ecosystems.
Mykleby and Doherty were telling that irresistible story, one that also lines up with the challenging state of American affairs — our toxic political discourse, our low standing in the community of nations, our still-wobbly and inequitable economy, our fraying social fabric, our brittle infrastructure. The story just needed to get out there.
Aligning our economy
There was one piece missing, however. This story needed to be rooted in the realities of 21st-century commerce, including how innovative technologies and market shifts are reshaping the world of business, roiling supply chains and creating innovative products, services and business models that align with environmental and social sustainability goals. That’s where I came in.
Suddenly, the pieces fit together: a military strategist, a policy strategist and a sustainable business strategist. We set out to write the book.
“The New Grand Strategy” tells the story of how America has leaned on something called “grand strategy” throughout its history to take on the big challenges of the day, leveraging our economy to do the heavy lifting. The book, as the title suggests, lays out a new strategy for the 21st century.
Grand strategy involves aligning our economy with our foreign policy and governance structures to take on big, existential threats. We’ve used it effectively over the past century to fight fascism during World War II, then to contain the Soviet Union during the Cold War, then to — well, what?
The fact is, we haven’t had a new strategy since they lowered the hammer-and-sickle on the Kremlin for the last time on Christmas Day 1991. Harnessing a strategy of “containment” dating to Dwight Eisenhower and adopted by every subsequent president through George H.W. Bush, we defeated the Soviets in a contest of economic and political systems while actively containing their moves on the global chessboard. The better we lived the American dream and the greater the contrast with the underperforming Soviet economy, the more resources — money, allies, goodwill — we had to stop its international advances. The Soviet empire ultimately crumbled — a real, not manufactured, “Mission Accomplished” moment.
Arguably, we got through the last century because we knew how to do grand strategy, and do it well. And our leaders made global decisions without the benefit of computers or the internet, or really much data at all, compared to the rich insights we can draw on today.
We long ago stopped thinking strategically. We’re still operating off the same economic playbook that helped us vanquish the Soviet Union 25 years ago. It’s a threat-centric view of the world — not the Land of Opportunity we’ve long thought ourselves to be.
So, what is today’s big, existential threat? We believe it’s “global unsustainability.” Specifically, the combination of four strategic antagonists:
- Rapid economic inclusion. The great global project of the 21st century is to accommodate 3 billion additional middle-class aspirants in two short decades without provoking resource wars, insurgencies and the collapse of our planet’s ecosystems. Those 3 billion people are expected to increase their per-capita consumption by 300 percent, driving resource competition to the brink, with the potential for great power conflict over access to food, water and other resources. That’s on top of having to solve the growing issue of income equality here in America.
- Ecosystem depletion. Climate change is outpacing scientific models while natural-capital stocks are being depleted below levels necessary to maintain essential ecosystem services. With no further changes in policy, we could see warming of 6 degrees Celsius by the end of the century, with potentially ruinous impacts. Well before midcentury, we are likely to face widespread food insecurity, economic disruption, mass human migration and regional conflicts as these critical systems degrade further.
- Contained depression. The intervention by the Federal Reserve Bank, European Central Bank and other such institutions around the world has failed to address the fact that central banks alone cannot revive aggregate consumer demand for housing and other goods and services. Congress can’t either, as pumping more stimulus dollars into an old economic engine won’t do the trick. Consumer preferences have shifted such that simply forcing more money into the system, even directly into citizens’ bank accounts, will have little lasting effect beyond propping up an unsustainable economy and adding to deficits.
- Resilience deficit. The supply chains and infrastructure that undergird our cities and markets are brittle and prone to disruption. Today’s corporate value chains are designed to increase efficiency but have little redundancy or resilience. Infrastructure arrears in the United States alone stand at $3.6 trillion to get the bridges, roads, railways, schools, ports and airports that we need to bring the Cold War-era economic engine up to today’s standards. Without rethinking and rebuilding these systems, we’ll be forced to react to their breakdowns, sometimes with tragic consequences.
Taken together, these four fused and interlocking issues compose the global challenge of our time. It will require focused and determined leadership — and new forms of partnership — if we are to survive and thrive. To solve one requires solving the entire set.
Three pools of demand
In our new book, we lay out a plan — a grand strategy for the 21st century — that can address these challenges and, in the process, lift America’s economy and its standing in the world. By making ourselves stronger and more resilient at home, we can use smart power abroad more effectively, much as we did in defeating the Soviets.
But this grand strategy doesn’t come from Washington, and it need not require acts of Congress, the federal budget or even the president (although political leadership and some federal funding certainly would help). Rather, it comes from cities, states and regions, in partnership with the private sector — companies big and small, global and local — a bottom-up approach to solving problems that so many Americans seem to be craving.
American business, not politicians, would do the heavy lifting.
How? By aiming our economy to tap three massive pools of demand: for walkable communities; regenerative agriculture; and resource productivity.
Walkable communities. Between now and 2030, baby boomers and their children, the millennials, will converge in the housing marketplace, seeking smaller homes in “new urban” communities. In its 2013 consumer preference survey, the National Association of Realtors found that 60 percent of homebuyers want their next home purchase to have the attributes of what is commonly referred to as “smart growth.” That is, they want right-sized homes in a broader range of housing types (single-family, townhouse, live-work, condo, apartment) and they want them in walkable, service-rich, transit-oriented, mixed-use, opportunity-dense neighborhoods.
That represents roughly three times the demand for housing after World War II — a demand signal that was a primary driver of our economy until the 1970s. Today’s demand for smart growth is of truly historic proportions.
The demand exists across the country. Boomers are downsizing and working longer, and they fear their car keys will be taken away as old age creeps in, leaving them stranded in car-dependent suburbs, eventually to be housed away in a nursing home or retirement community. Millennials were raised in the isolated suburbs of the 1980s and 1990s, and 77 percent say they don’t want to go back there.
Prices already have flipped, with exurban property values dropping and those in walkable neighborhoods rising. Yet legacy federal policies — from transportation funding to housing subsidies — remain geared toward the Cold War imperative of population dispersion and exploitation of the housing shortage, and they are stifling that demand. Only a fraction of housing starts have the attributes of smart growth, and new homes represent only 1 percent of the residential real estate market.
Regenerative agriculture. America cannot become sustainable, nor can it support global sustainability, without addressing agriculture. To meet rising population and income levels, the world needs to increase global food production by 60 percent by 2050, according to the Organization for Economic Cooperation and Development, and 100 percent of that will need to use farming techniques that restore soils, sequester carbon and cleanse waterways.
For American farmers, the increase in demand for food is already translating to record prices, but the heartland is held back from capturing additional gains from regenerative methods — which provide up to three times the profits per acre and 30 percent higher yields during drought — because of federal policies set during the Nixon administration.
It is time to restore America’s heartland and breadbasket. Instead of depleting soils, emitting carbon and polluting rivers, American farming must adopt modern methods that bring more land into cultivation, keep families on the land, provide employment to a new generation of American farmers and build regional food systems that keep more money circulating locally, all while helping to feed the world.
Resource productivity. To bring 3 billion new middle-class aspirants into the global economy requires a revolution in resource allocation. Energy and material intensity per person will need to drop dramatically while simultaneously delivering the higher income and lifestyle expectations that come with global connectivity.
We’re already seeing the resource revolution taking shape in the form of the clean-energy economy, the zero-waste economy, the circular economy, the bio-based economy, the sharing economy and more. But it’s time to step it up, to fully seize the opportunities before us.
The resource revolution will provide the logic to power innovation in material sciences, engineering, advanced manufacturing and energy production, distribution and consumption. In the United States, the high-wage, high-skill jobs emerging from this revolution will restore and strengthen America’s middle class and national competitiveness for decades to come, enabling new manufacturing hubs from sea to shining sea. In the end, America will learn how to “make things” again.
A new growth scenario
Put it all together and, by our calculations, we have a game-changing, $1.3 trillion annual opportunity for America’s economy.
The demand and opportunity are there: Americans overwhelmingly want a new American Dream that could put people and capital back to work. Cities and suburbs are rethinking what constitutes “the good life” and are building walkable communities to help strengthen their social fabric. America’s farmers have the opportunity to restore the health of the planet’s life-support system, and get paid better to boot. We are witnessing the beginning of a revolution in resource productivity that can rebuild middle-class lives and wages.
How do we pay for it? Trillions of dollars of liquidity are sitting on the sidelines of the productive economy: $3.5 trillion in corporate cash, plus $10 trillion in private equity and hedge-fund cash. Plus, $30 trillion of baby boomer wealth that is in the process of being transferred to millennials (that’s on top of the $17 trillion still changing hands between the greatest generation and their boomer offspring).
Many of these players are looking for a new investment hypothesis for America that can put their money to good use over the medium to long term while providing a reasonable return. This opportunity could be compelling.
What about the trillions of dollars in oil and gas reserves currently on companies’ books — stranded assets that we cannot burn and stay within the limits of a livable planet? We believe it is time to solve the “unburnable carbon” issue by executing a feedstock shift, moving oil and gas out of combustion and into advanced materials, where they actually can reduce greenhouse gas emissions by substituting for more carbon-intensive materials. We don’t need to “keep it in the ground,” but we won’t be able to burn it, either. In the book, we explain how to do this.
It all adds up to a new growth scenario. Simultaneously, new pools of demand, vast stores of pent-up capital and a workable set of stranded-asset challenges are aligning with the four strategic antagonists of the coming decades.
Is any of this possible in an era of political gridlock? Our grand strategy, rooted in a powerful demand-plus-capital business case rather than a threat-plus-regulation policy framework, can be implemented under current policy by private businesses and producing at the speed of commerce to harness the best of the private sector’s efficiency.
We just need to get started.
It’s a truly exciting time. Yes, the challenges are historic and America is late to the party. But it’s a party we can’t afford to miss. The opportunities are simply too massive to ignore, and we can see a viable course of action that is scaled to the challenges we face but also, more important, to the opportunities that are available.
And here’s the best part: We know how to do this. We’ve done it all before.
Researching, reporting and writing “The New Grand Strategy” — not to mention, forming an enduring partnership and friendship with my two co-authors — has been one of the most satisfying and engaging opportunities of my career. The ideas and themes in the book will be core to all that I do going forward.
I couldn’t be more excited to share this with you, or more optimistic about what lies ahead.
Joel Makower is chairman and executive editor of GreenBiz Group Inc., producer of GreenBiz.com. For 20 years, Joel has been a well-respected voice on business, the environment, and the bottom line. Joel is chairman and executive editor of GreenBiz Group Inc., creator of GreenBiz.com as well as research reports and events on the corporate sustainability strategy and trends. He hosts the annual GreenBiz Forums and VERGE conferences around the world, and is author of the annual State of Green Business report. In 2012, he was awarded the Hutchens Medal by the American Society for Quality, which cited “his ability to tell compelling stories that both inform and inspire business leaders toward profitable action.”