There is Only One Right Answer

When i was young, I thought that the world's toughest problems would be solved by the world's smartest people, and I wanted to be one of them. So in 1978, when I started university at McGill in my home town of Montreal, I chose honors physics. This degree involved courses only in theoretical physics and advanced mathematicsnothing but the laws of nature and of pure reason.

My classmates and I were proud to be inducted into this elite intellectual fraternity. We trained by reproducing an increasingly difficult series of logical proofs. Our textbooks contained questions at the end of each chapter and the answers at the back of the book. Our quantum physics course was graded based on a single open -book exam. Before the exam I worked through every exercise in the text, and so I got a perfect grade.

We understood that there is only one right answer.

During the summers, I had electronics jobs in different laboratories. When you're troubleshooting circuits, either the wires are connected properly and it works, or not: you're completely in control. One weekend I went horseback riding , and I was concerned with how to get the horse to raise its leg to get over a log, whenwithout any instructions from methe horse did it! I was not used to dealing with living, sentient systems.

One year, while I was still a student at McGill, I participated in a meeting of the Pugwash Conference, an association of the world's top scientists dedicated to preventing nuclear war. I had written a paper arguing that airplanes were more ideally suited than satellites to monitor nuclear test ban treaty compliance, because airplanes are cheaper and more flexible. I ignored the practical and legal reasons why this regime would be harder to implement. Bob Williams, a Princeton scientist and policy advocate, pleaded with me not to fall into the idealist's trap of "letting the best be the enemy of the good." I didn't understand his point. Wasn't there only one right answer?

At one of the conference sessions, a woman from Sri Lanka gave a compelling speech about her country's shortage of energy. I liked the idea of using my scientific training to solve complex societal problems. One of the conference participants , physicist John Holdren, ran a graduate program in energy and environmental economics at the University of California at Berkeley, and so in 1982 I moved there.

The Berkeley economics department had a strong theoretical and mathematical orientation. They and I thought that my physics degree was adequate preparationeven though I had not taken any undergraduate courses in economics or other social sciencesbecause their mathematical models of economic behavior treated people like predictable, inert objects. I discovered that economists are only slightly less confident than physicists that they possess objective truths about the way the world works. When their truths were questioned during the recession of the early 1980s, my professors were embarrassed and distraught. "This really isn't a good time for you to study macroeconomics," one counseled.

At Berkeley I reoriented myself from solving tough physics problems to solving tough public policy problems. I learned to be a policy "wonk": I'd analyze a societal problem, calculate the right solution, write a paper on it, and then advocate for government decision makers to implement it. I built a computer model of the Canadian economy to assess the impact of different ways to tax energy and to critique the government's policies. I wrote my thesis on the Brazilian government's program of substituting alcohol for gasoline. After reading every report written about the program, I concluded that it was misguided.

My classmates and I fought for more rational energy and environmental policies. In our second year seminar, "Tricks of the Trade," John Holdren taught us how to testify before a congressional committeeour idea of the ultimate decision makersand to give a sharp answer on the spot: "That's an excellent question, Senator. The answer is 10.7 exajoules. That's why I recommend that you vote in favor of this legislation." We were learning to be "policy doctors ": to make a dispassionate diagnosis and write out a policy prescription, which the decision makers would take and implement and which would cure the problem.

Once I had my degree from Berkeley, I took a series of economics research jobs, first at the Lawrence Berkeley Laboratory in Berkeley, then at the International Energy Agency in Paris, the Institute for Energy Economics in Tokyo, and finally at the International Institute for Applied Systems Analysis (IIASA) in Vienna. Set up during the Cold War, IIASA brought scientists from the East and West blocs to work together, apolitically, on complex global challenges such as population pressure, global warming, and energy shortages.

The institute had a relaxed , intellectual atmosphere. In the mornings we were served Viennese pastries with coffee. In the afternoons there were lectures from resident and visiting scholars. I set out to work on the biggest, toughest problem I could find. I was going to calculate, by hand, a "general equilibrium" model of the interactions among energy, capital, labor, and technology in the world economy. I wanted to prove mathematically the optimum level of world energy consumption. This would indicate the correct policies that the world's decision makers should implement for energy supply, pricing, and conservation. This problem turned out to be more difficult than I expected. I spent week after week covering sheet after sheet of paper with formulae, getting more and more confused and frustrated. Eventually it dawned on me that the problem was probably mathematically insoluble and, more devastatingly, that nobody had any interest in or use for any solution I might find. I had completely floated away from earthly reality.

This realization led me, when I returned to the United States in 1986, to look for a "real job." I got one at Pacific Gas and Electric Company in San Francisco, the monopoly supplier of electricity and natural gas to Northern California. PG&E was right in the middle of pitched panalytical and political battles over nuclear power, environmental protection, energy conservation, and utility deregulation . I was given the title Corporate Planning Coordinator and an office near the top executives, with a beautiful view of San Francisco Bay. My job was to work on strategic problems and recommend solutions to the executives. I understood that the way to get ahead was to know the one right answer to any question, quickly: "Well, boss, the return on that investment would be 10.2 percent. So I recommend that we go for it."

PG&E, a publicly traded company, was strictly regulated by the California Public Utilities Commission (CPUC). The company had a simple, highly controlled business model: it forecast what it needed to do in order to serve its ratepayers, added up these "revenue requirements," and then petitioned the CPUC for permission to charge rates sufficient to cover them. These regulatory rules were designed to provide consumers with reliable, low-cost energy, and to provide PG&E shareholders with a low but steady rate of return. The primary focus of PG&E's management attention was therefore not on customers, but on formal public hearings before the CPUC. Fittingly, eight of the nine members of the company's executive Management Committee were lawyers .

In our semijudicial rate hearings before the CPUC, we asked for rate increases to cover the cost of investing in new power plants to meet growing consumer demand. Our case rested on the soundness of our forecasts. Consumer and environmental groups tried to prove that our forecasts were too high and that we did not really need to build more power plants or have higher rates. We had a set of sixteen detailed, linked mainframe computer models that took ten days to run through. At the CPUC hearings, energy policy experts fought "model wars" as to who had the right numbers about the future; in other words, who had the societally optimal answer.

After a year, this whole approach started to seem like make-believe to me. From my work on forecasting at IIASA and before, I knew that no one could really have the right numbers about the future especially because deregulation was about to upend the industry. This orderly, controlled edifice of models and predictions and hearings was not realistic.

In the midst of all of these changes and challenges at PG&E, I was very content to be working directly for the real decision makers. I reported to the Senior Vice President of Corporate Planning, Mason Willrich, a former law school professor and an arms control policy expert. I was delighted with my boss, and I could only imagine how much more brilliant his bosses must be. The hierarchy at PG&E was so obvious that it was never even mentioned. The CEO was in charge, his senior officers were next in line, and then the officers, and so on down the ranks. I assumed that the people at the top were smarter and more informed than the rest of us.

I was keen to fit in and make a good impression . On my first day I mentally measured the width of Willrich's trouser leg where it hit his shoe, so that I could make sure mine did the same. After only a few weeks, I found myself smiling every time I walked past a PG&E manhole cover on the sidewalk. I was happy to be doing an important job for an important company.

Because I coordinated internal planning studies for the Management Committee, I went to some of their meetings in the enormous , oak-paneled boardroom on the top floor. Here, conversations were polite, reasoned, and completely under control. The company secretary provided orderly agendas and discreetly negotiated minutes.

In my second year, I was assigned to assemble the analytical material for the annual Management Committee strategy retreat. The meeting was held at a rustic lodge on a wild mountain property, near one of the company's small hydroelectric dams. I was excited to be with the bosses in their inner conclave, even though on the first evening, the president took several hundred dollars away from me in a poker game.

Given my exalted expectations, the retreat itself was a profound letdown. I watched the business sessions in stupefied disbelief. The executives ignored the analytical material, played power games , ganged up on each other, pretended to misunderstand, settled old scores. I was deeply disillusioned and felt my commitment to the company slipping away. This was not at all the brilliant, informed, rational decision making that I had been trained to expect. The world did not work the way my one-right-answer textbooks said it did. Something much messier was really going onand I wanted to understand it.