Editor’s note: Filling in for Rick Smith and The Daily Skinny today is international consultant William Dunk, based in Chapel Hill, who is a bit upset about the state of North Carolina.A couple of years back, some banking acquaintances moved from Singapore to London. They had been spoiled, because Singapore is an engine that purrs, greased by an ironfisted autocracy that has its eye on the future and its hand on the levers of the present. Except for the occasional python that may crawl out of the Botanical Garden into your house, nothing untoward is ever allowed to happen there. This island nation is proud of keeping gum off its sidewalks and pursuing those who “outrage the modesty of ladies.”

London is shock itself. The City, London’s financial district, suffers occasional bomb scares. The traffic does not flow, unless you are on the Thames. Indeed, the gridlock by some accounts rivals that of Bangkok, the capital of going nowhere and enforced lassitude in Asia. When our friends’ car was savaged and broken into while they were staying at a fancy country inn, the wittiest fellow exclaimed, “Oh Britannia. You have become a Third World country.”

Storm of the century?

December 4 brought an ice storm to the Carolinas, and minds and hearts came to a standstill. The local paper called it “The Storm of the Century,” which means, we imagine, that the headline writer is stuck in the 20th century and thought that this tempest took the cake for years past. But maybe the newspaper is prophetic (perhaps you have seen the TV serial in which the headlines spell out tomorrow’s tragedies); just maybe it is looking 98 years into the future and sees an all clear out there.

In any event, the storm did put swathes of the Carolinas out of commission as trees crashed down onto power lines and dimmed the prospects for the week. As of Monday, lots of lights still were not on, revealing a fragile infrastructure more than symbolic of the last quarter of the 20th century when we built things patchwork and underinvested in all the humdrum systems that keep life going. The very stuff that leads to a Third World Economy.

Duke Redux

Duke Energy of Charlotte is a principal electricity provider in North Carolina, suffering vast outages during this icing. If you prowl along some of its lines, you will see why they can be knocked down with ease. Trees tower over the toothpicks that hold up the electric lines. The sclerotic state government provides weak regulation of utilities and several other quasi-public industries, so it has been rather easy to underbuild as housing and the population swells. And yet the power is fully priced. All this shows up in truly bad weather, but consumers can also expect halting repairs during an average lightening storm (8 to 12 hours is not uncommon).

Free-wheeling Duke, meanwhile, has had an opportunity to take its eye off the ball, purchasing ventures well outside its service area, and making a horrible muck of speculative activity in energy trading just like several others. Several trading executives have recently gone their own way. It has put its foot on the third rail. As an investment, we have been forced to change our evaluation from “investment grade” to “trading vehicle.” This has not been an inconsequential matter since the whole U.S. economy has traditionally run on cheap, reliable power.

Duke is, of course, just one visible example of the state’s slide into the Third World Economy. Some food items at grocery chains may cost as much as 60 or 70% more than the same items at discounters. Price, service, and quality disparities plague a number of industries. One lady is known to send her cleaning to New York, having found no local outlet that can reliably get the job done on finer articles of clothing. In another five years, some of its growth districts threaten to choke on traffic, because its planners and politicians have not paid enough attention to its Blue highways. For the state, this has led to an economy that has peaked for now. Variations on this theme have led to low growth in industry after industry throughout the nation. Growth is dependent on honest government and a well-wrought infrastructure.

Self reliance

If the 21st century offers a Third World dimension to many in the developed world, it’s heartening that citizens are slowly finding their own ways to deal with inadequate systems, which, as we have said in previous letters, are melting down. Out-of-the-box thinking is not enough: the brave and the survivors find ways to entirely detach themselves from complex, poorly designed, poorly built systems. During the power outage in the Carolinas, a host of people installed little generators in their houses. Alternative systems, such as solar power, are gaining traction: San Francisco is implementing more solar power as a matter of public policy. More and more innovation is now taking place in the arena of small generators, which will partially uncouple us from central sources of supply.

There are other examples where people are giving up on the system and relying more on their own ingenuity. We have talked previously about the huge growth of obesity in the United States. Our national healthcare system has not been able to come to grips with it. Of their own accord, many are flocking to physical exercise, better diets not recommended by the USDA, and restraint toward fast food. Some indignant consumers are suing the fast food companies, having grown irate at the unhealthiness of the offerings. Yet again, this is an area where adversity is bringing out an independent thinking that will eventually lead to real innovation.

Best of the week

We recently visited with a fine sports doctor who even finds his own weight and cholesterol creeping up. Ironically this stems from long hours taking care of professional athletes. He is treating himself with two organic supplements that show promise in relation to cholesterol. That is, he is a doctor of an independent frame of mind, fully cognizant of all the received scientific opinion, who nonetheless knows it is worthwhile to find natural substances to deal with medical conditions, since, again and again, we discover that standard drugs may have side effects that have not yet made it into the medical journals and are, in any event, hard on the pocketbook. It is remarkable when a physician can pull himself free of the handouts from the pharmaceutical companies. Adversity–Third World Economy, ice storms, broken utilities, high cholesterol, uncertain health systems–inspire self-reliant people to find new ways to deal with things that are not in any of the standard how-to books. Though Paradise appears to be lost, we can rejoice in resilient souls who are ready to assert their own commonsense.

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