Capitalism 3.0 | Peter Barnes | Talks at Google

Welcome everyone. It's my pleasure to introduce author and entrepreneur Peter Barnes today at this Authors at Google event. Peter is presently a Senior Fellow at the Tomales Bay Institute and author of the new book Capitalism 3.0 A Guide to Reclaiming the Commons, which you all have should have a copy of, and he'll be talking about that today. Previous to founding the Tomales Bay Institute, Peter co founded Working Assets Long Distance. His other books include the Plight of the Citizen Soldier, the People's Land, and who Owns the Sky. And his articles have appeared in the Economist, the New York Times, the Washington Post, the San Francisco Chronicle, and numerous other publications. So without further ado, please join me in welcoming Peter Barnes to Google.

Thanks, Lacey. Let's see. Ah, it works. Okay. The magic of wireless. Well, thank you all for coming out here and dedicating your lunch to learning a little bit, I hope, about capitalism. Although I suspect you already know a fair amount about it. If you came here because you thought I was going to teach you something about how to take better advantage of the capitalist system, I'm afraid you're going to be disappointed. What I am going to talk about, what this book is about, is about some of the serious flaws in our economic operating system. The title obviously is a reference to the notion of operating systems. It also suggests that capitalism has evolved and can continue to evolve, which is one of the points here. But the main point I make in this book is that there are three big pathologies, three big flaws, you might say, in the current operating system of capitalism. One is it destroys nature. Second is it widens the gap between rich and poor. And the third is, at the end of the day, it actually doesn't really do a good job of making people happy. So the first of these flaws is a serious, you know, you might say planet threatening flaw. We see it most obviously in the case of climate change. And one of my main points is that unless we fix this flaw, we're doomed. But that's the bad news. The good news is that just like any operating system, there are ways to upgrade the capitalist operating system and we can do it. So I'm trying to make a somewhat long story short here, and I want to try to explain how I think I could talk about all the problems, but I think it's more interesting with creative systems thinking people like you to talk about solutions. What might an upgrade of capitalism actually look like? How can we preserve the virtues of which there are many of our current operating system while fixing those flaws, which there aren't so many, but the ones we have are quite serious. And I walk through the argument obviously in the book, and I'm just going to summarize it here. The gist of what I say is that the way to fix the operating system is to build a new sector of the economy, which is basically missing right now. And I call that the commons sector. And I talk a lot about the commons and our commonwealth in this book. And so let me talk a little bit about what I mean by that. And I have a sense from my visit here today to Google that you understand a lot about the commons here already, both in the nature of your business and how you run your business. So a lot of this, I think, will be familiar to you. Everybody knows what private wealth is, obviously stock, money, houses, stuff that we own individually. Commonwealth, the commons is stuff that nobody seems to own. It's stuff that's out there. It consists of gifts that we all get, inherit, receive. We don't do anything to create. We receive these gifts and we share them. And a lot of these commons are invisible or hard to see unless you look carefully for them. But they're out there and they're enormously valuable. In fact, life depends on them, and capitalism depends on them as well. And there are three broad categories of assets in the commons. It can be broken down into nature or natural assets or natural gifts. Gifts from the creation, from the atmosphere to the water, to DNA to forests, and all the ecosystems that make life on Earth possible. Second big category is culture. And by that I mean all the information, all the knowledge, all the math, the science, the art, all these things that we creatively create and share, all that stuff is enormously valuable. And that is a commons. The Internet is a commons. That's part of it. And community, the things that bind us together as different kinds of communities, from roads to schools to institutions, both government and private institutions, our legal systems, our political systems, all these things are collective creations that we share. They have immense value, more value, actually. Economists have calculated. I mean, it's often hard to attach numbers to the values of these things in the commons, but to the extent that you can attach numbers to them, they are clearly more valuable than the private wealth that everybody obsesses about. So the problem with capitalism is that it destroys this commonwealth just by its nature. There's privatization, there's appropriation, there's destruction, there's externalization. I don't know if these words mean anything to you now, but I talk about them in the book. These are sort of built into the current operating system of capitalism. Even an enlightened corporation like Google, and you may be a rare exception, but most corporations are constantly externalizing costs onto others, be it the environment or other, or government, taxpayers, customers, whatever. You know, you're externalizing costs. That's what you do. That's part of your job to maximize profit. But the end result of all of this is that these bits of the commonwealth or the commons get destroyed. Nobody's in charge really of protecting them. We think government is, but in fact, government really is not doing a very good job of protecting the commons. So what we need are some new institutions to protect and expand and reinvigorate the commons. And I can give a couple of examples. First, something that you, I assume, are familiar with is the broadcast spectrum, the airwaves. This is obviously a commons. When the broadcast industry began in the last century, there was the question of, well, you know, what do we do with this commons? And the decision was made in 1935 to essentially to privatize it, to give it away to licensed broadcasting companies, now big media conglomerates, for free. And they would then produce all our programming and sell ads. And that was the model. Now we have a whole new use of that commons for cell phones and wifi and all that stuff. And the question is, what are we going to do with it? Are we going to give it to say, a duopoly of phone companies and cable companies, or are we going to open it up so people can share it a lot more? So that's one case where you have a conflict between private corporate ownership of a commons and common ownership. And I'm glad Google is on the right side in that particular battle. There's another example involving the atmosphere, and in particular what we're doing to the atmosphere, which is emitting greenhouse gases and making the planet heat up. We obviously have to do something about the fact that at the moment there are no limits on pollution, on emitting greenhouse gases. There's no price, it's free. So everybody does it. And you know, the price of buying gas or electricity doesn't include anything that reflects the cost that is imposed on the planet and on our children by dumping all this stuff into the atmosphere. So we need to fix that. And one of the big debates that's going on now and will become much more engaged once George Bush is gone, is, well, what should we do about climate change in this country? I mean, there's only so much we can do as individuals or even as companies, because the basic problem is system wide. So we have to do something to fix this. System to cap the total amount of emissions and to bring that down till we get down to actually 80% below where we are today.

So.

I'm actually spending a fair amount of my time at the moment trying to, you might say, educate and lobby for a solution to climate change that is based on the fundamental concept that the atmosphere belongs to everybody, that we all inherit the atmosphere together as part of our commonwealth, our shared inheritance. And that when it comes to managing the atmosphere in a way that we can keep a stable climate, we have to do so from the assumption, based on the assumption that it is something that belongs to all of us equally. And some of the proposals that have been put forward in the US Congress and actually in Europe as well, to reduce greenhouse gas emissions, while they are well intentioned from an environmental standpoint, from an economic standpoint and a political standpoint, are very biased, you might say, towards the companies that actually pollute. And what they do is they set up what they call a cap and trade system where they cap the total number of emissions. That's good. They issue permits to pollute. And you do that because you want to reduce the number of permits and that manner reduce the total amount of pollution. You let businesses trade these permits amongst each other, because that's okay. The business markets can figure out the most efficient way to allocate the declining amount of carbon that you allow the whole economy to burn. So that's kind of a model that has been applied in Europe and people are talking about applying here in the United States. But there's a couple of problems with that. First, when you make the supply of these permits to pollute scarcer, you give them economic value. That's okay. But then when you give these permits for free to the historic polluting corporations, you're giving them a huge windfall. It would be as if the FCC just gave for free the broadcast spectrum to Verizon. Why would you do that? You would want to have an auction. So the same principle applies to the atmosphere, to the air, in its capacity as a waste sink. You wouldn't want to give it free to anybody, much less to a polluting corporation, just people, because they happen to have polluted a lot in the past. You'd want to auction it and have the revenue go for some public purpose. Anyway. That is an example of a kind of structural change in the operating system of capitalism that we need. And I'll just point out one other feature that is implicit in this and how it deals with the other flaw that I mentioned of the capitalist operating system. Which is the fact that it inexorably increases the gap between the rich and everybody else. I mean, you guys are lucky because you own stock in Google, so you're set. But the reality in the total population is that about 5% of the people own more private wealth, corporate stock and things like that than the other 95%. So you've got 5% here and 95% here. And that ratio keeps getting worse. In other words, the 5% keep sucking more and more from the 95%. And that's because even though lots of you own stock, if you actually do an analysis of overall stock distribution in the United States, stock ownership distribution, it is very concentrated in the top 5% of the population. So how could we possibly upgrade the capitalist operating system so that this tendency to suck wealth towards the top is reversed and that wealth actually spreads more evenly? And I talk about several ways that that might be done in the book, but one of them specifically relates to the example of the atmosphere that I was talking about a minute ago. So if you had a system where you take this commons, the atmosphere, and you hold it in a trust, that's the key to it, since everybody owns it. How do we manifest that common ownership? Well, you need an institution. You need some kind of institution. So what I propose in here is a trust whose beneficiaries are all of us. All in the case, if you did this in the United States, it would be all US Residents, one person, one share. And so this trust issues these permits to emit, and each year it issues fewer and fewer. And eventually by 2050, you're issuing only 20% of what you're issuing today. So you've cut 80%, and you auction these permits and the money comes into the trust. And then what does the trust do with all this money? Well, who are the beneficiaries? All of us. One person, one share. So the trust actually pays dividends. Like if you've ever been to Alaska or heard of what they have up in Alaska, the Alaska Permanent Fund, they got all this oil money coming in and they give it out to every Alaskan. One person, one share. Last year, every resident of Alaska got about $1,500 in dividends from this fund. Family of four got $6,000. So it's not chump change. You could do that same thing with the revenue from the atmosphere, which just like oil underground is a common asset, a gift to all of us. The difference between the Alaska model with oil and what we're talking about here with the atmosphere is that Alaskans are really lucky because Alaska sells its oil outside Alaska. Money comes to Alaska and they split it up. So every Alaskan comes out ahead. That's nice. In the U.S. i mean, dealing with the atmosphere, it's a little bit different because we're not selling the atmosphere to Japan, we're using it ourselves. So when we sell permits to emit carbon, that extra cost is going into the price that you're going to pay for gasoline, which is fine because we should pay for that cost of polluting the atmosphere. So you're paying more. The average family is going to be out a couple thousand dollars a year in higher prices once we start dealing with climate change. This is the downside of dealing with climate change. It's going to cost us real money. We've been getting a free ride and we're not going to get that free ride anymore. Okay, so we're going to pay more. But, but that's going to depress our disposable incomes, which is not going to be either politically popular or good for the economy. So what are we going to do? Well, if you have these dividends, essentially you pay more, but then you get the money back as a dividend. Ok, you might come out ahead, actually, you might break even, you might lose. What it is depends on is how much you pollute. The more you pollute, the more you're paying, which is appropriate. But then everybody gets back the same. So if you only pollute a little, if you conserve, you come out ahead. If you drive your Hummer to work, which I'm sure none of you do, it costs you bucks. But that's perfectly fair. The people who are polluting, in effect are, are paying and the people who are conserving are getting some kind of reward for that behavior anyway. But the net result of all of this, bear in mind is that there is some redistribution of income. The system has another mechanism here for distributing income which is one person, one share. Everybody is getting an equal dividend from this asset. The atmosphere that now has economic value, always has had, but we haven't, you know, we haven't assetized it or properties it until now. So we have two kinds of income streams in the economy. Well, three, we have everybody's labor income. We have the income that people get from private property which is heavily skewed towards that top 5%. And then we have some income that everybody gets from the commons, which everybody gets the same amount of. So that new stream of income which is equal begins to offset the second stream of income of non labor Income, which is the income that goes to private wealth, which is hugely unequal. So you wind up with an overall system that is a little more equitable than our present one. Anyway, that's kind of the gist of the upgrade or our capitalist operating system that I call capitalism 3.0. And it is an idealistic vision, you might say, and I think it could work. But the question is, would it ever happen? And I'm always asked that question. Well, it's great in theory, but how is it ever going to happen given the fact that corporations not only dominate our economy, but they dominate our political system as well. And all that is true. And my general belief as to how this might happen is that it basically relies on a theory of historical change, which views historical change as nonlinear. And there are tipping points. There are these moments in history. And I think if you look at US History, these tipping points come maybe once or twice per century. The last one you could argue was in the 1930s when there was a big economic crisis and we started, we kind of went from capitalism 1.0 to 2.0. At that point, we upgraded the system and put in things like Social Security and the securities Exchange Commission and things which made capitalism much better in many ways. I think we're approaching another such tipping point. It's impossible to predict exactly when it's going to happen or what's going to trigger it, but it could be as early as 2008. There could be a kind of a landslide election in 2008. I don't want to get too optimistic here, but it's not inconceivable. And if there is some kind of ecological crisis or economic crisis which would kind of spur this nonlinear discontinuity, I think we could see some pretty significant changes in a relatively short period, period of time. I personally believe that from the time clock, the timetable of the planet, with this global warming thing kind of ticking away, that we don't have a lot of time to make some of these fundamental changes. So I really hope these changes kick in soon. But I do think it's possible. I do think it could happen in the not too distant future. And of course it lot depends on us and us getting active and involved and pushing our political leaders to do the right thing on a lot of these issues. Anyway, I'll stop there and be happy to throw it open to questions and comments and thoughts. Yeah.

Now it's on.

Thanks for waiting.

If you have any questions, please ask them into the mic.

Okay, so about the example that you gave. With every person receives an equal share because some corporation does some pollution and it pays. Now this is actually there's a small issue with the fairness of the system. If that corporation makes very big pollution just in one place, why should people from other places receive the same, the same share as people that receive like live in that place where the pollution actually happens?

So.

This, this, I can answer that question. It's a very good point that under some of the car, I mean the pollution trading systems that exist, there has been a tendency for companies to move their pollution to certain communities, usually poor communities or communities of color. And that isn't fair with the case of carbon, which is what I was talking about for global warming. Carbon dioxide, you don't have quite that problem because carbon dioxide by itself is not toxic. It just goes into the atmosphere and it blends into the whole atmosphere and heats up the entire planet, not just the local spot where it's polluted. So I agree with your point about other pollutants, but it doesn't apply to carbon is what I'm saying. Did I misunderstand the question?

Yeah, I'm sorry, but I have to disagree on that. I mean global warming, the effects are not spread equally. Like Bangladesh is a very low lying country so they could be affected much more than say somebody in some other corner of the earth.

Oh yes, yes, I completely agree with that.

So actually this is the thing. For example, if you take factories that emit a large amount of code CO2 then actually it will spread around the world after some time. But at the beginning it will be gathered like in that place where it is polluted most. So this issue is actually seen like in the communism where everybody should get the same share but somebody profits of that thing and it gets more than the other person.

Well, that's a longer discussion. And one way, which is a partial answer, one way to address that is to say that this model of having an airshed trust is a scalable model. It could work in a local airshed with the kinds of pollutants that remain local. It can work in a national or even a global airshed with other kinds of pollutants. So to some extent you can set up parallel mechanisms to deal with different kinds of pollution. So that's a partial answer. The ultimate answer about climate change is yes, of course it's a global problem. Of course some countries are going to be hurt more than others. Some countries are contributing more to the problem than others. The US being the number one contributor, even though China is said is now emitting more carbon dioxide on an annual basis than we are on a per capita basis. It's about 1/5 of us. And in terms of cumulative carbon dioxide emissions, which is what really matters, because the carbon dioxide, it goes up and it stays there and it accumulates. That's the real problem. And we've been doing it for 150 years and China's only been doing it for 20. So we are the prime cause of the problem and we need to be the ones who do the most to solve the problem. And that includes paying for some of the mitigation and things for the damages that are going to be caused in Bangladesh and everywhere, you know, else in the world. It is appropriate that in some way we pay for that. Yeah, over or.

Thanks for coming to Google. In your book you propose a limit on the amount of advertising. Google makes its money on that sort of thing. And so we also strive to not show advertising that is bad or irrelevant or, you know, annoying. So a lot of the ads that Google shows in theory should be things that people want to see. So I'd be interested to hear you elaborate on why a ban on or a limit on advertising would be a good thing.

That's the first time I've ever gotten that question and this is a bad place to have gotten it in. Well, I like the way Google does advertising, so this is not in any way anti Google. What I don't like, you know, is the fact that there is a tragedy of the commons with advertising that because there are no limits and nobody owns the space between all the emitters of ads and our eyeballs and the competition is getting ever, ever more intense to get our eyeballs, our limited attention, amount of attention that we all have, that it's driving people crazy. You know, this constant ever growing din of advertising noise is, is just a health problem, a mental health problem. And the only way I can see to deal with it, that is, you know, is to put some kind of an upper limit on it. And then if you want to advertise, if you want to dump your commercial messages into this sort of collective space between our eyeballs and where it all comes out of, then you're going to have to buy some kind of a permit to do that. And I would think that the Google Ads would be at a premium that people would, if there was a limit on total advertising, more of the amount that there was would drift towards the kind of mediums that Google was providing than towards others. I don't know. But that's the argument for that. And you could extend that to say, okay, well we're creating a revenue source. We're saying if you, the peddlers of one product or another want to fill this common space with your marketing messages, fine, we're going to charge you for that privilege and then we're going to use that money for education or art, non commercial art or non commercial radio or something like that which creates money, more space for the non commercial realms of life which are just as important as the commercial realms and are being constantly squeezed aside by the advertising driven commercial realms. Does that make sense? Okay, let's see.

So I have the mic, but I'll pass it along afterwards.

Okay.

So Peter, you must get a lot of questions on like how your theory would become reality and how it would work. I assume so. I don't want to ask you a question related to that. I have a thought and I would love to get your opinion on it. I think to some degree that's true. 5% of the population do own, you know, probably 80, 90% of the wealth. But a lot of those people are starting to be under a capitalistic structure, self made billionaires, people like our founders, you know, people who have started companies. So and to some degree this has happened already. People who are actually up there in the top wealth bracket are doing things to help the environment, to create some of these things you're talking about in terms of, you know, addressing the global warming issue and whatnot. So that sounds like a more realistic, I think that's probably what may happen eventually instead of this a little bit more communistic kind of evenly toned out solution that you're proposing in the book. And I think personally I came from business school and I feel like capitalism has been a better structure than anything we've had before because of the fact that you can only get money by serving someone else's needs. And that is a fundamental aspect of the structure. So I think more realistically, personally I believe that we're going to see people in the top brackets making these changes instead of the government. But I just, I was curious to get your opinion on that thought.

Well, I certainly welcome all the efforts that people like the Google founders and Bill Gates even are making to use their fortunes that capitalism has given them for good ends. I welcome that and I agree with you that, that, I mean the more that happens the better. Where I might argue with you a little for the sake of having an interesting discussion is over what I think I heard your premise being that, you know, that these fortunes are earned by the people who receive them. Now Obviously, the people who receive these fortunes do something that generates wealth, and they are certainly entitled to much of what they earn. But here's my point. A chunk, and I would argue is probably more than half. You know, in other words, the larger part of most billionaires. Let's just talk about billionaires. Of most billionaires, fortunes are actually not due to their own brilliance or hard work or whatever the individual attributes that you want to attribute to them, but are actually social creations that through the rules of capitalism, they have managed to appropriate for themselves. More than half, I would argue, and let me explain a little bit of the math behind that, because I've had some experience myself, not nearly as much as Bill Gates or the Google founders. When I ran a company called Working Assets, a much smaller business than Google, we were a private company and there was a point at which we considered going public. And had we done that, I would be a lot richer man than I am today. But for various reasons, we decided not to go public and never did. So I'm not complaining because I did fine. But what I learned in that experience when we talked to the investment bankers and all the rest who were urging us to go public, was that. So there's sort of a magic thing that happens when you go public, as I'm sure you know, that the day before you go public, your stock is worth X and then the day after you go public, your stock is worth some multiple of X. And let's just say for the sake of argument that it's 1.5 times x. Well, where does that extra 0.5, half the value of the company or a third of the value of the company? Where does that come from? Well, it doesn't come from anything anybody working for the company did. It comes from the fact that we have a capital market out there with a relative regulatory commission, the sec and a whole system that has evolved over centuries for trading and making and having accountants who review, you know, have accounting standards. So if company says its numbers look like this, the public will trust that that are the real numbers anyway. All this social wealth that has made possible that leap in value that an individual shareholder gets when they go public. So there's just one example of what I'm saying about how private, what appears to be private wealth and obviously shows up in individual bank accounts in that sense is literally private wealth, but its source is the commons. And so to say that we need to give back to the commons and put money into the commons is totally appropriate. And that to the extent that there is wealth that resides in the commons, that that wealth in some way needs to be more equitably shared and not just sort of garnered very disproportionately by a few. I think is a legitimate way to improve capitalism. It won't take away any of the incentives to invest and to work and to do all those things. Those are great and I'm all for that, but it's a question of proportion. I think we over reward some people and don't share the commonwealth sufficiently.

And in classical economic theory, that's the government's job technically.

But of course it's right, that is the classical economic theory. And what I'm saying is that government, we have a conundrum because the way our democracy works, who runs the government, who dominates the government? It's the top 5% in one form or another. So what we've seen in the last 50 years is less and less and less fulfillment of this important role of government. And so the question is, is there anything we can do about it? And so my conclusion is that government always tends to be dominated by the rich and powerful. That's just the way it is, except for those rare moments in history, these windows of opportunity, and when there are these chances to change the system. And what I'm saying is that the next time there is such a window, we ought to use it to fix the system so that the system shares the commonwealth more equitably, regardless of who happens to hold political power. It's kind of a.

So this is a good segue actually into my question. So I believe that you have ideas that are sort of a, that you believe are different from just bigger government and more taxation. But you know, when somebody asks me about this talk later, I won't be able to tell them I haven't heard how that the details. So can you drill down a little more and explain how the trust's idea that you're proposing is really different at a fundamental level from say, just bigger government? So for example, for a couple issues. So how are the people who work for the trusts incented? Right. And how is that different from the way people who work for government are incented? How you know, who ultimately runs the trusts? If they're all just essentially like companies where everyone has an equal number of shares of them, then are they just essentially parallel democratic governments sort of sitting alongside the normal government? And how do you determine where the division is between the things that can be privately owned that you continue to allow to be privately owned versus the commons? Right. And how is the creation of the trust different from just the government, you know, non privatizing things. Publicly assuming ownership of more.

Those are all very good questions and it would take a fair amount of time to get into them. So let me sort of try to bite off a piece of it. Think of. I mean, it sometimes helps to think of examples. So think of the Nature Conservancy or think of. Well, I live in Marin county, so we have something called the Marin Agricultural Land Trust. And there's another thing called a Pacific Forest Trust. Okay, so what are these institutions? What do they do and what are they like and how are they governed? They hold property rights. Like in the case of, say, the Marin Agricultural Land Trust, it will buy from a farmer, a rancher, the development rights and hold them in trust forever. And its board of trustees, or board of directors, whatever they call them, but let's call them trustees, have a fiduciary responsibility. Just the way the directors of a corporation have a fiduciary responsibility. The corporate directors have a fiduciary responsibility to shareholders. If they don't act in the interest of shareholders, the shareholders can sue them and it'll cost them, you know. So they tend to take their fiduciary responsibility very seriously. In the same way a trustee has a fiduciary responsibility to the. Whoever the beneficiary or whatever the mission of the trust is. If the trust is supposed to hold conservation easements in perpetuity, essentially for the benefit of future generations, so that the landscape will always be agricultural and will never be turned into suburbs, let's say, then that's who that trustee is accountable. Now, you can have a lot of variety as to how trustees get appointed and so forth and so on, what the governance is. But that gives you an example of how I see trusts operating. And to contrast that with a government approach, say, the government approach has been to say, well, okay, we're going to have some rules or regulations. We're going to have zoning and it's all. And whatever these rules and regulations are, they're. And so you could have the board of supervisors today say, we're going to zone it this way. And then you have another election and the board of supervisors change their mind and they say, okay, now we're going to build suburbs over here, let's say. So the difference between government or politics and trusts is that trusts are more like economic institutions. They manage property and they're bound. They can't change their minds. They can't sell out. They can't, you know.

So is there any Incentive for the people who work for those trusts to work harder.

Oh, I see what you mean. Not particularly. I mean in that sense it's just like a non profit organization. I mean in that sense. So it's different from a private for profit corporation corporation where you probably get incentives and all that stuff. I mean, I'm sure they can develop other incentive systems within a trust, but. Or any nonprofit. But it's not quite the same way as in a business. Yeah.

So my question kind of follows the previous one. So how do you think, are you optimistic about the trustee? Trustees wouldn't be controlled by the top 5% of the people. And also you mentioned, so the trustee is like an economic institution. So it would be work efficiently if people have the right to sue them if it doesn't work well. And so that sort of relies on the effectiveness of the system. But if the trust thing goes really big and usually doesn't go that effective because the cost of filing litigation, things would be really high and not everyone in the system could afford that. So that's my question. And second question is, so you mentioned the population trading system for the natural resource. And so how do you think it's going to apply to the culture resource you mentioned as another kind of comment, like it seems to me you need to have a centralized standard for what is a good culture and what's pollution for the culture. So it seems kind of like censorship to me to some extent. So I would like to hear like how you think about this.

Gosh. Well, those are two big questions. Just out of curiosity, how are we doing on time? Five more minutes and how many more questions are there? Okay, two more questions then. Okay, so I'll just. The thing about culture, I'll just try to talk about culture that briefly. You're absolutely right that the cultural commons is very different from the physical or natural commons. And I think. And you can't manage it the same way. You wouldn't set up these trusts or try to set standards or anything like that. The main thing that I think you want to encourage in the cultural commons is freedom, openness, what's the word? Diversity. You want to have the maximum free exchange of information, of art, of creativity, and the minimum, you know, not zero. But you want to minimize all the private toll booths and the rigid intellectual property laws and all the lawsuits going back and forth on, on intellectual property rights and so forth. I mean, what Google is doing, as I understand it, is really in that direction to put as much information as possible, even in books. And the way the Earth looks and all that stuff. The more you can throw out into the free, open, accessible exchange, the more cultural diversity of vitality you're going to have. And that's the way to go in culture. Thank you.

It seems like one of your concerns is that you don't want the top 5% controlling the country. And so I was wondering, when you're auctioning the right to pollute, it seems to me that that would benefit a larger company. And how would a smaller company have a chance to compete in this and kind of get into the market and get established?

Well, it's true that the rich will always be able to outbid the poor for these scarce resources. That is true. I think that happens anyway. I guess what I would say is that at least if you're making the rich pay more to use the atmosphere or any other scarce resource, and then you're sharing the income, at least the people who use it less are getting some money. They're being compensated by the rich who are using it more.

But this from the fund goes to a person, right? Or the people. So the company itself wouldn't like. What would a smaller company who pollutes less, how would they benefit from paying less?

Well, smaller companies that pollutes less, I mean, basically what will happen is that the price of energy will go up. I mean, because the cost of polluting will be built into the price of energy. And that's all that's going to change. So I don't know that that is not going to prevent a small company from doing business. You know, they'll just have to factor in a slightly higher energy cost than they used to pay. But it's not going to make a big change in the way business is conducted.

Okay, thank you. I was also wondering something else. How do you see your system relating to all the countries in the world? Would there be some kind of fair distribution of how much pollution can be auctioned out, or is that up to each country to decide?

Well, ultimately, there has to be a global deal about the atmosphere. That's what the Kyoto Protocol, flawed as it is, was the first step towards. Obviously, we have to, you know, have a global deal that's stronger than Kyoto, but. And what that looks like is, you know, beyond my ability to say it's complicated. But I do believe that there will not be a global deal until the US does its domestic carbon limitations, because the rest of the world is just waiting for us. They have already all ratified Kyoto. And we're just sitting here polluting, polluting, polluting. And Saying screw you. So we've got to get our act together now and then we can talk to the rest of the world and China and so forth and come up with a deal that's high priority for whoever is the next president.

Okay, thank you.

Okay. Yeah. Oh, okay, you got it.

So let's say that the trust plan is brilliant and perfect and now it comes time to put the trust in motion.

Yeah.

So what is the incentive for the government or, or like the big corporations to yield to trusts? So how do you come to a, or even a local government and say, okay, don't do it this way, don't try to manage it yourself, turn it over to us, we'll do a better job. How do you convince them and how do you go against the politics? How do you go against the politics of it?

You're right, it's a bit of a hard sell. But I'll give you one historical example where it's actually in politicians self interest to give this stuff away to another entity like a trust, and that is the Federal Reserve System. In a sense, our money is a commons and we need somebody to manage our money supply. And the politicians wisely decided that they don't want to be in the business business of managing the money supply because they don't want to have to vote for higher interest rates and stuff like that. So they said, okay, here you guys who don't have to run for election, you run the money supply. And I could see the same kind of decision being made with regard to climate where the politicians finally say somebody's got to manage the atmosphere. We don't want to do it because that would put us in the position of having to raise everybody's energy prices. That's very bad politics. So we'll let you guys run it. Sort of like a Fed, a carbon Fed or something like that. I mean, that is one. Obviously this is an important question that has to be dealt with. If it's going to happen in the real world, how do you make it politically palatable to those who have political power? So we're working on that. In the case of the climate one, I'm actively working to try to come up with a palatable political strategy. Well, thanks very much.

Yeah, thank you guys for coming and thank you Peter, for your time today.