Around the time of the Great Depression, a man named John Maynard Keynes made an incredible discovery. The reason so many people were out of work was not really because of irresponsible banks or high taxes or reckless government policy. It was really much simpler than all that: there wasn’t enough money.

Now, as individuals, we’d all like a little more money for ourselves. But pause for a moment and think about what it means if there isn’t enough money in the economy as a whole. A good way to wrap your head around this is to think about a much smaller case: instead of the whole economy, let’s think about a now-famous babysitting co-op on Capitol Hill. Instead of dollars, the co-op used its own scrip that was worth an hour of babysitting time. When you wanted to go out, you’d pay a couple hours to someone else to watch your kids; then when they wanted to go out, they’d pay you or someone else to do the same for them.

It all worked great for a while, until one day they found they had too few pieces of scrip. Every couple had only a couple hours left and, having so little, they didn’t want to waste it. So they all decided to save it for a very special occasion. This was kind of an incredible situation — even though there were people who wanted someone to babysit their kids, and people who were willing to do just that, the deal didn’t happen, simply because the co-op hadn’t printed enough colored pieces of paper. Eventually the co-op learned their mistake, printed some more scrip and handed it out, and everybody went back to babysitting like before and were much happier for it.

The same thing happens in the real economy. When there aren’t enough green-colored pieces of paper around, everybody gets worried and holds on to the little they have. Even if you’d like someone to build an extension on your house, and there’s someone else out there who’d like to build an extension on your house, the deal doesn’t happen, just because you don’t have enough green pieces of paper (or, more realistically, dollars in your bank account). This is a total waste. You don’t get the extension and the other guy doesn’t get a job, all because we haven’t run the printing presses enough (or added enough zeroes to the bank’s computers).

Before the Great Depression, most countries wouldn’t simply print more colored pieces of paper. They were on the “gold standard” and they would only print more currency when more gold was discovered. This led to the most bizarre series of booms and busts as more gold was discovered in strange places and then “used up” by population growth or other things. After Keynes, countries eventually stopped this silliness and just started printing their money directly. As soon as they abandoned the gold standard, they begun recovering from the Great Depression.

But the power to print more money is obviously a very special power and you wouldn’t want it to fall into the wrong hands. So, in the United States, we’ve taken it away from elected politicians and given it (mostly) to the big banks. The banks select people to run their local Federal Reserve and then some of those people (along with some additional folks nominated by the President) are selected to be members of a group called the Federal Open Market Committee (FOMC). The FOMC, essentially, decides how much money there should be in circulation, which in turn decides how many people have jobs.

You might think this sounds crazy — a bunch of unelected bankers get to decide how many people have jobs? — and, in fact, it is crazy. But I’m not making it up. Ask a macroeconomist, like Paul Krugman, and this is exactly what he’ll tell you. And if you look in the Federal Reserve Act or on the Fed’s website, you’ll find their mission is to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” These multiple goals are relatively recent; before 1978, the goal was simply “maximum employment, production, and purchasing power.”

Now some people will claim that the Federal Reserve has done all it can to create more jobs but the recession is so deep this time that there’s nothing else it can do. But that’s just not true — even the chairman of the Federal Reserve, Ben Bernanke, says it’s not true. He was asked about this in a Senate hearing. As the Economist summarized his response: “Mr Bernanke does not want to risk a de-anchoring of inflation expectations. He is willing to accept 10% or greater unemployment and the resulting economic and political fall-out in order to avoid that risk.”

Which brings us to the subject of inflation. Obviously if you print a lot of new money, it makes existing money worth a little less. This is annoying, but is it worse than having people out of work? Well, it depends who you are. If you have a lot of money, you’re more worried about it becoming worth less. But if you work for a living, you’re more worried about people being out of work. As you might expect, Mr. Bernanke has a lot of money, as do the other bankers on the committee and the people who selected them. So they’ve decided to let millions and millions of people be unemployed and the rest of us experience the resulting recession rather than risk the chance that some of their money might be worth a little less.

The biggest reason this is possible is because nobody realizes it. If it was conventional wisdom that a bunch of unelected bankers looking out for rich people were the reason everyone was out of work, politicians would be forced to explain to angry voters why we had this crazy system and might actually consider doing something about it. But, incredibly, it just seems like nobody has any idea. Voters don’t realize it, politicians don’t understand it, journalists don’t cover it. And, in fact, they’re so far from having any idea that it’s really difficult to explain it to them. When you say a bunch of unelected bankers are the reason there are no jobs, they just look at you like you’re crazy. I’ve just spent a page or two explaining it and you still probably think I’m crazy. But it’s true! This isn’t some Ron Paul-type crackpot idea; this is mainstream economics, from Paul Krugman to the head of George W. Bush’s Council of Economic Advisors.

I feel a bit like the guy in one of those movies, going around and telling everyone that the murderer is standing right over there — right there, look! — but nobody believes him and people continue to die. It’s incredibly frustrating, and I have no idea what to do about it.

One final point: How did we get into this mess in the first place? Why did we suddenly find ourselves without enough money? Well, there was a housing bubble: for many years, house prices kept going up and up for no other reason than everyone was betting that they were just going to keep going up. When house prices were unsustainably high, that was part of the money in circulation. But when the music stopped and the bubble popped, house prices cratered and nearly $8 trillion disappeared overnight. The government has printed a bunch of money since then, but nowhere near the $8 trillion we lost. Obviously a lot of other bad stuff happened during the financial crisis, but this is the reason everybody is out of work.

I am increasingly convinced that the difference between effective and ineffective people is their skill at developing a theory of change. Theory of change is a funny phrase — I first heard it in the nonprofit community, but it’s also widespread in politics and really applies to just about everything. Unfortunately, very few people seem to be very good at it.

Let’s take a concrete example. Imagine you want to decrease the size of the defense budget. The typical way you might approach this is to look around at the things you know how to do and do them on the issue of decreasing the defense budget. So, if you have a blog, you might write a blog post about why the defense budget should be decreased and tell your friends about it on Facebook and Twitter. If you’re a professional writer, you might write a book on the subject. If you’re an academic, you might publish some papers. Let’s call this strategy a “theory of action”: you work forwards from what you know how to do to try to find things you can do that will accomplish your goal.

A theory of change is the opposite of a theory of action — it works backwards from the goal, in concrete steps, to figure out what you can do to achieve it. To develop a theory of change, you need to start at the end and repeatedly ask yourself, “Concretely, how does one achieve that?” A decrease in the defense budget: how does one achieve that? Yes, you.

AUDIENCE MEMBER: Congress passes a new budget with a smaller authorization for defense next year.

Yes, that’s true — but let’s get more concrete. How does that happen?

AUDIENCE: Uh, you get a majority of the House and Senate to vote for it and the President to sign it.

Great, great — so how do you get them to do that? Now we have to think about what motivates politicians to support something. This is a really tricky question, but it’s totally crucial if we want to be effective. After all, if we don’t eventually motivate the politicians, then what we’ve done is useless for achieving our goal. (Unless we can think of some other way to shrink the defense budget.)

But this is also not an insoluble problem. Put yourself in the shoes of a politician for a moment. What would motivate you? Well, on the one hand, there’s what you think is right. Then there’s what will help you get reelected. And finally there’s peer pressure and other sort of psychological motivations that get people to do things that don’t meet their own goals.

So the first would suggest a strategy of persuading politicians that cutting the defense budget was a good idea. The second would suggest organizing a constituency in their districts that would demand they cut the defense budget. And maybe one of you can figure out how to use the third—that’s a little trickier.

But let’s stick with the first, since that’s the most standard. What convinces politicians that something is the right thing to do?

AUDIENCE: Their beliefs?

In a sense, I suppose. But those are going to be pretty hard to change. I’m thinking more, if you have a politician with a given set of beliefs, how do you convince them that cutting the defense budget advances those beliefs?

AUDIENCE: You outline why to them.

Well, OK, let’s think about that. Do you think if you ran into Nancy Pelosi in the hallway here and you tried to explain to her why cutting the defense budget would accomplish her beliefs, that you’d convince her?

AUDIENCE: Probably not.

Why not?

AUDIENCE: Because she wouldn’t really listen to me — she’d just smile and nod.

Yeah. Nancy Pelosi doesn’t trust you. She’s never met you. You’re not particularly credible. So you need to find people the politicians trust and get them to convince the politicians.

Alright, well, we can continue down this road for a while — figuring out who politicians trust, figuring out how to persuade them, figuring out how to get them to, in turn, persuade the politicians, etc. Then, when the politicians are persuaded, there’s the task of developing something they can vote for, getting it introduced so they can vote on it, then getting them to vote on the specific measure even when they agree with the overall idea. You can see that this can take quite a while.

It’s not easy. It could take a while before you get to a concrete action that you can take. But do you see how this is entirely crucial if you want to be effective? Now maybe if you’re only writing a blog post, it’s not worth it. Not everything we do has to be maximally effective. But DC is filled with organizations that spend millions of dollars each year and have hardly even begun to think about these questions. I’m not saying their money is totally wasted — it certainly has some positive impacts — but it could do so much more if the people in charge thought, concretely, about how it was supposed to accomplish their goals.

I’ll close with one more example, showing how this strategy can be used personally as well. I was at a party once and I told someone I was writing a book and that I wanted it to be a bestseller. They laughed at that and I think it’s because they had a theory of action model in their head: you write the best book you can, and of course you want it to be a bestseller, but either it does or it doesn’t.

But I was working backwards, I had a theory of change: I asked, What makes something a best seller? Well, lots of people buy it. OK, how do you get lots of people to buy something? Well, you have to persuade them it’s something they want. OK, how do you persuade them it’s something they want? Well, first it has to meet some desire or need they have and second you need to explain to them how it meets that need. So what are the desires or needs people have? (Looking at bestsellers: entertainment, escape, self-improvement, etc.) What are the ways of explaining your book meets their need? (Being popular early on, appearances in the media, persuading readers to tell other readers, etc.)

Again, we can keep going for quite a while until we get all the way back to something I can actually do. But because of this, I didn’t have to simply have to hope that my book became a bestseller, like every other author. I could actually do something about it.

That’s the power of a theory of change.

Menomonee Falls, Wisconsin-based Bradley Corp., an international manufacturer of commercial plumbing fixtures and washroom accessories, received a 2010 Exporter of the Year award from ThinkGlobal Inc., publisher of Commercial News USA, the official export promotion magazine of the U.S. Commerce Department.

Bradley serves a diverse customer base ranging from small local facilities to international corporations such as WalMart, General Motors, U.S. Postal Service, W.W. Grainger, and AMC Theaters Corp.

Here’s what we can learn from Bradley on taking a business global:

“Our company’s commitment to product innovation and strong customer service – as well as aggressive sales promotions in Germany and the Czech Republic — have all positively influenced our continued success in product exportation,” said Steve Zingsheim, Vice President, International Sales, Bradley Corp. “We also work closely with the Department of Commerce and take advantage of services such as the Gold Key in Japan and Mexico. Because of our many years of service in the international community through organizations like Milwaukee World Trade Association (MWTA), we mentor international students enrolled at local area colleges.”

Find out more here. Bradley backgrounder here.

Congratulations to Bradley! It is clear they are benefiting from their export efforts through new market expansion opportunities that lead to powerful growth.

Photo credit: Bradley’s Themepark Women’s Restroom

Description:
Casey, founder and Executive Director of the Designers Accord, works with organizations all over the world to create positive social and environmental impact. She has been named a “Guru you should know” by Fortune magazine, a “Hero of the Environment” by Time magazine, and a “Master of Design” by Fast Company.This Keynote will be simulcast in ACC Level 1, Ballroom A / ACC Level 3, Room 9ABC / ACC Level 4, Ballroom D / ACC Level 4, Room 18ABCD

Presenter:

Valerie Casey – Designers Accord

Today we’re going to talk about hoe despite the fact that ht interactive community has been absent from the sustainability conversation, it’s the interactive community that is going to take the led in this.

We’re going to start with narrative. Kurt Vonnegut graduate thesis … there are existing narratives that you can apply around this axis,,,good and ill fortune (vertical) and time (horizontal). In top one someone is leading an ok life, they lose something important, they again it and then are happier. At bottom,, it;s abut a person who become happier about finding something they like a lot, they lose it and then get it back and are happier.

Another one: cockus metamorphasis. An already unhappier man become a cockroach.

The Kaftka narrative is the one we tell about sustainability and it’s why sustainability feels so overwhelming.

Stories are about toxic villages in China and Big Macs being cheaper than salads, burn pits in Iraq.

Started the Designer’s Accord to challenge this idea, with an underlying philosophy that by bringing the creative community together we can look at these issue in a new way … to make change we have to depend on collective. It’s a Kyoto Treaty of design. Guidelines include personal to collective accountability, Idea about sharing not only successes.

Advance the notion that sustainability sits outside of what we do.

Constant total length: if you can imagine a world as having two fixed points and a string sits between. Anytime you pull on that string it reverberates through the system.

7 ways to think about systems

. A system is more than the sum of its parts

Presenter:Clay Shirky
Part I: Sharing
Anyone who is looked at a modern city has seen the same thing, People trying together into and out of a town, total inefficiency. One solution is to make bigger roads. Second solution is about better public transport. Third solution is PickUp Pal, it’s about moving information. Then people can share cars. There’s no longer an infrastructure issue. It’s better for everybody except buses. So bus company hires a private detective and suggested that they were breaking the law because car pools can only be no-to efficient. It goes to court and there is such an uproar that the law gets rewritten. What PickUpPal realized is that they can not operate in the current environment.
The fight between the bus company and PickUpPal was about sharing. How well can people share? We have this idea of “rainbow unicorn sharing.” PUP was doing jackhammer sharing. It has historically happened around media revolutions.
Which brings us to Guttenburg. He is associated with the Bible almost exclusively. But he actually created the press to create indulgences that buys you time off off purgatory. There was a high demand for indulgences. The imbalance was handwritten. You couldn’t write them fast enough! But they got so good that it it created indulgence inflation. Indulgence inflation, ability to read bible, etc. actually doesn’t support Catholic church but weakens it.
Abundance breaks more things than scarcity does. It is a bigger threat to society.
Scribes: With the spread of printing press the scries started writing slowly. Book written, In Praise of Scribes. He has it printed–and the media destroys the message. That is the kind of change abundance brings about.
Second, literacy. If you could read and write you are set for life. Now it is so critical that we make sure everyone knows it and you can no longer make a living at it.
Part II: Monkeys and Balloons
Napster was the first big time app that was general social change, to geeky. One of the explanations of this behavior was that young people today had become criminally minded, had no morals.
Two things wrong are with this thesis: 1) It’s obviously false (you would expect to see this behavior elsewhere if this was true, and oddly coincided with largest fall in criminal behavior, except theft of digital property) 2) It relies on junk sociology. It’s a huge generalization, it’s like an element of your being. But human motivation doesn’t change that quickly.
Napster simply increased opportunity to share and changes motivations around sharing–not by creating a new one but by unearthing a new one.
Study of sharing on primates (book” Why We Cooperate). Primates don’t have a behavior called “sharing,” there are actually three modes. There are three feelings around sharing: one mode for good, one for services, one for information.
What freaked the music industry out was that we didn’t voluntary withhold things that would make someone else’s life better. We weren’t spiteful And the music industry didn’t get this. The fight from the industry is to reintroduce spiteful behavior. If we allowed to indulge in the positive emotion of sharing, then it will completely transform the way that media works in the 21st century.
DARPA. last year launched red balloon challenge. Launched 10 balloons and asked for lat and long. Thought it would take 30 days, first people solved in in under 10 hours. If you have two lat and long coordinates you can’t tell how far apart they are. You need a calculation. DARPA does not want to talk about this calculation so they point to wikipedia. Why did they not point to Britannica? Because they couldn’t. The required signing up to get full info. And links are 404 … for weeks … because no one cares. It’s a reference work you can’t refer to. Wikipedia has made Britannica less accessible. Wikipedia is not just a new competitor, it has changed the environment.
Part III: Lingerie
The funniness of the reviews of the 3 wolf t-shirts is mainly communal. Enjoyable by participants. You see it everywhere,. But that’s not the potent stuff.
The potent stuff is when people try to create civic value not just communal value. One of the best examples of this right now is a site called patientslikeme.com. It’s trying to get people who share the same symptoms to come together and document those symptoms n obsessive detail.
This flies in the face of the U.S. health care industry. Site has openness philosophy. They tell users that we believe if we share our symptoms doctors will be able to find cures faster. If we hold info private we lose potential for public good. It will fail if they don’t change U.S. health care culture. The argument is for the co-creation of public good.
Last January, Hindu fundamentalist group went out and attacked women drinking in bars. Attacks were photographed and videotaped and the group said they will enforce how we think women should ask. if you’re a woman you can go out and defy or you can stay home … or you can start a Facebook group called the association of outgoing forward and loose women. Thousands joined. They mailed pink panties to the head of this group. The effect on the politics was remarkable because one there was clear there were women acting as a group then the state acted and arrested the members of this group.
We would like the state to do the right thing on behalf of citizens. What the FB group did was demonstrate there was enough of a constituency that the state should care.
2007 Kenya elections. Blogger needing help documenting act of violence. Two developers created Ushahidi.com. It places acts of violence on a map. It was better at getting information and predicting information. The site has gone global. Takes what the whole group knows and taking it into a shared doc.
Pakistan kids, tied of Pakastani government, we’re going to show up in market streets and clean up every Sunday. Started FB page. They kept coming back and others started going in. It’s positive deviance. Deviating from social norms in a positive way.
Today we have tools that promote sharing. Previously it was all about sharing in small groups. Intrinsic motivation seemed to go hand in hand with small projects: little things for love. And now the link between intrinsic motivation and public action were accidental.
Today the number of people who can put something into the social sphere is abundant (where as before it was excluded to a class of jobs such as publishers). Today you can do big things for love. We are creating opportunities for each other that bring motivations into the public sphere that increase
This is the big opportunity: How much value can we get of public sharing?