Monthly Archives: November 2010

Brad Delong: Yes We Could've

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Some folks have argued that given the Republican’s Obama-must-fail strategy and the Conservadems desire to punish working families, there’s no way Obama could have prevented the economy from going off the cliff. Brad DeLong has published a great, depressing talk that’s a center-liberal economist perspective on what Obama could’ve done despite these obstacles.

Although a big government stimulus s was going to be almost impossible to pull off, at the beginning of his administration Obama had a number of other tools at his disposal that didn’t require the Congress’ or Senate’s approval.

The Federal Reserve could act in an extraordinary manner by engaging in “quantitative easing” policies….

The Federal Reserve could engage in open-mouth operations and state that it is raising its targets for the price level and the inflation rate. Such announcements would lead investors to expect that their holdings of safe high-quality nominal assets would be subject to a small inflation tax. That would diminish their demand for such assets in their portfolios–and as a consequence increase their demand for currentlyproduced goods and services instead. Once again, not as powerful as conventional open-market operations in normal times. But also not chopped liver….

The Treasury could engage in targeted nationalizations to keep the inability of firms to get credit on usual terms from causing mass layoffs and bankruptcies and shutdowns that are unnecessary in the long run. The U.S. government did this with Fannie Mae, Freddie Mac, AIG, GM, and Chrysler–other financial bankruptcies were forcibly merged into stronger firms–but it could have done more….

The Treasury could use its resources to take private risk onto its balance sheet when it thinks markets have overshot and risky assets are undervalued–thus hopefully making money as the world’s largest hedge fund and adding to the risk-bearing capacity of the market.

The Treasury can reorganize mortgages by providing liquidity and a little up-front cash in exchange for principal writedowns–thus making the riskiest part of the financial asset structure less risky….

these tools are applications of Walter Bagehot’s rule: the principal that the way to deal with a panic in which nobody is sure if contracts will be honored is for the government to make sure that contracts are honored by lending freely to anybody who asks. (But, Bagehot wrote, the lending should be “at a penalty rate”–financiers should never profit from the fact of government assistance to stem the panic. That is the second part of Bagehot’s rule.)

Delong was convinced Obama would do at least some of this:

10% unemployment seemed, to me, politically unthinkable. 10% unemployment for any substantial period of time seemed, to me, doubly politically unthinkable….

The correlation between economic growth and electoral success not just at the presidential level but at the congressional-midterm level is well known. The correlation is strong. The difference between a rapid recovery and a jobless one is worth 20 seats in the House of Representatives in midterm elections. Every pollster knows about the correlation between economic growth in the two and three quarters before an election and electoral success in it. So if there is one thing that the policy and the political and the message staffs in the White House should be able to all agree should not fade to the backburner, it is the macro recovery situation.

But that’s not what happened: Continue reading →

Combining Principles & Strategies into Stack the Odds

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One of the things I figured out while consolidating my core principles down to just three is that a number of the free-floating principles and strategies I wasn’t sure how to categorize will fit into Stack the Odds in Favor of the Good Guys:

I’m a little stretched for time this week, so next week I’ll explain how these five strategies are part of a new way of thinking about Stack the Odds.

Down to Three!

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My headbanging is beginning to pay off. After messing around a bit, I figured out how to take some of the Principles I’ve been discussing and incorporate them in other Principles. For example, I figured out that Make It Easy is isn’t a separate principle, it’s just one strategy that’s part of Stack the Odds in Favor of the Good Guys.

As a result, I’m down to three core principles:

Bit by bit, upward and onward!

Kentuckians Kick Ass – with People Power & A Positive Vision

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Some great news from one of my fav groups, Kentuckians for the Commonwealth. After years of fighting, a victory:

We have some great news to announce: The coal-burning power plant proposed by the East Kentucky Power Cooperative (EKPC) has been canceled by the utility.

EKPC has entered into an agreement with Kentuckians For The Commonwealth, Kentucky Environmental Foundation, the Sierra Club, three individual co-op members, the Kentucky attorney general, and Gallatin Steel (EKPC’s biggest industrial customer). Under the agreement, EKPC will halt its plans for the proposed [nearly $1 billion] coal-burning power plant in Clark County by abandoning the permits it needed to proceed with construction. The cooperative also committed $125,000 toward a collaborative effort in which the public interest groups, EKPC and its member co-ops, and other parties will work together to evaluate and recommend new energy efficiency programs and renewable energy options.

To pull this off in coal country is pretty damn impressive – especially since they got the power company to agree to take a serious look at investing in renewable energy.

KFC won not only because they ran a great campaign against the plant but also because they have a vision of where they think Appalachian Kentucky could go. Their plan called Renew East Kentucky, is very sharp. It takes advantage of existing infrastructure:

EKPC and the local co-ops already have the infrastructure in place to ramp up EE/RE solutions to scale throughout the region—trucks, workers, power lines, contracts, customers, and brand. Most of the co-ops have more than 70 years of experience each, and with their proven capacity for billing and servicing more than half a million members, the electric co-ops are in the perfect position to provide an immediate shot in the arm that would kick off a wider Appalachian transition.

Because it’s being run through co-ops, more of the money is likely to stay within the community. And what they learn from their experience could be scaled up:

The co-ops here are similar to the more than 400 other rural electric co-ops across the nation… this plan can become a model, or template, that can be picked up and implemented by—and can become a vision for—hundreds of other co-ops and for the more than 40 million members those co-ops

More excerpts from Renew East Kentucky: Continue reading →

"The Choice": Strengths and Weaknesses

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The intro I wrote last week? Nice idea but no cigar. It feels gimmicky. Maybe it’s that it sounds too formal? Or maybe it’s that the “no accident” approach isn’t working for me (although I think it does for Demos and Topos).

But the intro does have a few strengths. It’s stronger than the 3 Market Myths I tried in July, because it starts from a positive goal – building the middle class – instead of a negative –”our debate about the economy the economy is shaped by 3 myths that tilt the playing field in favor of the values of people with power.”

It also lets me put on the table the history of how we’ve used the government. With a little work I might be able to set it up so it foreshadows the core pieces of the framework.

And it ties this history of government involvement to the middle class, which most Americans really value. Plenty of people will argue against “big government,” but how many of them will argue that the government shouldn’t have helped create a strong middle class?

Overall, not the right starting point, but a couple of useful bits.

Stopping the Climate Crisis 101: Admit People Aren't Calculators

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Dr. Doug McKenzie-Mohr, author of Fostering Sustainable Behavior: An Introduction to Community-Based Social Marketing. on why a carbon tax might help, but it ain’t enough: because People Aren’t Calculators

The most that price can really do is enhance motivation to act. If we get the prices right, it does not make it any easier for the person who does not have a vehicle, or is physically disabled, to get down to the hardware to pick up a programmable thermostat. It just makes them feel more anxious about the fact that they ought to be doing it.

What research has demonstrated, he argues, is that you need to do a lot of nitty-gritty work — break down the kind of behaviors you’re trying to change and study what are the actual, real-world barriers to getting folks to change. As he told Grist’s David Roberts,

If we skip [the work], we fail. If we want to get people to bike to work on a massive scale, we have to understand intimately what the barriers are to that behavioral choice — and they will differ for people in different locations — and put programs in place that make that behavior much more convenient than it is now, and at the same time make the competing behavior, single-occupant driving, less convenient. I wish there were easy solutions. But each of the behavioral changes we’d like to encourage have their own set of barriers. If we don’t understand what they are, we’re not going to build effective programs.

European Unions: Slow on the Draw?

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The American Prospect has an interesting series of articles on how CWA, the Steelworkers, SIEU, and other US unions have been reaching out to European unions for help in organizing. You may not realize it, but if there’s a school bus that gets your kid to school, or there’s a security guard in your office building or your bank, or if there is a cafeteria in your office building or on your college kid’s campus, odds are they are part of a European-owned company.

In this age of globalization, large foreign multinationals are acquiring subsidiaries in the United States. Going native, they are embracing anti-union tactics they avoid at home, where unions often have legal recognition, respect, and political influence.

In turn, US unions are learning how to work back up the food chain.
(Disclosure: I’ve worked for some of the unions and campaigns mentioned in these articles)

Take the case of 58-year-old Marcia Snell, who spent a “decade working for food concessions operated by the French multinational Sodexo at Ohio State University sports arenas.”

on her part-time hours and low pay ($9 an hour or less until recently, after she began organizing and got a raise and a full work week), Snell had to raise her five children with the help of Medicaid, food stamps, and public assistance. When her Medicaid coverage ended, she could not afford Sodexo’s insurance or her heart medicine and then needed bypass surgery.

French Sodexo union leaders Jean-Michel Dupire and Gerard Bodard say that after visiting Columbus last spring, they were shocked by differences between the lives of Americans like Snell and French Sodexo workers — and the difference between Sodexo’s self-image and reality. In France, anyone can easily join a union, and everyone in the food services is under union contracts. Most French Sodexo workers earn the minimum wage (about $12 an hour), but they have comprehensive public health insurance, a much more generous public pension, full work weeks, and six weeks paid vacation. (Snell will get her first few vacation days next year.)

“I think we’ll help each other,” Bodard says, “because we’re working for a global company, and the only way for us to go is to build global power. In France, we’ve put pressure on Sodexo and given publicity [to U.S. conditions] so everyone in the sector knows about it.”

Reflecting the growing worry that multinational companies will bring U.S. labor standards to Europe, Bodard adds, “What I’m going for is equal treatment, but it’s also important to bring everyone to the top, not the bottom.”

“The French workers stood by us and want to help us get a union,” Snell says. “They actually cried when we told them our stories. … By workers from other states and countries going together, it shows we really want a union.”

Although there have been exciting first steps, the road to Solidarity Forever has been rocky. Partly it’s because it’s hard work. But there are hints in these articles that European unions are also to blame.

Let’s start with the example of International Framework Agreements (IFAs), over 50 international agreements primarily signed by European-based corporations that were won in the last decade. Continue reading →

Deficit Obsession Is to Unemployment As Choosing Paint Colors is to…

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Another smart, quick Dean Baker smackdown:

The NYT Doesn’t Know That We Have 15 Million People Unemployed

That is the only thing that readers can conclude from its heroic efforts to balance the budget in 2030. This exercise is utterly mind-boggling. We have more than 25 million people unemployed, underemployed, or who have given up work altogether.…

It is utterly loony to be focused on the projected deficit in 2030, when we have tens of millions of people who are seeing their lives ruined today by the downturn. This is like debating the colors to paint the classrooms when the school is on fire with the students still inside.

"The Choice": One Possible Intro

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It feels like I’m getting close to having the right pieces for my framework. Where I’m still really struggling is gluing them together. So, I’ve been playing around with a new way of an intro for my framework that riffs off of Demos/Topos’ Promoting Broad Prosperity. Here’s the longer version:

The middle class is in trouble – and it’s no accident. Not because of an evil conspiracy, but because of a decision made a long time ago.

In the 30s and 40s, through affordable mortgages, college loans, Social Security, supporting basic research, fostering markets in computers and electronics and other means of creating new jobs & growth, and the right to join unions, our country helped to create a thriving middle class. Initially these benefits were only available to whites, but if the economy had stayed on the same path the civil rights movement would have closed that gap.

But there was a catch. Government help for the middle class wasn’t treated as government. Meanwhile, the paltry scraps of government help for the poor were constantly attacked as “big government” or “socialism.”

And so when the world economy changed, the middle class didn’t have a way to talk about the challenges created by this new economy or how the government could respond. And so as good jobs were destroyed, Wall Street got rich wrecking the economy, middle-class paychecks stopped growing, and the cost of housing, healthcare, and education kept rising, the middle class was defenseless.

Today we face a new choice. We can keep pretending that the government doesn’t play a big role in the economy and suffer the consequences. Or we can face up to this reality and ask ourselves, how do we put the government back on the side of the middle class and also the working poor? How do we rebuild the middle class and the freedom to choose our destiny as individuals and as a community?

Not a bad first draft! It’s a little rough on the edges and needs a bunch of editing, but it feels like a good place to start. Rather than spending more time reworking it, next I’m going to figure out how to tie this new opening to the pieces of my framework. Stay tuned…

Starbucks' Idealism vs. Stacking the Odds in Favor of the Good Guys

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Fast Company has an interesting article about Starbucks’ efforts to figure out a way of making their cups sustainable. Most of the article focuses on Starbucks’ trials and tribulations – it turns out it’s a lot more complicated than it might at first seen. But near the end of the article, Fast Company gets down to brass tacks:

The complexity dissipates, apparently, when you have the law on your side. Only 5% of Starbucks stores currently recycle cups, and that’s mainly in places like Seattle, San Francisco, and Ontario, where it’s required by law. Tim Hortons recycles paper packaging in 600 stores in Ontario due to legislation passed in 2002. It was the law, not corporate initiatives, that enabled Cedar Grove’s state-of-the-art, profitable (and expanding) composting facilities, the largest in the nation…

Could the solution to Starbucks’s long-standing cup conundrum actually be legislative change? Look at the recycling rates of soft-drink cans and bottles. “Our national recycling rate for bottles and cans is only 34%,” says As You Sow’s MacKerron. “It was over 50% just 20 years ago.” Part of the reason for the decline, he says, is that Coke and Pepsi have lobbied aggressively against mandatory take-back laws. In the 11 states that do have these deposit laws, more than 80% of cans and bottles get recycled.

The solution for the paper coffee cup may lie not with building coalitions and markets — or with corporate social responsibility at all. “Landfills in Europe charge an average of $250 a ton. In America, it’s $40,” says Eco-Cycle’s Lombardi. “Ireland created a compost industry overnight by doubling landfill fees and creating a zero-interest loan for any composting business.” Economical technology exists today for 80% to 90% resource recovery through recycling and composting (including harvesting of methane for energy). There’s a lot of money to be made from an essentially zero-waste economy, but only if the right incentives are in place. “I think Starbucks supports this,” Lombardi adds. “Its vision and words are exactly what we want to see top global companies doing. But it can’t do it alone.”

If that’s the case, why doesn’t Starbucks also fight for laws that stack the odds in favor of the good guys?

I ask Hanna why the Shared Planet goal doesn’t simply read “We will advocate and lobby for mandatory recycling laws wherever Starbucks stores are located.” He pauses and chuckles, uncharacteristically at a loss for words. “That’s a tough question,” he says, before specifying that Starbucks supports recycling laws “where cities work with the business community, so there’s a level playing field. Laws are written differently from community to community. That’s why I can’t say that Starbucks supports laws in every community.”

‘Nuff said.