Reading Pollock: on advancing the bioeconomy, a New York City 400th anniversary column

Myself, I first landed on Governors Island in New York Harbor in the spring of 1968 when my parents dumped my sister and myself in the Coast Guard nursery for a couple of days, while the folks made official and personal visits. 

However, the first European settlers arrived at Governors Island on May 20, 1624, when it was known as Notel Eylandt (Nut Island). The seal of the City of New York dates settlement to 1625, yet, this year is the proper 400th anniversary of the city’s founding. 

For a list of reasons outside the scope of this column, the life and times of Philippe du Trieux, a co-founder of the settlement, were impressed vividly and in detail upon me in my youth. My father used to observe in his sonorous voice and slow cadence that the settlers had no way of envisioning what New York City would ultimately become; the place it would have in the world. 

New York as it became was not imagined then. Indeed, by the standards of the time the Dutch colonization was a failure — the Dutch lost the colony to the British in 1664, who promptly named it for the Duke of York. The Duke became King James II, was overthrown in 1688, and installed in his place was William of Orange, the Dutch prince, and his wife Mary Stuart. So the wheel turns.

Access to resources, fertile lands, a crossroads of trade, a decision to build infrastructure and commence manufacturing — these were the factors that gave life to the settlement and set New York on its appointment with destiny.

It’s a lesson for those near to the bioeconomy, here in the early 21st century. I have no idea, because it is unknowable, to what ultimate purpose the advanced bioeconomy will have been built and deployed. Yes, climate change. Yes, defossilized products. Yes, local alternatives. Yes, new functionality. Yes, a stabilizer for commodity price volatility. Yes to all these things, but who really knows? 

One day, we may find ourselves giving up on climate change prevention and focusing on adaptation. We may find that carbon capture has alleviated our concerns about petroleum, or that electrification or the internet has made petroleum transport obsolete. We are not given eyes to see so far around the corner — we must wait for the future to unfold.

Yet, access to resources, fertile lands, a crossroads of trade, a decision to build infrastructure and commence manufacturing — these are reasons to foster an economy no matter what the future brings. The bioeconomy is a little like New York itself, gateway to a New World. One grounded in local energy production and use, so that economies do not founder on currency valuations. Strong rupee, cheap energy. Weak rupee, expensive energy. And so forth.

Does Design for Purpose have a Purpose?

The settlement at Nut Island was designed to foster a trade in primary goods that long ago disappeared. It was designed for purpose — just as bioeconomy projects are designed for purpose today. 

Make this from that, get one credit for reducing this, get another credit for increasing that. Raw materials at this price, capital at that cost, products sold for A, and sold to B. Everything predictable, measurable, conclusions drawn, lifecycles analyzed, risks assessed, products priced, profits assigned. Beethoven’s String Quartet in F is the anthem of the bioeconomy — the final movement beginning with Beethoven’s couplet, Muss es sein? Es muss sein! (Must it be? It must be!)

Company presentations, market projections, climate models, technology roadmaps, policy debates, everything so clear, everyone so sure. 

Muss es sein? Es muss sein! 

No one in the debate seems to doubt that the future is determined, cause and effect, from present-day conditions which will evolve along a determined line to a determinable end. Models, models, models. This product will sell at this price, then that. The profits will be this, then that. The policy response will be this, until it’s that.  The risks are these, until they’re those. The market will grow to this, and then to that.

No company’s five year business projection I know of made room for 9/11, or the Global Financial Crisis, or the Pandemic, all of which hit New York City hard. Therein lies the problem of models and guesses about the future, no matter how well-intentioned or deeply-studied.

Guessing the Future

Why do I think that? Because I know where Westchester County is. The northern part of New York City, and almost the entirety of Westchester, 52,000 of the most valuable acres on earth, were once owned by a single and remarkable individual, Frederik Phillipse, and you might wonder where his fortune went. 

Phillipse took the Loyalist side in the American Revolution; his lands were seized and sold by the Legislature of New York in 1779 (which same legislature later, in the 1780s, outlawed the practice of legislative property seizures, presumably for the protection of the new owners). Philipse never got his land back.

You never know. Even in the short run, always in the long run. The smallest change in conditions can have landscape-transforming effect. A few guys slipping some box cutters past an airport security check in 2001; small perturbations in a large system can have massive consequences. 

You cannot ultimately build anything, anything sound at all, on the basis that you know, or because you know the risks, or you’ve modeled the risks. Don Rumsfeld referred to the dangers of the unknown-unknowns — you don’t know them, and you don’t know that you don’t know them. That is the way it is, even in the short term, always in the long.

Patterns in the noise

A bioeconomy is better built on the precepts of Chaos Theory — looking not for signal but for patterns in the noise. 

As currently financed, there can be no surety in a project investment unless it is limited by the investors and lenders to this feedstock at that price, this product at that price, for this fellow now and that fellow later. in other words, the lock in.

What is the use of that? I’ll sell you in 1992 a stock of VHS cassette blanks for shipment to Blockbuster Video in 2017. The certain price, the bankable buyer, the fixed volumes, the baked-in margins, the established demand. How perfect.

Only, it’s all nothing. By 2017, there’s no Blockbuster, VHS is dead.  And that’s over 25 years — bioeconomy projects have to pay out, fully, for longer.

What are we to do? Fold up in the face of uncertainty? A romantic belief in risk avoidance is one of the foundational attitudes of well-off societies which is probably why, in the long run, well-off societies fail, and nutty land-grabs like Nut Island are successful. 

Italy’s still there, but not the Italian monarchy, or the Venetian Republic before it, the duchies before that, the Holy Roman Empire, the Lombards, the Byzantines, the Goths, the Romans, the Etruscans, the Villanovans, the Apennine culture, and so on into the mists of yesterday until we meet some poor Neanderthal slob trying to stay warm by a fire, wondering when it might go out, because the theory goes that the Neanderthals had the ability to use fire but not to make it.

Waiting for Lightning

I suppose the Neanderthals waited for the lightning to strike, and, in a sense, that’s what we do today, Build a biorefinery? Hell no, let’s wait for the lightning strike of low feedstock prices, the bankable buyer, the proof of technical prowess at scale. The so on and the so forth until you can’t see the forest of success for the trees of the requirements.

Delay piles on delay, inaction piles on inaction. Small wonder. Success these days is dependent on what you might call the Miracle of the Inputs and the Outputs; all the necessary conditions must arrive in the one place, at the one time, and persist for decades. 

Is it thus? Is it ever thus?  

It’s laughable, yet understandable. Which is to say, in this hour of what is widely called “climate peril”, we are socializing the gains and privatizing the risks instead of the other way around.

The people get benefits, the clean skies. Some poor banker bears the risk, based on a “come on, seven!” lucky guess as to which of a thousand projects will be amongst the couple of hundred that find success over the long term. A banker who, like his Neanderthal predecessor, is praying that the fire will not go out.

The fear of risk, of course, causes the hold up of the money. Money is plentiful and a coward, and flees from risks when they pile upon each other until they are as indecipherable as a painting by Jackson Pollock.

The engineering of finance

It is not the elimination of risk that the bioeconomy needs, or bankers need. A sure thing? They’ll take it and right gladly — like pie in the sky when you die. But the need is not that. They need a path to sharing risk and pricing it, they need a way around reading a Pollock, because you can’t and it’s not the point.

The pricing of risk — that, today, is the business of New York City. The city was something else, when it started — but now, it is one giant engineering concern — financial engineering. They engineer structures that work and are safe. These are the bridges and tunnels of our time, financial ones. 

So, let us celebrate the 400th anniversary of New York by turning our efforts towards a new engineering of the risks. Not because they are measurable, but because they are bearable; not because projects must be built in some Beethoven fashion (Must it be? It must be!), but because they can be built, and why not? 

Resources, fertile land, a crossroads of trade, infrastructure, manufacturing — these are the things that are platforms for new civilizations and for a re-birth of opportunity. These are things worth using, now, to build something to stand upon. In another 400 years these places in the bioeconomy will become something else, in the way that everything becomes something else — but they will become something good out of all that else.