Last week the Indigo Non-Fiction Blog had the pleasure of bringing you an excerpt from Jeff Rubin's new book, The End of Growth.  This week Rubin, a previous contributor to the Indigo Non-Fiction Blog, has kindly taken the time from his schedule to provide us with this guest blog post.

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In the world of economics, prices matter. Particularly when it comes to the price of the single most important fuel that drives our economy-oil.

Triple digit oil prices don’t just change the speed at which you drive your car. Triple digit oil prices change the speed at which your economy can grow, and that is something that will change all our lives, whether we drive a vehicle or not.

We all know what happened to the global economy the last time it tried to run on those fuel prices.  We’re all still feeling the after effects of  he deepest recession in the post-war period. Since that shock, the global economy has become even more  dependent on oil, guzzling some 90 million barrels  every day. Why should we expect any different outcome now that our economy is once again facing those same fuel prices?

Encountering these growth-killing fuel prices so soon after the recent recession poses a challenge that neither our central banks nor our finance ministries have the tools to deal with. Neither zero interest rates nor huge budget deficits are a substitute for affordable fuel. They may give the economy a temporary spurt, but the costs that they leave behind just make the adjustment to a world of much slower economic growth all the more difficult. Just look at what is happening in Greece or Spain these days.

Nor can the quick return of triple digit oil prices be ascribed to some transient shock caused by supply disruptions or financial market speculation. Instead, with every passing day of rising pump prices, there is the dawning recognition among motorists around the world that today’s oil supply only flows at prices that they can no longer afford.

You see peak oil isn’t about what you can drill. It’s about what you can afford to burn. There is a big difference between the two concepts. It doesn’t matter if there are billions of barrels of oil trapped in tar sands, shale rock, or under the Arctic seabed, if the cost of extraction is more than the price consumers can pay.  Peak oil is ultimately an economic concept, not a geological one. And when you run out of oil you can afford to burn, your economy stops growing.

Trying to envision a world without growth is not some thing that comes naturally to an economist. After all, economics is all about trying to maximize growth. Growth is the Holy Grail of modern societies. It’s the common denominator underlying every action taken by corporations and governments. Whether it the sales manager at your local electronics store, the developer of a new condo tower, or a finance minster desperately looking for more revenue to close a yawning budget deficit, all pray at the alter of economic growth. All will  soon have to prepare for a whole lot less growth than what they have been accustomed to.
What does a static economy look like? Well for openers very differently from the economy you know. Tomorrow’s winners seem unlikely candidates in yesterday’s global economy. In a world of triple digit oil prices, local manufacturing and local labor forces suddenly become empowered as distance costs money. Global supply lines are radically re-jigged, bringing production back much closer to markets. At the same, as we start making things again we will need to draw away resources from the service sector. Will tomorrow’s economy suddenly have less investment bankers and hedge fund managers?

How are jobs created when the economy downshifts into a much lower growth gear and who gets them? What happens to the labour force? Does rising youth unemployment rates keep kids at school longer and at home? Will pensions continue to be funded or will pensioners have to find part-time jobs to help pay their medical bills? What happens to immigration, the principle source of new workers in OECD economies, when GDP flat lines?

How does government operate when the tax base is no longer growing? Does it invent cheaper ways of providing services or does government redefine itself to play a much smaller role in our economy?

Governments, businesses and consumers will soon all discover that the solution to rising energy prices won’t be found with releasing oil stockpiles from strategic reserves or building more nuclear power plants. Nor is it likely to come from any imminent breakthrough in renewable energy technology. Instead the solution to rising energy prices will be far more basic yet stunningly effective - learn to use less. From Denmark’s bike lanes to Japan’s decision to go nuclear free literally over night, there are no shortage of successful examples of profound energy conservation that other countries can borrow.

Along the way we might discover more than a few silver linings.
We might for example discover we don’t necessarily have to grow our incomes every year to enjoy our lives, especially if we are getting more leisure time in the process. And triple digit fuel prices might just end up saving us from the worst  environmental consequences from our carbon emissions.

As we adjust to a world of much slower growth, we will find that can still shape the future we want, but only if we relinquish the past that we have known. As the boundaries of a finite world continue to close in on us, our challenge is to learn that making do with less is better than always wanting more.

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Jeff Rubin is the former Chief Economist at CIBC World Markets and the author of Why Your World Is About To Get A Whole Lot Smaller and The End of Growth.

The Indigo Non-Fiction Blog would like to thank Jeff Rubin for taking the time to write for us and Random House of Canada for facilitating this post.

Read this book.

No, really, read this book.

Escape From Camp 14 is Shin Dong-Hyuk’s recollection of his life in a North Korean prison camp, or gulag, and eventual escape through China to South Korea. Shin’s story, told by PBS reporter Blaine Harden, is a prison memoir worthy to stand beside Aleksandr Solzhenitsyn's classic description of the Soviet gulags, One Day in the Life of Ivan Denisovich. Escape From Camp 14 is entirely matter-of-fact and Harden, in spare prose, has no need to rely on emotional or political handwringing to incite moral outrage. Shin’s life in a universe of alien moral dimensions, his terribly unlikely escape, and stumbling adaptation to life outside North Korea is alone sufficient to shake the reader.

As Harden warns, this is no typical prison story of unjust arrest, descent into a barbaric survival, and redemptive liberation. Instead, it tells of a man born into the gulag from a “reward marriage” permitted to two productive workers. Shin’s childhood is training for his future as a labourer, and his often violent education gives him literacy, numeracy, and, in an Orwellian twist, a memory of the Ten Laws of the camp that promise to offenders immediate execution.

Raised in this environment, Shin doesn’t agonize over the morality of snitching on his own family or the deadly consequences – he simply wonders who among the guards will give him the best deal for information. As he grows up, Shin becomes the model North Korean worker-inmate: uncomplaining, ready to snitch, and unaware that people can care for or even trust others. His reward are jobs that avoid the dreaded mines, into which his childhood companions disappear. This eventually brings him into an alliance with a Chinese prisoner who becomes Shin’s Abbé Faria, who tells Shin of a world beyond the camp wire governed under difference principles. They plot an escape that, unlike the normal escape narrative, succeeds due to luck rather than bravery, preparation, or the cosmic justice owed to the oppressed. From here, Shin is thrust into “free” North Korea where he begins to learn to trust people – or as Shin says, where he begins to “learn to be human.”  His education in humanity continues as he moves through China, assimilates into South Korea, and eventually moves to America where he now works for an advocacy group.

This book rightly troubles us. On one level, it is a fascinating view into the “Hermit Kingdom” of North Korea. Camp 14 is the most secure of North Korea’s gulag system and Shin remains its only known escapee, but analysts and North Korean refugees corroborate his story. Reading this draws one into a 1950s Stalinist time-warp. The camp and country are shocking because history should teach us what to expect while, in 2012, we shouldn’t have to expect the existence of such a society. Shin’s story troubles our conscience, because the West fought the Soviet system and contemporary human rights abuses, but the battle against North Korean gulags remains unchampioned.

Escape From Camp 14, even if it were a terrible book, should change this and it has already inspired a leading editorial from The Economist. It is, however, Shin’s story that is most troubling because, while fictional dystopias like The Hunger Games entertain millions, his dystopia is real. Shin’s story threatens belief in the inherent goodness of man – for if at some level man is good, then, like in the fictional gulags, a hero would surely emerge to rebel against such abuse. But Shin doesn’t. He is born into a world knowing only hunger, labour, and what we would call betrayal. When he emerges into our moral universe he brings with him real flaws and scars of memories of darker days, and reminders of the terribly thin boundary between civilization and barbarity.

Bryan Pearson is the President and CEO of LoyaltyOne Inc. and one of the leading experts in customer reward and loyalty programs. While you may not recognise the company LoyaltyOne, there is a good chance that you are familiar with thier work, as they are the driving force behind Air Miles, one of the most popular consumer incentive programs in Canada. With the release of his first book, The Loyalty Leap, Bryan Pearson decided to draw on his twenty plus years of experience in customer relationship and management.

This is one of the more interesting Q&As on the Indigo Non-Ficiton Blog, while the questioning was done by Indigo, it was not done by the Non-Fiction Blog Team, it was done by members of our own loyalty team, the team behind our very own Indigo Plum Rewards program. I would like to take credit for this idea, but I can't.  When we were offered the chance to do a blog about The Loyalty Leap it was suggested that our loyalty team conduct the Q&A, and when I asked my colleague, not only was he willing to ask the rest of the team, but was already familiar with Mr. Pearson and his work.

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Indigo Non-Fiction Blog (INFB): What is the one thing that a loyalty program must deliver on to survive (if you had to choose just one)?

Bryan Pearson (BP): That’s easy. In order to thrive, a loyalty program needs to be relevant to its members. This goes beyond merely rewarding points and delivering promotions. The entire loyalty program experience, from sign-up to communications to the rewards delivered, has to be relevant to what the consumer wants and values. Communications should include meaningful messages and arrive through the channels she prefers, at times that resonate with her schedule and life stage. Don’t send a consumer who switched down in clothes size coupons for a brand that runs rather large. Use the data to understand what is important to her today and to determine her aspirations for tomorrow.

INFB:  How do you answer critics who equate data-usage marketing with Big Brother watching or spying and the question around privacy?

BP: First, I’d agree that there have been oversights and missteps by some marketers, but those well-publicized indiscretions do not represent the majority. In fact, most consumers willingly share their information with corporations that use data responsibly and with the intent of creating mutual value. That’s the critical point – creating mutual value. Marketers first need to be completely transparent about what information they collect and why they collect it. They should gather only the data they need, and use the data they collect. Then, they are obligated to deliver the consumer something of equal or greater value in return for that data. Something relevant. And all along, marketers need to guard that data like it is a company secret.

INFB: What are among the most prevalent mistakes made in loyalty marketing today?

BP: Generally, I’d say it is in not knowing what to do with the data they collect. Loyalty programs today are nearly ubiquitous, but I’d wager only a small percentage of loyalty plan operators know how to use the data in a way that helps them really understand and benefit their customers. The data can yield information that illustrates the consumer’s values, personal preferences, life stage and even sports preferences. Yet our research shows that 77 percent of Canadians feel they receive no benefit from sharing their personal information with marketers.  

INFB: What is your idea of a good lifecycle strategy – are welcome, renewal, birthday acknowledgments enough anymore?

BP: The old standards of welcome, renewal and birthday are still good, but they have become so common that they don't really serve to distinguish the program. They don't take advantage of the data in a way that will surprise and delight the consumer. Imagine how pleasantly surprised you’d be if you just bought several books on baby care and then received a coupon for a free baby toy? That said, life cycle events don’t necessarily have to be huge, like a new baby or home. Trigger messaging is a great way to respond to even small, recent activities – like identifying a customer who is looking up restaurant reviews in a certain city and then sending him an offer for a nearby restaurant with better ratings.

INFB: With the number of communications members are bombarded with (specifically from other loyalty programs), how can you differentiate yourself?

BP: To be successful, an organization needs to address both content and context. First, let’s look at content. You can start by segmenting customers based on purchase patterns and behavioral motivations – what the consumer has responded to before – and then creating messaging for each. This helps to determine who to target, how to reach them and what to offer. Don't send the same offer to everyone – there’s nothing personal and therefore meaningful in that. For example, say my wife and I were both invited to a special shopping event at a sporting goods store this weekend, but my message promoted power-wicking workout clothing while my wife’s featured yoga apparel. It’s the same store, and the same household, but segmented messaging designed to appeal to what is important to each of us.  

The key to enhancing the content of your communications is context – the environment in which an offer is extended. You can take the same offer and place it in a contextually aware environment and double the response rates. Simply changing the visual elements around the offer to reflect important characteristics such as life stage (families vs. seniors, sports enthusiast vs. hobbyist), you build a greater willingness from the consumer to engage in the details of the material and fully appreciate the value of the offer being presented.

INFB: What companies/programs are effectively showing customers how their data exchange is going to benefit them (ie. showing the value exchange up front)?

BP: I mention many great examples in my book, The Loyalty Leap. But among those that immediately come to mind are GameStop’s PowerUp Rewards, for its very creative approach in communicating rewards that are of particular value to its members, such as tickets to the Comic-Con Convention. The Hilton HHonors program continuously finesses its messages and offers, and uses advanced algorithms to cross-reference a guest’s profile and spending patterns against hundreds of variables to recommend the best offers in rank order. And we at LoyaltyOne personally worked with grocers across the country to create one-to-one direct mail pieces that offer promotions of highly personalized value, based on members’ specific purchasing behavior. Of every million pieces that are mailed, 987,000 of them are unique.

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Bryan Pearson is President and CEO of LoyaltyOne and author of The Loyalty Leap: Turning Customer Information Into Customer Intimacy. You can follow Bryan’s blog at www.pearson4loyalty.com.

The Indigo Non-Fiction Blog would like to thank Bryan Pearson for taking the time out of his busy schedule to speak with us, the Penguin Groups of Canada for facilitating the interview, and Indigo Loyalty Team for taking time from thier schedules to conduct the Q&A.

In 2009 economist, Jeff Rubin, released his ground breaking book Why Your World Is About To Get A Whole Lot Smaller. Rubin delved into how the world is connected through its need for energy - rolling blackouts in Japan affect the auto plants in North America, wars in the Middle East affect the prices of Chinese made goods found on the shelves of Wal-Mart.  Despite advances in nuclear and renewable energy 40% of the world's energy needs come from oil.  In his follow up,  The End of Growth, Rubin looks further into the future. When oil was cheap the production and consumption of goods exploded, industry grew and it took no effort to ship a cheaply made product across the world, but with the oil running out and prices going up, what will happen to industry? Will the growth of industry slow, perhaps stop altogether?

The Indigo Non-Fiction Blog is proud to publish this excerpt from Rubin's new book The End of Growth, and stay tuned in the coming days for a guest post from Jeff Rubin as he further explains the situation the world is facing.

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Growth is the Holy Grail of modern societies. It’s the common denominator underlying nearly every action taken by corporations and governments. Whether it’s the sales manager at your local electronics store, the developer of a new housing project or a finance minister trying to close a huge budget deficit,
each one prays at the altar of growth. Economic expansion comes in all shapes and sizes. It can be spotted in the building cranes above your city’s skyline, in the bustle of shoppers at the mall on a busy Saturday and in the freshly turned sod of a new subdivision. All of this activity feeds into Gross Domestic Product (GDP), the total measure of what a country’s economy produces each year.

Of course, growth also comes with a lot of costs. Without growth, we could stop building new highways for the burgeoning number of new vehicles that hit the road every year. We wouldn’t have to build more nuclear energy facilities or coal-fired power plants to meet our expanding electricity needs. We could stop our cities from sprawling into the countryside to make room for new suburbanites. And we could cut back on the amount of greenhouse gases we emit into the atmosphere.

For the economics profession, the notion of a world without growth is pure science fiction. While most economists now acknowledge that expensive energy curtails GDP, the majority also believe that technological innovations will allow us to leap over the hurdles presented by resource scarcity.

Historians take a different view. The decline of the Roman Empire has captured the world’s imagination for centuries, as has the collapse of Mayan society and the disappearance of people from Easter Island. Indeed, history is the story of the rise and fall of civilizations large and small. The exact reasons for social collapse are rarely known, but many theories cite resource scarcity as a contributing factor. Whether constraints on resources, such as food and water, is the driving reason behind societal failures will remain lost in the mists of time, but one thing is indisputable: civilizations that once flourished have eventually floundered. But most economists these days seem to have short memories. Viewed from the limited perspective of the postwar era, resource constraints, and a scarcity of fossil fuels in particular, appear to them to be no match for human ingenuity, which keeps finding ways to supply the world with more energy. However, rising resource prices are telling us that technological advancements are now coming up short.

We could hardly pick a worse time for higher energy costs to start squeezing the growth out of the global economy. The modern world counts on economic growth to support population expansion,
as well as satisfy the desire for higher incomes and all the extra things that money can buy. Since the last recession, the need for GDP growth has become even more urgent. Economic growth will provide the financial wherewithal that allows governments to service the debts accumulated during that downturn. Right now, though, the global economy is discovering that chasing growth is a catch-22. Our countries need GDP growth to repay the debt acquired during the last oil price–induced recession, but achieving that growth will bring back the same high prices that killed growth in the first place.

Finding the energy to fuel our economies is no longer enough; we need that energy to be affordable. That’s why the oil industry is going to such lengths to tap the world’s resources. That’s why we’re changing dictatorial regimes in Libya, propping up an absolutist monarchy in Saudi Arabia, digging up pristine forests in northern Alberta and drilling beneath the icy waters of the Arctic Ocean.

In the United States, the Obama administration, which just fined BP billions for the Macondo fiasco, is back issuing permitsfor deepwater exploration in the Gulf of Mexico. I guess the White House is betting other offshore drillers will have better luck contending with the ultrahigh pressures at the bottom of
the ocean. On the other side of the world, China is building new nuclear plants in coastal areas that are prone to the same magnitude of earthquake that caused the Fukushima disaster. Beijing is undoubtedly hoping for a luckier roll of the dice when the next seismic event occurs.

The choice currently being made by most politicians simply to cross their fingers and hope for the best is hardly a sound way to deal with mounting energy costs. And in any event, the solution to higher energy prices won’t come from finding larger oil reserves or building more nuclear plants. Nor will it come from a technological breakthrough in renewable energy. We aren’t going to suddenly discover that solar panels or wind turbines hold a magic key that will power our economies. Instead, the solution to higher energy costs is quite simple: learn to use less energy. That doesn’t mean returning to the Stone Age. As you’ll see in this book, people in some countries, such as Denmark, live quite happily while also using a lot less energy. And you may be surprised to find out what’s at the heart of that country’s success.

The sooner more nations learn how to curb energy demand, the better it will be for everyone. In a world of energy scarcity, consuming more fuel comes at someone else’s expense. One country’s gain is another’s loss. It’s a pending reality that will affect how much oil everyone gets to burn from now on. And if you live in North America or western Europe, you can expect your fuel allotment to be much more modest than it’s been for the last few decades.

The prospect of burning less oil may sound benign, but it carries profound economic consequences. Oil powers economic growth. That means if we cut back on oil, we cut back on growth. In a post-carbon world, our economies may run on a different fuel, but for now they’re still critically dependent on oil, and will continue to be so for the foreseeable future.

Over time, our economies will become greener and more efficient. That’s the hope, anyway. In the last forty years, we’ve made massive gains in fuel efficiency in places such as North America, Western Europe and Japan. But at the same time, economic growth and a rising global population have meant that our total energy consumption has become greater than ever before. And now emerging economic giants such as China and India are looking to claim a larger share of global energy supply. Hundreds of millions of Chinese and Indians are moving from rural lives, where they consumed sparse amounts of fuel, to energy-intensive urban lifestyles. As these folks fill up the gas tanks of their brand new cars and flip on light switches in their new apartments, how will the world keep pace with the fresh demand for energy?

One day, we may come up with a fuel alternative that will allow our energy consumption to increase by leaps and bounds. Renewable energy certainly has room to become a larger part of our power mix, and thanks to technological advances, that’s exactly what’s happening right now. But renewable energy won’t come close to supplying the power we need to shelter us from the consequences of ever-higher oil prices. In the here and now, our economic fates are still unavoidably tied to fossil fuels.

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Excerpted from The End of Growth. Copyright © 2012 Jeffrey Rubin Enterprises Inc. Published by Random House Canada, an imprint of the Knopf Random Canada Publishing Group, a division of Random House of Canada Limited. Reproduced by arrangement with the Publisher. All rights reserved.

The Indigo Non-Fiction Blog would like to extend a thank you to Jeff Rubin and Random House for providing us with this excerpt.