Systemic View

Many powerful people are jumping on the AI bandwagon - not despite the environmental damage, but because of the environmental damage.

 

Businesses make revenue and pay expenses, and get to keep what's left over. For example, in 2020, the company that Michal & I co-founded with partners made about $20M in revenue, paid expenses of about $4M, and got to keep the profit of $16M.

In Iowa City's predominant cultural narrative, this kind of profit is possible because we "created value." My partners & I were determined entrepreneurs who identified a real problem, created a valuable solution, and built the organization that could deliver it at a profit.

This narrative is built on the basic formula that Profit = Revenue - Expenses. You figure out how to sell something for more than it costs to make it, and you get profit. You've created value. It's pretty hard to figure out how to do.

But there's a cheat code that makes it a lot easier. Instead of paying all your expenses, you can have other people help pay for them. This is called "externalizing" when CEOs do it in business plans and "stealing" when hungry people do it in convenience stores. It extends the profit equation to:

Profit = Revenue - Expenses + Externalization

For example, you might think growing a tomato in Arizona and shipping it to Iowa City would be more expensive than just growing a tomato here. And if you're just looking at revenue & expenses, you'd be right! But if you take advantage of externalization, you can share the costs of the roads, the water, the soil, the air pollution, and the plastic proliferation with everything that is currently alive or will be alive for the next 10,000 years, and keep all the profits for yourself.

Externalization is why growing food 1000 miles away with all the expenses of this mega irrigator (pictured above, in a desert!!) can still have more PROFIT than a local tomato. It's not more efficient, it's just more profitable.

So externalization can make a pretty stupid business plan into a pretty profitable business plan. Once you realize that you can have other people pay your expenses but you keep all the money, you also realize you can just do it again!

 

Photograph: Greg Bedinger/LightHawk [The Guardian]

 

If you externalize A LOT, but make your revenue pretty close to your expenses, the formula simplifies to:

Externalization ≈ Profit

The more you are able to externalize (e.g. to environmental damage), the more you profit. Here's 60 square miles of irrigated cropland in the Arizona Desert designed to "externalize" costs to everyone but drive up profit just for them.

 

 

Profiting from AI is almost all externalization

AI companies are doing the same thing as the Arizona megafarms. They're building data centers that run on fossil fuels, degrade our water, pollute our air, destroy our land, and take our jobs. They are paying only a tiny fraction of the externalized costs to replace the fuels, restore the water, clean the air, protect our land, or create new jobs - WE are paying almost all of it, and our grandchildren will, and the same for every other being on the planet.

And just like the megafarms, once you get into that cushy business model where everyone else is paying for your expenses, it makes sense to scale up. Not because anyone asked for a chatbot in their refrigerator, but because the more environment you can destroy, the more profit you can make. Externalization ≈ Profit.

Local Impacts

The Cedar Rapids city council recently agreed to approve (and subsidize) a set of datacenters on the southwest side of their town. Over a square mile destroyed for the purpose of consuming energy, degrading water, and automating our jobs.

I'm grateful that our Johnson County supervisors have passed a moratorium on datacenters to learn more about their impacts. I hope all of our politicians and business leaders can adopt the same sensible and cautious approach to a technology that is demonstrably bad for Iowa City in every long-term, systemic way.

I'd like to see the same consideration to all industries here in Iowa City. In a counter-example, our City Council recently approved over $5M in tax benefits for an Ohio company to build a new chemical factory centered between Southeast Middle School, Tate High, Twain Elementary, and Longfellow Elementary. This business model only works with our subsidies and other externalized costs, and doesn't add to our long-term resilience.

RSFIC would like to see locally-owned businesses and residences in these central locations for more resilience and less corporate externalization.

Things we can do

Ultimately this is a cultural problem. We all cooperate with all these companies, and we believe naive narratives like "this factory in the middle of our residential neighborhoods will create jobs, so it's good." But our culture is already shifting to value local, neighborhood-centric development, and we can all keep adding momentum.

Small things help

We are assured that we will eventually stop living unsustainably, because things that can't go on forever don't. So, in a sense, there's no rush. Some huge signal like a natural disaster or social collapse will probably provide most of the impetus we need to change. Look how fast we all changed when COVID started.

In the meantime, building social awareness of the way things really work is enough to make us more prepared for those big upcoming shifts. And when we do it in ways that also make us healthier, happier, and build friendships, it can be fun, rewarding, and powerful. Iowa City is a wonderful place full of great people working from a place of joy & love & personal agency. We can work forward from where we are now in small, sustainable ways.

Peace,

Riley

Co-founder of RSFIC

 

PS: For all events at RSFIC, please be aware that car parking next to the building is limited to folks who need to use our ramp. Everyone else who needs to use a car should park in the Pepperwood Plaza lot and walk a short distance to the building. Please be careful, the culture is still shifting and some car drivers are reckless! More details about getting to RSFIC.

RSFIC is a private operating foundation building long-term, systemic resilience in Iowa City. We say "rizz-fick!"


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