Rifkin, my hometown & the icing on the cake

Today we had an Econopolis Economic Encounter at Lier, my hometown, which celebrated its 800th anniversary. Going into its 4th week of celebration, the future was in the spotlight of attention. And when it comes to visionary moments of truth, my hometown has a poor track record. Well not entirely. In the 15th century, we were faced as a town with the choice of a monopoly on the sheep market or opting for a university, this in competition with Leuven. You will probably know by now why we are nicknamed "Sheephead". Although in those days a pretty understandable decision, it didn't turn out quit well to be a long term decision fundamentally based. And for what it's worth, I still welcome the decision post factum because it allowed me - citizen of Lier - to study at Leuven, but this on the side. However, it sets the stage for Jeremy Rifkin as a non-conformist economist putting the dots on the so-called "i" to the extent that most of us - unknowingly - have to face the music of basic economics with more than short term implications : choice. And choice involves taking decisions, not only on what you want but especially on what you are willing to leave behind, this for all the good and wrong reasons.

Jeremy Rifkin (1945) is an American economist, writer and public speaker. Rifkin's work explores the potential impact of scientific and technological changes on the economy, the workforce, society, and the environment. Already very early on in his life, Rifkin was preoccupied with the effects of the human footprint on the globe. Rifkin is the principal architect of the Third Industrial Revolution (2011), a long-term economic sustainability plan to address the triple challenge of the global economic crisis, energy security, and climate change. The Third Industrial Revolution was formally endorsed by the European Parliament in 2007 and is now being implemented by various agencies within the European Commission. Some of his visionary books : Who should play God (1977), Beyond Beef (1992), The end of work (1995) and The empathic civilization (2010). O yes, and let's not forget he was an indignado avant la lettre when in 1973 , he celebrated the Boston Tea Party by throwing oil barrels in the river to protest against the soaring price of oil and gas.

For Jeremy Rifkin, the endgame of today is how we as a society cope with the challenge of climate change and the post-carbon society. It's basically a choice between investing in something revolutionary new or going along with a couple of decades in investing in the old which means dead end street. And with the old, he had already some thoughts on 2 hinge moments in 2008-2011. First of all July 2008 when the real economy stopped playing at 147$ a barrel of oil. For Rifkin, the financial crisis of fall 2008 (Lehman etc) was just an aftershock because the real economy stopped playing at oil @ 140$ plus. The same line of reasoning applies as well in the spring of 2011 - the Arab spring - when food prices sky rocketed as a result of increasing energy prices with its impact along the chain, especially food (fertilizers, biochemicals etc). The recent Unilever/Colgate quarterly results just confirm : stagflation puts a damper on purchasing power and we desperately need something different.

So the demand/supply bottlenecks on energy are usually a hinge moment throughout history. And economic revolutions are also a function of successfully transforming these challenging moments in time : how to transform an old energy regime into a new one while at the same time managing this new energy regime with revolutionary new communication techniques ? And as far as Rifkin is concerned, this is an urgent problem.

He proposes a third industrial revolution involving the sound usage of scarce energy at our disposal. And for this, we require amongst others a 5 pillar strategy for which Europe by the way has the lead in the developed West, along with Asia :

1) 20% renewable energy by 2020

2) Collect the energy which is there. Here Rifkin points at the power of numerous micro organizations, being buildings (apartments, corporates etc). These buildings are a treasure for creating energy through all different kinds of energy, renewables ("the garbage you create is yours") and even as collectors of surplus energy.

3) Surplus collectors under the form of hydrogene collectors and via fuel cells back into electricity.

4) Smart-grids : the application of internet technology to meet demand and supply of energy through useful application of energy storage on micro-level.

5) Transport-logistics : the energy highway in full motion, interlinking the pillars, the true implementation of revolutionary communication (internet) on new energy.

On this last point - and a very important complementary issue - Rifkin has quite a lucid view, referring to recent business cases. In technology, or energy for that matter, is it still the case that a top-down analysis holds the trump cards of the sector ? For Rifkin, the answer is clearly "no", referring to IBM for instance. Suppy/production is not the future cash-cow, managing it on the other hand makes a difference (cfr Cisco, IBM and IT data control). And so it applies for power utilities : not selling energy but managing energy in corporation with 1000s of micro renewable suppliers is the key going forward. And finally, for business models, labor cost is not the name of the game, energy cost pretty much is. Understanding energy laws (thermo-dynamics) is vital for understanding economic evolutions but most of all economic revolutions.

The second part of the seminar was hosted by Ivan De Cloot (Itiera) and Peter Vandhoutte (ING) who basically put the optimism of the Rifkin message into the reality of today (slow growth, deleveraging and modesty of ambitions). Mayor Marleen Vanderpoorten wrapped it up all nicely - in 3 languages - giving all the credits to the people supporting the festivities of my hometown for all the right reasons, being not personal reasons : Sheephead or not, we are still standing and this event and everything which is involved gave plenty of color to the 800th anniversary of a small town called Lier.

I would like to put a little extra as my personal icing (cherry) on the cake. And for this I would like to refer to the solving of a mathematical riddle called Fermat's puzzle. It took mathematicians more than 200 years to solve it and in the end it was Andrew Wiles who did, after proving Flach/Kolyvaging and above all the Tanyiama/Shimura conjecture. Tanyiama was a special mathematician who died at young age (suicide) due to a very complicated love affair. When his colleague Shimura was asked what he liked about working with Tanyiama, he replied : "He was brilliant ! Why ? Because he made brilliant mistakes !" I think that after yesterday's session, the same might apply. Suppose Jeremy Rifkin is wrong for now : so what ? At least he made us aware of something which regards us all, being the fact that we should think forward, have a clear contingency plan on this planet called earth and that we should take the responsibility of being this earth's rent collector and making the best of it. At least Jeremy Rifkin tried, made a terrific credible effort and above all gave us some hope - which we desperately need these days - that it is feasible within our current technological capabilities. And for that, I am the first one to give him the benefit of the doubt, even if he would have made a brilliant mistake.