Network of production; Copper production in the north of Chile

This assignment is all about identifying a regional network of production and analysing this network using at least two of the concepts presented with particular attention to the linkages of the regional with the non-local actors. Another point of attention is to make clear how the network constrains and/or enables actors to work towards closing material loops. First of all I will however introduce the case so that afterwards we can apply theory and analyse it in depth. I chose this case as my wife is Chilean and part of her family used to work and live near the mine and in the period they used to work there we’ve visited the site. An experience that truly leaves you in aw in terms of scale, but also makes you think about the tremendous environmental impact of the mining industry. It really felt like a visit to Mordor from the Lord of the Rings.

If you are not in the mining industry most likely you might have

never heard of the company, but there is a very high chance that you have used products that contain something from Codelco as it is the largest copper mining company in the world that produced 1/3rd of the world mined copper. Codelco, Corporación Nacional del Cobre de Chile, is a state owned copper mining company that was formed in 1976 after the foreign owned copper companies were nationalized in 1971. Codelco sits on the world’s biggest copper reserves and therefore will remain of importance in the future. Codelco was born out of many different copper mines that were forced together by nationalisation and therefor forms its own network. In country that is 4200 km long, similar to from Lisbon to Moscow, it is almost difficult to call it a regional network, but it is all within one country and one company. Recently they have been developing some activities outside Chile in Ecuador, but that so far has been the only venture they had abroad. However in this assignment I will mainly focus on the copper production from the Chuquicamata mine near Calama in the north of Chile.

Codelco is not a footloose company and is highly dependent on where its minerals can be found in the earhts crust, they locate where the resource is located creating a whole economy around itself and even whole cities. A good example of such a city is Calama or its predecessor Chuquicamata. Chuquicamata, shortened as Chuqui, was where it all started. Iin 2008 they gave the now abandoned, or better said evacuated city, a facelift as a final goodbye leaving written parting messages on the homes, as it has by now disappeared below the mountains of rubble (detritus) that come out of the mine. As it is too costly to transport the waste rubble over long distances, the shortest distance is preferred and that unfortunately is where the old city that once was home to over 20.000 inhabitants used to be marking the end of over 90 years of its existence. All people left, around 4000 as already years before Codelco started shutting down the town, moving to Calama. Here housing was no longer provided by Codelco, but the employees had to find their own houses.  Calama currently houses around 150.000 inhabitants in the middle of the dessert that are completely directly or indirectly dependent on the vicinity of the biggest copper mine in the world. 

With a brief explanation of the case let’s now move towards the application of theory. Focussing on the mining of copper only and mainly near Calama, the company of Codelco formed a whole industrial complex with a highly asymmetric dependency. Codelco is the party with control over the resource, Copper, whereas all the surrounding industries and service economy depends on it. As for instance working conditions are extreme, incomes are very high. Dump truck drivers for instance belong to the highest paid trucking jobs as their job requires a lot of precision, patience and concentration and is key to the operation of a mine. As miners usually work in shifts of 1 week up and 1 week down they do have plenty of time to spend all their freshly earned money creating a whole industry of consumption around it. There is not much to do in the desert so LAN Chile, Chileans national airline company, in guaranteed plenty of flights to handle from and to Calama. Furthermore the main form of entertainment in town is the main mall where they more than happily receive a percentage of those high salaries, etc. Furthermore there are many other services that are related to the mining industry such as human resources companies, or environmental impact companies that are contracted by Codelco to work for them. In this sector my family in law worked, in capacitating humar resources and trying to minimize environmental impact of the mine. Many things however where still missing as for instance the protected animal called Vicuña are frequently run over by trucks and left to die in the desert, while a simple animal ambulance could save many of them. Another area where big investments are made by Codelco is in going underground as the open pit is about to run out of copper. Acquiring all sorts of knowledge and machinery needed to go underground as a consequence is another industry thriving in the area. As one can see Codelco Chuquicamata creates all sorts of jobs and directly and indirectly related industries and services around it.  Applying the theory of Burt on the different types of networks I would argue that the network I described would be a one with a high centrality as all interaction takes place through one central actor (Codelco).

The theory of Gordon and McCann on the types of regional network would classify the regional network as an industrial complex as there is one central firm that decides. They are the cause that their suppliers and customers co-locate. Of course many of the big copper processing customers of copper are located worldwide and they won’t co-locate as they also are not footloose in terms of knowledge, cheap labour, etc., The high tech industry in China for instance is a big buyer of Copper for all their products as only copper provides such high conductivity that is highly sought after. So far no real alternative has been found yet in this sense, but in construction for instance (another big user of copper), plumbing has often been replaced by PVC so there they did manage to replace it with other materials in some cases.  However the smaller industries that have to do with the mining technology itself, or the wheeling and dealing of Codelco as such will co-locate and be contracted by Codelco. The same goes for companies that provide and maintain all the big machinery needed in the mine. The closing of material and energy loops in the mining industry is mainly focussing on using less energy and on efforts to generate renewable energy. In terms of closing material loops in the mining industry that is sort of a contradiction in terminus as mining as such only takes resources and pumps it into our society. However they do focus on doing so in a less environmentally damaging way by for instance investing in bio-leaching contrary to current more heavily chemically and energy intensive ways. The government, which in some way is internal actor as Codelco is a state company, but also can be seen as external, wants to unhook the mining companies from the cheap energy they have been receiving from the government and make them responsible to generate 20% of its energy in a sustainable way. Currently Chile imports 70% of its energy and this with the ups and downs in energy prices is an unwanted situation leading to miners in Chile to build “independent solar, solar thermal, wind and geothermal power plants that produce power at costs competitive with or lower than conventional fuel supplies or grid-connected electric power”(http://www.renewableenergyworld.com/rea/news/article/2014/12/chiles-mines-set-hot-pace-on-renewables-australia-take-note). The actual main driver that makes this all possible is the massive investment in renewables by China, driving down the costs of these technologies and thus making them available at a lower cost worldwide. Because of this currently the costs of energy generated by renewables is lower than the costs of black electricity thus providing a competitive advantage over other copper producing countries like Australia for example that is lagging behind in terms of renewables.

Source: Paper written for the System Earth course entitled “Copper at the foundation of our society” and conversations with family in law, own experience, visit

 

Name of the game

I was in group 4 and during class we had to develop a new type of game that had the learning goal to experiences the process of social evolution. This was not an easy task especially as we are not used to developing games, but overall we had good discussions and ideas until we ran out of time. We used changing conditions, limited information and imitation as our main guidelines to design the game.

So what does the game comprise of? First of all, all players are a firm that produces products with three different symbolic (neutral) characteristics with three values each, see table 1. Behind these abstract shapes lies a secret meaning as can be seen in table 2. The goal of the firms is to maximize profit.

Shape	Feel	Colour
square	soft	red
cirkel	medium	blue
triangle	hard	yellow

Table 1: characteristics

Characteristic	Secret meaning
square	SUV
circle	MPV
triangle	Urban Car
red	Diesel
blue	Electric
yellow	Gasoline
soft	Steel
medium	Organic
hard	Carbon

Table 2: Secret meanings

Each round the different firms choose a combination that goes to market and the bank gives back a final value based on consumer preference. So throughout the rounds the firms will get to know the consumer preference, however the tricky aspect is that they only get to know the final outcome and do not know how much of the value is allocated to which characteristic. In order to become successful they could for instance imitate a sequence of a competitor or learn from them by comparing their sequence to their own.

In the beginning a certain sequence is set as the optimal sequence that is most sustainable, but due to market demand, policy (cards, more on that later) and other developments (technology) the money which can be made by this varies. The optimum set of characteristics is not static and therefore could change over the course of the game. For instance one scenario could be that urban electric organic cars would be the optimal set in the end of the game, but that in the beginning due to the premature battery techniques or dirty electricity diesel actually is the more environmental friendly option. Another scenario could be that SUVs all of the sudden become very popular until policy appears that favors urban cars. Urban cars however bring smaller profits, but when done in big numbers could become more profitable than the SUVs that had a big profit margin. 

After each round a random policy card will be placed central on the table for all players to see and adjust their strategy too. This policy is geared towards the most sustainable option and therefore players can learn from it. As the optimum outcome is said the game plays a bit like mastermind and in the end when the game is over the secret meaning of the abstract characteristics will be revealed and things will make more sense.

We choose to go for abstract characteristics in order to not have any relation with more earthly things that lead to a more predictable behaviour, as we all know instinctively that a small car is probably more sustainable than a big one. 

Let the games begin!

Feedback given on Laura Lucas in the Nokia Case

Dear Laura Lucas,

I just read your blog which provided an easy read. There are some  minor errors that have to do with English “other companies depend in their collaboration” should be depend ON. Etc. But they are just minor errors so if take the time to read your post again you will pick them out easily.

Furthermore the blog is incomplete as you also mention. Point three on how other coordination mechanisms could improve this is not yet dealt with. In answering the second question on diffusing sustainability criteria I would elaborate more on the diffusion part as now it is only mentioned in the question, but does not come back in the actual answer. Here you could talk on how measures etc. get spread throughout the supplier and how they trickle down from the top management to the work floor.

You wrote that it didn’t became clear to you how Nokia can check if their suggestions were taken into consideration, but as audits are recurring events for sure the supplier will try to, before each audit, implement several of their clients suggestions. If this is done right or sufficiently is another question, but therefor we have audits to check upon this progress. Moreover Nokia also discussed in the end that it is a long process that needs time.

Overall my impression of the blog is that it could all be formulated a bit more sharp and concise and that of course it should be finished. In the first part all elements are already in place so that should not be too much work, in the second and third part there are things missing still.

Good luck!

Jody Milder

Feedback given on Zinzi Wits in the Nokia Case

Hi there Zinzi,

First of all it was nice to read a flawless post in terms in written English! In terms of style it was pleasant to read and I think it contained all elements. It always works very well to start off with a clear theoretic definition of the key concept like coercive isomorphism like you did, so well done.

When I saw the video I at first also had similar thoughts that the role play theatre was rather distracting and disturbing from what they both wanted to achieve, however on second thought I changed my mind as the women who did the audit were not phased about it at all. They just did their job anyway in a very smart way by giving the right reactions that satisfied both ends. I could start a whole discussion here on culture and that in France for instance you need to first have elaborate dinners, talking about art etc, without any mentioning of business before you actually can get deals done, etc., but for now I think you took on an interesting point of view. Just be aware that there are more than one ways to reach a goal. I also think we have to see this movie in the light of Nokia being one of the pioneers in auditing these sort of things, so there were very few previous experiences to learn from. Currently there is much more attention for these sustainable matters and industry can jointly guide their suppliers towards a more sustainable production so I agree with this suggestions. 

Certification is the way forward and I think we saw Nokia take the first steps in this long term effort. However as I said before I do think that human communication will always play an important role that cannot be put aside because of the fact that the communication is inefficient. I think that communication should be judged on its effectiveness in reaching their goals.

Well, as you can see I only discussed things, but have no actual feedback in terms of things that are missing. So overall I would like to say keep up the good work.

Jody Milder

Harvest game 2.0

The original harvest game was made up by a simple set of rules. The sea contains 50 fish that if no fish is caught will reproduce to be 100 fish in the next round. If 25 fish are caught, the next time the sea will have 50 fish again. Each team writes their demand on a paper and sticks this in a "boat"  and there is no communication allowed between groups. The sea randomly picks the boats and fulfills their demand as long as there is fish. If a group receives 2 fish instead of the demanded 4 fish, it means that the sea is depleted of fish as the sea will always provide the maximum amount of fish possible. 

After playing the harvest game with the initial set of rules during class we all saw that even with a group of environmentally aware people we still emptied the seas. So something needs to be changed in order to prevent this from happening so that we all can keep our business alive and thus not empty the sea. I was in one of the groups that just did the math and always asked for 4 fishes and got 4 fishes 3 times, until the 4^th time we didn’t get any fish and therefore had to conclude (although we didn’t as we were busy accusing other groups of greed) that the sea was empty.

So what can be changed based on opening up communication?

I would suggest a wide range of tweaks that ultimately lead to more fish being caught in the end as in theory the game could go on for ever. Ultimately you want to achieve that all 6 teams catch at least 4 fish and one of the teams can catch 1 extra fish. However another approach could be to first under-fish and therefore increase the amount of fish that can be caught in the future. The latter however would only work if the game could last for more rounds than we played the game therefor perhaps this option should be discarded.

You can go two ways. First of all you could have all cards on the table and therefor really demand openness on catch figures by the individual teams. This would be most effective, but at the same time would be most controversial as well, so for that reason it will be discarded as well.

Secondly you could also control the total amount of fish being caught without going into the details of how much each individual team caught. By having all fish collected by one new governing body that consist of a new team of representatives of all teams that stay on shore. Their task is to make sure that a maximum of 25 fish are to be sold. By applying the same randomness as the sea applies to picking the order of boats to receive fish, the game element would still be present. If the maximum of 25 fish is achieved the rest of the fish that still is landed after this would be sold without the money going to the boat who supplied them, but to invest in creating a sustainable fishing label. This label would then be handed out to the teams that never ask more than 4.17 fish. If the maximum amount of fish being caught reaches 25 before all teams have landed their fish, the teams that already landed their fish get punished by not being allowed to go out fishing in the next round. I am not sure if this would lead to the seas not being emptied, but at least it would provide an interesting dynamic that could lead to more conservative demands to the sea.

If this turns out not to lead to more sustainable fishing then I would go back to total openness so that naming and shaming could do its job. If this still does not work then a punishing factor should be introduced together with a reward system. Being forced to skip a year, or with a very low catch limit could be used as a punishment, whilst the division of the extra fish capacity (4 fishes per team + 5 fishes for 1 team) could be used as a reward. 

There are many ways to try to solve this puzzle and it would be interesting to keep on playing the game with different tweaks to see what the effects would be.

Feedback given week 4

Feedback given week 4

Review of Thodoris Spathas

Hi there,

I really enjoyed reading your post as I had no idea that they are experiencing a similar situation as in Berlin with the Tempelhof. Interesting to see also that where in Berlin basically they seem to continue the status quo whereas in Athens they try to move forward. The way in which this happens in terms of process can be debated of course.

Some very practical comments are that it is recommendable to read your blog once more you would pick out several type-o’s where the’s became they’s and those sort of things. Furthermore I would recommend shortening a few very large sentences in order to make these easier to read.

In terms of content I would suggest you to take the Ostrom framework and use it to structure the text. I can now see the different elements, but it nonetheless could be sharper cut out so the reader gets less confused. I think all the information is there, it just needs some shuffling up into the shape of the framework provided by Ostrom.

Well that was it, sorry I was late with providing feedback, but better late than never I hope.

Keep blogging,

                 

Review of Chloë Lejeune

There was not post yet for this week

Feedback given week 3

Feedback given week 3

Review of Jeroen Huisman

Hi there,

I think you chose an excellent subject to apply theory to. I do miss a link to a news article to introduce the case (however I myself also didn’t do that yet in my blog), but I think it would be helpful to link to an article. I got a bit confused myself with the use of –[[ as sometimes it referred to a source, whilst in other cases a comment on the side was made. There didn’t seem to be a standard convention on the use of these symbols. Sometimes they also had a great deal of text within them so it sort of distracted or confused me somehow. Also there are some small, but confusing type errors “how me make choice” (WE), “between different decision makers in taken into account” (IS), etc.

Please do connect “emotions don’t necessarily play a role” with the previous section as now I first thought it was the start of the bounded rational explanation, but it seems to below to the RAM model.

For the rest the article is nice. First theory is explained and then applied to the case. It is a textbook example of how to write the blog. You could perhaps use the same terms again in the text as you have used in the graph. Most optimal way in the RAM model and not only emotion as you now used well, but also interaction, information and lack of time (although the latter you do mention specifically).

All in all you have done a pretty good job. 

Review of
Imme Groet
Unfortunately the link didn't work

Connecting people; East meets West

Connecting People

Legitimacy

In the video A Decent Factory Nokia is trying to achieve legitimacy by sending a team to do an audit of their suppliers. They do so in order to try to get a better picture of the working conditions of their suppliers in order to get a better grip on how they do things by setting minimum requirements that they have to fulfil. By regular visits for new audits they slowly can work towards the desired situation.

The supplier tries to be a legitimate operation by complying to the rules set by the Chinese government, however in some areas they apply creative administration skills. For instance in terms of minimum wage they do not pay the minimum wage, but by letting their employers work overtime structurally they do reach the minimum wage. On top of this all employers live on the complex and because of this have to pay 1/3 rd of their total wage, which puts them well below the minimum wage level.

Diffusing criteria

The way in which Nokia tries to diffuse their sustainability criteria shows that they take their responsibility, be it risk driven, as they do not want their image of a correct Nordic company to be stained by working with suppliers that do not meet legal standards. As Nokia says, you cannot change the world in one day, and with time things will improve if you just keep pushing them in the right direction. As an audience of the documentary a judgemental feeling can easily overcome you, thinking that it is inhuman to live with 8 people in one room, or to be cutting cables for the whole day 6 days a week, but it is important to keep these considerations in perspective. Once I was in China for instance on a University where the dorm rooms were very similar. When asked if they didn't miss privacy, they didn't understand my question as they just did not have that concept. Similar puzzled faces were seen when asking people in a factory if they liked their jobs, what was there to like? It provided them with food, a house and money to take care of the son or daughter. Local laws are in place that supposed to fit local circumstances. It is Nokia's job to check if they comply to these laws or not.

Other mechamisms to improve

However as they also noted within the factory they also make products for their competitors for which different rules apply. For instance Nokia increased the wages on their product line, but when they are producing for say Samsung they get paid less again. Therefore it is necessary to organize a collective industry wide platform which coordinates and sets these minimum standards so that they all operate as one actor that has one and the same legal demands. This would for one be a positive development that could diffuse sustainability criteria within the Chinese high tech industries.

Fishy business

As a consumer of various products you are automatically part of many Social Ecological Systems. We all buy food, drinks, furniture, etc. and therefore all can be linked to these SESs. In this blog I will focus on fish as it is a subject that worries me. Furthermore during the course Sustainable Innovation and Social Change me and my team took The Blackfish as the main actor of our study and from there on studied illegal fishing practices in the Mediterranean. This really gave me some valuable insights into the seriousness and complexity of the problem at hand.

Ostrom developed a framework which helps to identify relevant variable of an individual SES. Below one can see the different aspects of which the framework consists; resource units, resource systems, governance systems and the users and they are all linked through interactions back and forth.  

Applying this framework to fish the following picture can be drawn up.

First of all the resource units, or fish, are mobile and therefore can swim in and out of the Mediterranean sea, or in and outside EU borders (towards the African countries). This creates a problem later on when we come to the resource system and governance system. But coming back to the RU, the Med is one of the most overfished seas and due to the influence of Calabrian Mafia a lot of illegal fishing is going on by deploying forbidden drift nets. Drift nets were forbidden in the nineties as they indiscriminately catch everything that swims in it, from turtles to shark, from small fish to baby fish, and therefore is a huge threat to marine life and in particular the endangered species. 

When we move on to the Resource system, the Mediterranean Sea, as stated before the fish do not necessarily stay in it. Tuna for instance is a very mobile fish and swims to the Americas. So perhaps the RS should be bigger and extend to all the oceans and seas in the world? But how can you govern that? As the EU through their Common Fisheries Policies try to guard the European waters, they can do little to things that happen outside their borders. For instance tuna is protected in Europe, but not outside of Europe and therefor fisherman were moving out alive tuna in huge enclosures and reporting their catch outside Europe. 

When moving further into the area of Governance Systems a big obstacle is that individual member states are responsible for keeping check of their quota. However due to outdated paper monitoring systems and corruption (catch that is not reported, etc.) official figures are highly unreliable on the actual catch. Also reporting more catch than was actually caught was a popular way to falsify data in order to guarantee a higher quota for the next year as high catch seems to indicate a healthy fish stock. Another issue is that member states do not want to or have no money to spend on patrol boats etc. in order to spot violations of regulation. So all in all one of the biggest problems lies in the GS as a central organisation is missing that monitors everything digitally. 

Finally the users, like myself, want to buy fish in a sustainable way, but sometimes get lost in all sorts of labels. Also for instance when going to a market where fish is freshest it often is unclear how a fish is caught, where it is caught, etc. so how can you then make an informed choice?

In my opinion more has to be done to keep fish stocks healthy and we all have our responsibilities. A global governing body should be set up that sets fishing quota, monitors everything, gathers further scientific insights, etc. to which all nations commit in the same way as the United Nations.

When we come back to our “friend” Friedman and his principles and how these could be put to good use here I am a bit puzzled. As he propagates a free market where the government sets the rules, but preferably not too many of them, I think in the current situation he would be a happy man. However this does not lead to a solution of the current problems we are facing, but a continuation of business as usual. The thing I was proposing of the global governing body would be a nightmare for Friedman as he states that concentrated power threatens individual freedom and that is exactly what we want to achieve in a way. I would like that there is no more choice for sustainably caught fish and unsustainable caught fish and the only way to achieve this is by binding everybody by the same set of rules and quota to revive the fish stocks. In the short term this will lead to unemployment in the fishing industries and higher fish prices as demand will continue to rise, whilst there will be less fish on sale. On the long term however this will secure the future of the fishing industry as otherwise they will behave like lemmings and will all commit economic suicide by depleting the seas and ending their business.

Feedback given week 2

Review of Marco Meloni
First of all I really like the way you made the parallel between neighborhood problems of broken windows to a variety of different bigger scale problems, from river pollution to the ozone layer depletion. Of course as you also stated there are some key differences that complicate applying similar mechanisms on more complex concepts.
This part “One could think of many reasons why this correlation occurs, for example that people who break windows tend to live in the same places whereas window preservers live in other places” could be better formulated as currently it sounds a bit funny, like there are groups of people that is continuously occupying themselves with breaker or preserving windows like a profession. Of course I do get the point as you mean that it has to do with social class etc.
I personally would have preferred to first have a very short summary of the theory of Kelling and Wilson without practice as now the theory is explained by using an example immediately. Also in the last section your reasoning is correct, but rather brief as it is supposed to be the climax or learning point and I have the feeling that it is a bit rushed. More elaboration would be welcome here explaining the differences separately instead of mixing them all in one sentence.
When coming to the second part of the assignment on making profit it is bound to lead to some interesting discussions. However I found it difficult to judge as it is all rather personal and subjective. I personally find it a bit too easy to put the responsibility in governments’ hands as in my opinion we all have responsibilities and should co-create laws etc. on the subject. So not just top down measures, but also bottom up. Besides due to the global nature of many businesses, western companies relocate their production facilities to low wage countries, due to the wages, but also due to limited regulations. Basically those companies measure with two different standards in my view and they can’t place responsibility at local governments. But then again, this is all rather personal and subjective on which there is no wrong or right.
Overall I would say it is a very interesting first blogpost that with some tweaking here and there could be even better.

Review of Laurens Boelens 

First of all it is all very enthusiastically written so that is nice and gets you involved easily, however this also leads to many unnecessary type-o’s such as i (I), continues use (continued use), explination (explanation), etc., it would be nice to get them all out.

The last section on your bachelor thesis is rather technical and I miss the necessary background to understand the first part, I do however the overall picture that GMO could save lives on the short term whereas conventional methods would mean decades or work for something that might in the end not even lead to the desired outcome. However this explains your personal connection, but does not relate to food as it is more in line with penicillin, etc. to which people do not object as you have stated earlier on.

Currently the blog is slightly unbalanced as it focusses a lot on the mechanisms, which is explains very nicely, but does little justice to why GMO’s should be embraced as there is only one sentence that says we rely heavily on it. Here you could elaborate a bit more I would say in terms of yield increase, population growth, climate change, etc.

Overall nice work, very passionately penned down, which for sure, also due to the topic, will lead to interesting internal discussions in the readers mind. Your style makes sure to keep this discussion going.

You did the blog already last year, but the assignment is a bit different this year. For this one I miss the part on your position relating the statement “the business of business is to create profit”.

Time for rational news

News item: Huge fire at Chemie-Pack

Where: Moerdijk

When: 5 January 2011

The Rational Actor Models states that actors make optimal decisions based on their beliefs about the world. Those beliefs are supported as well as possible by evidence and this evidence must be gained by an optimal investment in information gathering. Rational action as such does not lead to a specific goal as it is irrelevant if it is successful or not.  So let us look at the case at hand to see if this RAM can be applied.

For those of you who never heard of the massive incident that took place at Chemie-Pack I will give you a brief summary of events. In short the name of Chemie-pack covers it all as it was a Dutch company that mixed and packed chemicals. Since 1982 they have been present in Moerdijk, but in 2008 they were warned that they were violating rules as the employees were insufficiently trained to deal with chemical substances and furthermore Chemie Pack wasn’t working in a very structured way. In 2009 however they seemed to have solved these problems and the municipal government issued a new permit in 2010. On the 5^th of January 2011 a fire broke out, caused by an employee that was trying to unfreeze a pump next to dangerous chemicals with a gas burner, which had multiple disastrous consequences. Several storage tanks that were outdoor with substances that were not allowed to be stored in such a way outdoor, also caught fire and started leaking hazardous chemical substances and even exploded. This lead to an enormous fire and smoke development that moved over big parts of South Holland. Total damage was around 71 million euro of which big part was made up by cleaning the soil, but there were also additional costs as agricultural crops were lost, etc. As the fire department was unaware what sort of substances were stored on the terrain of Chemie-Pack they tried to extinguish the fire with water in order to reduce the risk of more explosions, but by doing so also polluting all the canals around the terrain. Critics said that a foam blanket would have been the better option, but in the first hours the fire was just too big and dangerous and more explosion were avoided by cooling tanks with water. The foam blanket was deployed in a later stage and proved successful. Later a long lawsuit followed between the state and Chemie-Pack as the second did not want to pay for excessive soil and water pollution caused by, according to them, wrongly fighting the fire. Another problem was that Moerdijk is a small municipality with a corresponding small fire department, however having such a large scale industrial area within their borders they should have had received more attention and finances from the so called Security Region (State and Provincial level). Court in the end ruled that the CEO of Chemie-Pack was responsible for the fire as they created the culture in which safety was not respected causing the employee to not follow up on safety standards by deploying a gas burner close to chemical substances. However final verdicts were lower than demanded by Public Ministry as the controlling bodies were not alert enough in noticing violation and announced their visits beforehand so the company could comply. 

So many things went wrong, but how can this all be rationally explained as in hindsight it all seems 

so obvious. First of all let’s go to Chemie-Pack breaking the rules by violating their permit. On many points they violated their permits multiple times, but each time after a check by the local government they reacted and conformed to the rules. However in 2010 no check was done, whilst this should have taken place. Also building and safety permits in some areas were contradicting each other leading to unclear situation.  Dangerous substances can be stored outdoor according to the building permit, whilst safety reports say this is not allowed. Building and environmental permits also contradict as it states that 60% of the terrain can consist of build-up area, but demands on the buildings and their fire resistance for instance contradict. So Chemie-Pack bought the ground and kept on expanding until they had no more space to expand. Each time they broke a permit and it gets uncovered by a control, they comply to the rules so that they get a new permit, but as this happens very often there are only short intervals during which the company actually operates in compliance with all the permits. As the different sets of rules and permits contradict each other in several areas, it creates uncertainty that was usually interpreted in the most convenient way for the company leading to dangerous situations. In some way it is like a kid who only obeys to the parents when they are watching and as soon as they take their eyes of him he takes more space than he was allowed to until he is corrected again. This leads to the government each time correcting the company and if the company complies a new permit cannot be rejected and is thus granted.

How does this fit in the RAM theory? There are three main actors, the municipality, Chemie-Pack and the Firefighting department of Moerdijk (which is also municipal).
Chemie-pack acted on their belief of how one should safely work with chemicals, but above all on how to create a workable situation in a forest of rules. Their business is not to be legal experts, but chemical packaging experts with economic survival (and gain) as their guiding principle and belief. The municipality is the actor who wants them to comply to the rules they set so they should instruct them is their belief. In order to do so one has to have a permit and follow its rules, which would be their optimal decision. If the permit is threatened to not be extended or renounced due to non-compliance of rules this situation has to be solved in order to comply again and this is exactly what Chemie-Pack did each time.
The municipality of Moerdijk principal beliefs are to provide a optimal conditions on various fronts for the inhabitants and companies within their borders. I will focus mainly on the fronts that are relevant in this case, so safety, jobs and homes. Chemie-Pack for them provided jobs that were harbour related and thus made use of the unique geographical quality of being located along one of the rivers of main economic importance. However safety is also of key importance and therefore permits are there in order to guarantee safety is covered. However as a small municipality with a big industrial sector there is a mismatch in size leading to capacity issues. The high complexity of combining building, safety and environmental rules into a harmonious framework goes beyond the legal capacity of the municipality. The optimal decision is to just put make companies comply to each set of rules separately. That these are sometimes contradicting is something that in the course of the process of granting and extending permits will be picked up and ironed out saving costs and time upfront and spreading them over a longer period of time as relevant issues will be selected along the route. That these relevant issues could come up in a disastrous way as it did in Chemie-Pack was not foreseen, but could have been as no check was done by the local government in 2010 for unknown reasons, therefore shifting some of the responsibility for the disaster to the municipality of Moerdijk in my opinion.
The fire fighting department of Moerdijk has a very simply goal and belief, to fight a fire in the best way possible with the least risks for its personal within a given budget. Their optimal decision would therefore be to comply with their belief, which they did as no fire fighters were injured in fighting the fire. They could however themselves either have asked for a bigger budget, but I have no documentation on if they did) or strengthened ties with the Security Region to assure themselves of sufficient knowledge and backup capacity if needed. 

Relating to the relatively small fire department, this can be justified by the small amount of inhabitants, but due its geographic locations along the river close to Rotterdam harbour area it is so tightly linked to Rotterdam leading to similar industrial activities on a large scale that you would not expect in such a small municipality. Therefore based on administrative data everything was good, but based on actual activities and scale it should have been judged differently and have a much bigger fire department or be much more closely linked to Rotterdam and the Security Region (financially, experience, etc.).

Concluding one could say that with hindsight a three strikes out policy could have avoided the whole situation combined with a set of streamlined rules that do not contradict each other and thus leaving no room for uncertainty and creative interpretation of these rules. If a disaster however does happen, as it can never be fully excluded, the damage it does has to be minimized by having a fire department that is actually capable of fighting the fire in the best way possible. This can only be done if they either fall under the responsibility of the Security Region of Rotterdam or if they get enough money to sustain a bigger fire fighter corpse with very close relations with the security region to exchange experience, etc.

Friedman’s proposition: The business of business is to increase its profits.

I always thought that Friedman had some very icily scary economic ideas that took out all things that make up humanity and only focused purely on the financial gain aspect. As my wife is Chilean and grew up under the regime of Pinochet and his Chicago Boys, of which Friedman was one of them, I always resented anything to do with them. Someone who supports a dictator and uses him in order to experiment the deployment of his own economic model in a such an extreme way that would ordinary never have happened in society, can only be seen as immoral in my view. Naomi Klein in her Shock Doctrine also writes about the Chilean case and describes that the initial shock of violently overthrowing a democratically elected socialist president was used to impliment its shock program of of "sweeping reforms including privatization of state-owned industries, elimination of trade barriers, and cuts to government spending". All those opposing these changes were subject to torture or just were made to disappear by the military regime.
Naomi Klein however was just one of the books I read on the case and I also saw several documentaries and spoke to many Chileans on Pinochet times and never once thought “wow because of them Chile now is where it is” as Friedman followers always like to think. Friedman is a fundamentalist and fundamentalist should always be avoided and steered clear of as their ideas are radical and dangerous. Unfortunately they are of all times, so I think we will always have to keep on the watch for new threats to a more balanced comprehensive vision in which economy, environmental and social aspects all get their fair share of attention. However the most fundamental reason why I do not agree with Friedman is that forcing his model upon a country in an undemocratic way can never be justified.

The puzzle of light

Artificial light has a long history from the first fire and torches 400.000 B.C., to primitive lamps that burned animal or vegetable fats in 13.000 B.C., to candles (400 A.D.) and gas lights (1792) to the first electric powered arc light (1809) to the first gas filled lights (1913) bulbs. Development have however not stopped since the beginning of the previous century and since then we had two remarkable inventions that I would like to discuss here. First of all the Compact Fluorescent Energy Saving Lamp, more commonly known as the energy saving light bulb, which was introduced by Philips in 1980. Secondly I want to talk about the Light Emitting Diode or commonly known as LED invented by General Electrics in 1962.

One of the main goals of both types of light are to reduce energy consumption (besides expanding life spam, adjusting colours etc.). The puzzle which I would like to investigate comes down to the following.

Why the reduction in electricity followed by the introduction of both new light types is not equivalent to the factual reduction that we see in practice?

There must be several mechanisms in place that lead to a so called rebound effect levelling out part of the energy reduction. In this first assignment I will try to shine a light on the above effect with the introduction of both light types.

Compared to the incandescent light bulbs (old light bulbs) the energy saving lamp offered many advantages. First of all it uses only 1/3rd to 1/5th of the energy the conventional light bulbs use, whilst having a life spam that is 8 to 10 times longer. However during the first decade the energy saving lamp had a slow start due to the fact that they were expensive, 25$-35$ per lamp and bulky, which made them unsuitable for many fixtures. Furthermore they were known for their low light output and inconsistent performance, i.e. they took time to reach their optimal light generation. However since then many improvements have been made and the old problems have been solved. As the traditional light bulb is phased out the energy saving lamp took over its position. You might expect that the total amount of energy saved would be equal to the increased energy efficiency of the new type of light bulb, however this is not the case. The total amount of energy saved is smaller than the total increase in energy efficiency. So how can this happen?

There are four possible explanation:
1. People start installing lights with higher luminosity in the same fixtures
2. People use their lights for a longer period of time
3. People increase the total amount of lights in their home
4. The overall income increased and therefore the relative price of electricity became less important 

The first mechanism leads to a partial levelling out of the energy saving as instead of a 20 watt energy saving light bulb that would have equalled the 80 watts old bulb, they put in a 30 watt bulb that equals 120 watts.

The second mechanism could also be a factor as people for instance feel less inclined to turn the light off, due to the fact that it will costs them less money anyway than the old bulb, but also due to the slow starting energy saving bulb.

The third mechanism is relevant as well  plays as with the introduction of the energy saving light bulb people on a large scale started lighting their gardens at night for instance, a practice that did not exist before.

The fourth mechanism refers to a general increase in income and, which therefore decreases the importance attached to the price of electricity as it became a smaller percentage of their total income. Furthermore due to this higher income people now live in larger dwellings than they did 50 years ago and therefore have more lights installed etc. relating back to mechanism three.

Interestingly enough the world of lights currently is rapidly changing again to another lighting technology that actually outdates the energy saving light as it was invented in 1962 by General Electric and is called Light-Emitting Diode (LED). It can already be seen that the massive introduction of LED leads to very similar events as during the introduction of the energy saving light bulb. People are replacing their old light bulbs with LED versions. This again leads to the three mechanisms being re-instated. Because LEDs are much more practical in size they can be applied in all sorts of new appliances. They appear in closets, as Ambilight in TVs, in clothes, etc. All applications that before were unheard off, leading to a reduction in energy use that is lower than the expected reduction based on just replacement. Therefore it can be said that although big strides are being made in increasing the energy efficiency of artificial light, part of this gain is being undone due to four mechanisms explained above leading to a rebound effect of 20%. This however still leaves us with 80% gain. 


http://www.philips.com/about/company/history/keyinventions/index.page http://energy.gov/articles/history-light-bulb http://energy.gov/articles/history-light-bulb http://ideas.repec.org/p/zbw/fisisi/s32014.html http://www.renewableenergyworld.com/rea/blog/post/2012/08/energy-efficiency-and-the-rebound-effect-neither-big-nor-bad http://www.aceee.org/white-paper/rebound-effect-large-or-small http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/06/DemLigEEEP2012.pdf http://www.mts.net/~william5/history/hol.htm

The business of business is to increase its profits

I would say that if this would be the sole purpose of a business it could be very profitable on the short term, but the long term survival of the company could be under threat. For instance sometimes you have to accept lower profits for a period of time in order to invest in new opportunities to keep the business going. For instance if you are a mining company and only want to increase the profit every year then when would you invest in a new mine or invest in new products or processes in order to stay ahead of competitors? If you look at the clothing industries in Bangladesh their main goal is to increase profits where the western companies who produce their clothes in Bangladesh are the ones with the biggest profit. The further you go down the chain the smaller the profit margins get. However this branch of industry can hardly be sustained on the long run, at least in Bangladesh, as due to the sole focus on profit, worker conditions were of secondary importance. This led to the collapse of a factory (Rana Plaza in April 2013) where hundreds of workers were killed. Currently many things are changing in the Bangladesh clothing sector leading to more obscure sweat shops that are subcontracted by the bigger factories. Factories that want to do well have to close their doors due to regulations that lead to extremely high costs while western companies try to take some responsibility, but do not want to give up their high profit margins and even consider moving to Africa (like H&M CEO said one month after the collapse of Rana Plaza). So in the end the large companies will survive unless consumers also take their responsibility and demand better working conditions etc. with higher profits each time. However all the lower tier industries will be built and experience rapid growth until it literally collapses. A philosophy that only focusses on the financial part of capitalism, but forgets the human and natural aspect will in the end only lead to more and more destruction until there is nothing more to destroy as all resources will be depleted or polluted.

http://www.chinapost.com.tw/business/global-markets/2013/05/21/379080/HandM-considering.htm

http://world.time.com/2013/04/26/dying-for-some-new-clothes-the-tragedy-of-rana-plaza/

http://www.npo.nl/jeroen-pauw-in-bangladesh/05-09-2014/14act0905Jeroen