Rep. Ken Ivory & Dan Griffiths: Creating a Financial Emergency Plan for States

In a country where insolvent states increasingly compete for Federal funds, Utah is bucking the trend. And in the process, it’s showing the type of leadership this nation will need more of to deal with its national economic plight.

A recent slew of new legislation has been passed collectively known as the Financial Ready Utah (FRU) initiative to assess the state’s greatest financial vulnerabilities and to identify the most promising programs for addressing them at the state, community, and household levels. As a result of its earthquake-prone geology, Utah has developed a robust statewide disaster-response system. The FRU initiative prudently asks: Shouldn’t we also have a financial-earthquake preparedness program in case of another 2008-style (or worse) economic shock, which the math indicates is more than likely?

In this week’s podcast, Chris talks with two of the driving members behind Financial Ready Utah, Representative Ken Ivory and CPA Dan Griffiths. Representative Ivory started the initial momentum behind the new legislation by pushing for a first-ever audit of the state’s receipts of Federal funds, essentially asking each state agency: How much Federal money do you receive each year?

The results were sobering:

What we learned in this process is that the State of Utah is somewhere between 30%-50% dependent on Federal Funds for their state budget. Imagine you're a company and 40% of your revenues come from a single source that is telling you in their consolidated financial statements that they’re broke. You probably ought to have a contingency plan.
Not only were no contingency plans on the table, but with the passage of the sequestration, the state is already seeing early efforts by the U.S. Government to reduce the annual funds to the state:
We’re seeing this already. Even over the last couple of months with sequestration, the Federal Government is reaching in and not just cutting its expenses; it’s cutting our revenue items – items that come right out of the land, the monies that were supposed to come off first to educate children. They’re not only cutting those back; they’re reaching back in time and saying you have to pay back what you've already spent. I mean, imagine that. That’s just unfathomable that they’re reaching in to do that.

They’re taking mineral release money from revenues that are extracted right out of the ground and taking that revenue out of local schools and local economies. That’s happening right now. That took the alarm bells to a new level.

So, in response, the state created the Financial Ready Utah initiative, bringing together state, private, NGO, and community organizations to begin scoping readiness solutions. It’s early days, but it’s refreshing to see a public, adult-sized dialog amongst leaders on a critical topic with little short-term political value.

Chris and I have been pleased to note that much of the discussion so far has centered on the importance of developing greater resilience the same kind that is recommended in our Resilient Life section at various levels throughout the state. As well, we were glad to hear that there is growing interest from other states in what Utah is pioneering here. If Utah’s example inspires other states to follow suit and bring their own ideas into the mix, we can accelerate our understanding of the most successful tactics, as well as reduce our national vulnerabilities:

Our system has evolved to something it was never intended to be. It was supposed to be 50 laboratories of freedom and of innovation. But we’ve consolidated that to a level now that we only have one firewall of risk. If the Federal Government has a hiccup, that affects everyone. Our system was never intended to be that way. We’ve got to restore balance in that partnership and pull that back down so that we can innovate in these 50 different laboratories and have these kinds of experiments in resiliency that you're talking about.
Click the play button below to listen to Chris' interview with Representative Ken Ivory and Dan Griffiths (23m:31s):

This is a companion discussion topic for the original entry at

The rest of the world sees the USA as the nation that drops bombs relentlessly on kids.
This is a much better way of representing yourselves.


I know it may sound like splitting hairs, but it's not the US in it's  entity dropping bombs.  I think you'd be hard pressed to find a meaningful minority of voters in the US wo agree with having permanent troups in 150 countries or the US spending as much on military as the entire rest of the world combined or starting one war after another.
Our vote has no meaningful impact these days.  The US Government is out of control and unresponsive.  It's the equivalent of blaming the citizens of the USSR for the Kremlin's actions.  Just because we are a "free country" doesn't mean we have any control over or say in our government.

If it makes you feel better, the US is doing exactly the same thing the USSR did.  They, not us, are fighting and spending their way into financial collapse.  I can't see this continuing much longer and the end will likely be just as fast as the end for the USSR.

We're mostly just along for the ride.

I'm delighted to see this.  It would be fantastic if this movement caught on with other states.  Even though it's too late to do much good, perhaps the federal government will even notice the concern.
The focus on local resiliancy and local resources is timely.

I always blanch, however, when people put churches in the mix of local resources.  Churchs, no doubt do a trememdous amount of good world wide.  

However, first, religions are notoriously bad about seeing overpopulation as an issue.  Overpopulation is the 800 lb Gorilla that we still rarely talk about directly.  We only address the impacts of over population by discussing pollution and resourse depletion as if they are separate unrelated phenomenon.  

Second, wars are still being fought over religious intollerance that began thousands of years ago.  My wife read in the paper yesterday that blasphemy has been elevated to a criminal offense in Eqypt.

Perhaps, we need to grow up in order to have grown up conversations.




I know that Les. You know that.It takes a lot of effort to build a good reputation. The reputation is destroyed with one violent action. Unfortunately, when the rest of the world thinks USA they think bombs, drones, surveillance, they think of cops pepper spraying kids. It is not a good look.  I had the same view of Russians until I married a Communist.
I am hoping that these initiatives help to turn that perspective around to viewing the people as people.
I regret having written the words. However I wanted to juxtapose the two philosophies together to highlight the opposing positions of what is being attempted here by the citizens and the other unspeakable actions that are being perpetrated in your name. Because that was my honest reaction.

We in the USA need to know how the world sees us.  
Every American that I know personally is completely opposed to the extrajudicial murders being conducted world wide via remote controlled drones and high altitude bombing.  Yet to the outside world, these are being committed by "the Americans."

I interpret this immense distrepancy between public desire and national behaviour as indicating that a psychopathic and organized group of some kind actually runs the country.  (Is it as organized as a "cabal" or just the pooled influence of the military-industrial complex?)

As an aside, everyone knows that "karma is a b*tch."  Our chidren may well feel the backlash.


…will be whether gov can incentivize folks to invest money in resilience-related things/projects.  With the heinous ZIRP (soon to be NIRP?) environment, folks (and pension funds, etc.) are chasing return by putting their money into the same sort of paper scams that will eventually blow up same as the MBS scams (and dot-coms before them, etc.).  This horrible misallocation of capital on a society-wide basis will eventually end up destroying much of the precious capital that is desperatelly needed to fund resilience-related projects.  Can you imagine a pension fund that would invest tens of millions in putting a solar hot water heater on every house/building in a given state (see CM's interview w/Kloster on this sort of idea [he talks about windpower generation investment]  Dr. Chris has quoted a real rate of return on such an investment in his house in the area of 10%+ per year.  Sure beats buying corporate junk at 5-3/4% – better return, and it actually accomplishes something useful (actually, several things).
I've been gradually coming to understand the long-term ill effect of consistent misallocation of capital in this big-picture sense, and it scares the dickens out of me now that it really sinks in…

We're throwing our society's seed corn onto the ground in hopes of attracting pigeons that we'll then shoot, so as to feed them to our hunting dogs, which we'll then take out on a fox hunt – so we might catch and eat a single fox.  Hm.  There's a vastly superior metaphor waiting to be discovered, but that's what I have instanter…

But eventually we get to an event horizon where QE and ZIRP/NIRP have run their course, and there's essentially no capital remaining to fund the work needed to maintain society as an ongoing concern…


Viva anyway! – Sager

It is nice to see this kind of dialogue happening, and many of the points made by Griffiths and Ivory are good. But I would challenge both to look deeper into the systemic causes and to question their own roles within the system. Too many of our cultural decisions are being made to fit this pathological system. Assumptions need to be rigorously challenged. Since this might be one of my only chances to have the ears of these two leaders (maybe they will read this?), I'll expand…
For instance, Griffiths' remark…"When they look at the Federal financial statements, their eyes bug out, and they think if this were a business, this would be crazy." The tendency to want to apply micro level economics to macro can be dangerous. "Bottom-lines" of federal governments should not mirror the bottom-lines of corporations for obvious reasons of differing ultimate goals. I'm sure the Griffiths and Ivory realize this, but I've heard this statement too many times in the past 20 years and it's often assumed it that it makes logical sense.  CPAs often confine their math to the predefined models of balance sheets based on economic models that factor out most external costs (societal, cultural, environment, etc). Maximization of utility or profit reduces human lives to output-input ratios. The costs to culture and community is never, or hardly ever, factored into these balance sheets. Governments on the other hand must take into account the value (however you might measure it??) of culture and community.

One of the first big assumptions that needs to be challenged is…that human behavior can be approximated by non-cultural models/methods (i.e. math). Why should we do this? In the past, before the disciplinary/mathematical approach to economics (through econometrics), self-interested behavior was kept in check by community values and culture. Through econometric analysis, these checks were removed and continued to move the "system" in the pathological direction of only considering efficiency, profitabilty, and productivity. In essence, we replaced living human beings with mathematical models. These models are then named "the free market" and our behaviors need to "fit" the models.

The second assumption that needs challenging is… that production of goods and services has a small effect on the biosphere. This is definitely being challenged, but by no means on a level that shows meaningful consequences. The economy needs to be put under the biosphere. I'm not saying that people don't understand this, but our economic "models" and balance sheets do not acknowledge this. The concept of throughput in our economic visions/models carry no exchange with the environment…our economies still remains separate and are viewed as isolated systems. The rational gap between these two separate systems is bridged in our society with the belief in technology. The problem with this separation is what we face…that economic growth becomes the solution for all our ailments.

The third assumption…the evolution of economic measurement only applies to the mechanisms internal to  the economy (market, free trade, and globalization). This leads to the market "fundamentalism" that has brought devastating consequences through the inherent mantras the accompany it. Mantras such as… if we don't engage in free trade we will be left behind. (left behind what?)

All these assumptions paved the way for human beings to be reduced through the disciplinary "science" of economics to create an enormous amount of "facts and mathematical theories" that have the appearance of being exact/scientific. 

Ever increasing "growth" relies on continual specialization, and the application of this specialized knowledge and technology. Galbraith describes how corporations over the past hundred years had to change to assimilate this knowledge which led to the organization of what he called the "technostructure." We need to challenge these assumptions and specialization!

Finally, to get to liberty. The concept of liberty needs to be clearly defined, or redefined, in light of the interconnectedness of life and the environment. Entrepreneurship seems to be the right spirit, but a balance needs to be struck with how much one person's right to choose effects another's as well as the biosphere on which we all depend. I finish with a quote from Griffiths…

Griffiths wrote: I think CPAs do have a role to play, and we can speak probably in ways that legislators aren’t at liberty to speak because of their positions and needing to get re-elected. But we’re in a place where we can be independent and say look, the math just doesn’t work. We need to start preparing.
If the system doesn't allow those "in charge" of changing the system to speak freely then who is in charge? The system?

Please be courageous to challenge the authority of your own specialty!



I don't regret you having said them.  I'm sure what you said is completely true, even if unfortunate.  
Communication is the key to clearing up misunderstandings.
I could rant about the power structure over hear, but, to a large extent, I'd be repeating things I've learned or had reinforced on this website.
A thought that has crossed my mind once or twice is that, when things start getting dicey, those who control the weapons over here could use them to control us the same way they are currently using them around the world.
Somehow, I just don't see the people in our government just packing up and going home when the dollar becomes worthless.