Monthly Archives: March 2011

Steven Lerner on Slapping Wall Street Upside the Head

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Two weeks ago, I wrote about how I think we should go on the offensive. Other folks have been trying to answer the some question – and some of them are trying to actually do something. Steve Lerner, ex-SEIU organizing strategist and one of my heroes, is one of them. Here’s his plan:

As long as Wall Street and the superrich feel secure and confident, they have no reason to negotiate a fair deal with the rest of us. Only by creating uncertainty and instability for them—by disrupting unfair business as usual—can we build the strength to challenge their stranglehold on our economy and our democracy….

Here’s how we can start:

§ Homeowners and students can stop paying unfair debt. If growing numbers of homeowners and students organize toward a loan strike—threatening to refuse to pay their toxic mortgages and student loans unless banks agree to negotiate lower rates—it could force banks to modify loans and provide relief to our families.

§ Citizens can demand that our governments stop doing business with bandit banks. Local governments conduct trilliions in business with Wall Street banks. That leverage can be used to force the banks to pay their fair share in taxes, renegotiate high-cost deals that are bankrupting taxpayers with astronomical interest rates, and stop foreclosures by reducing mortgage principals.

§ Public employees can use their collective bargaining power to protect taxpayer dollars. Teachers, nurses and other public employees can go to the bargaining table armed with solutions that would save billions, like renegotiating the toxic interest rate swaps that are costing taxpayers at least $1.8 billion a year nationally. Swaps were supposed to save taxpayers money, but they backfired when the Federal Reserve cut interest rates after the financial crash to help the banks. Now, as taxpayers deal with devastating cuts, the banks are using these swaps to suck millions out of government coffers. Imagine public employees voting to strike in order to pressure the city or state to use its power to protect taxpayers and critical services while also stopping foreclosures and stabilizing the housing market and tax base.

So let’s give Wall Street, Glenn Beck and the right something to be scared about. It’s time to use our collective power to challenge the economic and political stranglehold they have on our country.

Join thousands of Americans on April 4 in cities across the country for a dramatic series of actions to stand up for the middle class. On April 5, join the national teach-in with Frances Piven and Cornel West. Or start organizing in your own community to challenge the power of Wall Street and corporate CEOs.

FYI, the reason he’s talking about Glenn Beck is that some right-wing plant was at a conference where Lerner was speaking, taped him, and then Glenn Beck went on the warpath, accusing Lerner of “economic terrorism.” Apparently Beck didn’t realize that Lerner isn’t an NPR/Obama weenie – smack him and he’s going to smack you back twice as hard.

The best quote from the piece:

Beck, right-wingers and Wall Street sympathizers went ballistic because they knew the ideas I talked about are far from being a secret leftist conspiracy; in fact, they’re in sync with the thinking of most Americans. In my talk, I raised a very simple yet powerful idea: that homeowners, students, citizens and workers should make the same practical decisions Wall Street and corporate CEOs make every day—they should reject bad financial deals.

If you’re looking to have fun and push back against the corporate takeover, get ready to join in on April 4th and 5th.

Disclosure: I know Steven Lerner, from when I used to work in the union movement.

Two Quotes on Learning, Making Mistakes, and Feedback Loops

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As a followup to Monday’s post on We Aren’t As Smart as We Think We Are, 2 quotes:

Fujio Cho, former Chairman of Toyota Motor Corporation:

We place the highest value on actual implementation and taking action. There are many things one doesn’t understand and therefore, we ask them why don’t you just go ahead and take action; try to do something? You realize how little you know and you face your own failures and you simply can correct those failures and redo it again and at the second trial you realize another mistake or another thing you didn’t like so you can redo it once again. So by constant improvement, or, should I say, the improvement based on action, one can rise to the higher level of practice and knowledge.

Danny Meyers, restaurant owner and author of Setting the Table: The Transforming Power of Hospitality in Business:

The road to success is paved with mistakes well handled.

Is "We're Not As Smart As We Think We Are" an Infinite Regress?

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A snarky friend asked, how is it possible that We’re Not As Smart As We Think We Are? Isn’t that an infinite regress?

To understand why it isn’t, I’m going to geek out a bit and talk about some lessons a lot of folks – including myself – have learned the hard way about building software:

a) Nonfunctional Prototypes. If I’m managing a project to build a complex piece of software, before the programmers start writing code I often ask them to create a “nonfunctional prototype” – some quick-and-dirty sketches or mockups that the users can react to. Why? Because no matter how well a programmer or I think we understand what users said they want, we almost never get it right the first time – and usually not the second or third or fourth time either. And it’s a hell of a lot cheaper to rip up a quick sketch than to rip up days or weeks or months of coding.

And it’s not just us coders. Someone like Jacob Nielsen, the granddaddy’s of studying “usability,” does the same thing. Why? Because even Nielson isn’t smart enough to know what users want.

Here’s what makes this tricky. When you’re building the first mockups, an awful lot of the time you’re pretty sure you know what users will and won’t like. Even if you’ve been doing this for many years and have been surprised over and over by what users do and don’t find intuitive, some part of your lizard brain thinks you nailed it — or at least a good part of it. And that’s why we have the rule about nonfunctional protos: to put that part of your brain in check.

b) Building Software Iteratively. Rather than trying to build a program all in one swoop, break it into a series of mini projects or “iterations.” Why? Because, as they say in the military, no plan survives first contact with the enemy. It often turns out that users didn’t know what they really wanted – especially if they haven’t used the type of software you’re building. Or halfway through the project, your organization’s needs change. Or you discover that some parts you thought would be straightforward turn out to be a real mess and take three times as long to code. Or after you’ve gotten started, you realize that for a critical facet of the project you’ve been trying to solve the wrong problem. And so on. If you design the whole thing and then build it in one shot, you have to get it exactly right the first time. But if you build it iteratively, each iteration is another chance to respond or recover from the almost inevitable surprises.

When I start a complicated project, one part of my brain knows this. But the other part is whistling, hi ho, hi ho, it’s off to work we go! It’s cheerfully optimistic about how the project will play out. That, ultimately, is why iterations are crucial: they save you from yourself.

And that crazy optimism may be necessary. A developer I know likes to say that new software projects are like giving birth to her second child: if she remembered what it was really like the first time she gave birth, she’d never do it again.

I’ve worked with developers who do remember it all, in vivid detail. These folks don’t tend to get much done. They’re so bogged down by uncertainties and so disillusioned about what’s probably going to happen that they can’t do good work, and they tend to suck the energy out of everybody else.

It takes an insane level of can-do optimism to pull off great software. That’s probably true of a lot of things in life – creating a new company, trying to solve a social problem. That insane optimism is the engine that keeps you running. But you also need a structure that protects you from that optimism, that keeps gently but firmly reminding you, We Aren’t As Smart as We Think We Are.

Less Greenhouse Gas, More Cash

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So far, most economic models have shown that cutting greenhouse gas emissions will reduce growth, but only by a little. But a study commissioned by the German government argues that it could actually increase GDP — and not just by a little.

Increasing the EU’s 2020 greenhouse gas reduction target from 20% to 30% could help boosting European investments from 18% to 22% of GDP, leading to a GDP increase of up to €620bn ($840bn) and the creation of up to 6 millions additional jobs.

The reason for the big difference? A different set of assumptions:

Traditional models assume a ‘single stable equilibrium’, where investments are determined by an assumption of business-as-usual economic trends. The financial crisis however has exposed the fact that different expectations can lead to different investment behaviors, turning those expectations into self-fulfilling prophecies. The new model highlights the importance of policy in shaping investors’ expectations, leading to a virtuous circle of increased investments, faster ‘learning by doing’ in technology and manufacturing and enhanced expectations by investors in the market.

Or as the lead author of the report, Professor Carlo C. Jaeger from the Potsdam Institute for Climate Impact Research, says:

“In traditional economic models, reducing greenhouse gas emissions incurs an extra cost in the short term which is justified by avoiding long term damages. However what we are showing here is that by credibly engaging on the transition to a low-carbon economy through the adoption of an ambitious target and adequate policies, Europe will find itself in a win-win situation of increasing economic growth while reducing greenhouse gases”.

To Save the Planet, Don't Own a Prius, Live Near Metro/BART

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If you want help save the planet, you should green your house or buy a green car, right? Not so fast, says an EPA study (via Planetizen).

No factor has a bigger impact than going from conventional suburban to transit-oriented design. Making that change alone results in a 50 percent reduction in energy use in multifamily buildings and 42 percent and 39 percent reductions in single family attached and detached dwellings. In fact, the most inefficient TOD beats the most efficient Conventional suburban development (CSD) in this study. (emphasis added)

How could that be? And what is “transit-oriented design” anyways? The EPA explains:

Housing that is located in a walkable neighborhood near public transit, employment centers, schools, and other amenities allows residents to drive less and thereby reduces transportation costs. Development in such locations is deemed to be “location efficient,” given a more compact design, higher-density construction, and/ or inclusion of a diverse mix of uses. If American families can reduce their necessity to drive through better housing and transportation options, then commute times and household energy costs will drop.

Slicing and Dicing Public Data: A Lot Easier Than It Used to Be

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As Monday’s post noted, one critical piece of turning state pension funds into guardians of the middle class is to make sure that they are as accountable as possible, and that requires transparency. But even if they make tons of data publicly available, how do they make it easy to make sense of it?

The good news: there are a lot more tools out there for easily sliced and diced and public data. Back in November, when Google’s Public Data Explorer went public, Alex Howard at O’Reilly Radar summed up the state of the art:

Google Public Data Explorer isn’t the first big data visualization app to go online, as Mike Melanson pointed out over at ReadWriteWeb. Sites like Factual, CKAN, InfoChimps and Amazon’s Public Data Sets are also making it easier for people to work with big data

Of note to government agencies: Google is looking for partnerships with “official providers” of public data, which can request to have their datasets appear in the Public Data Explorer directory.

In a post on Google’s official blog, Omar Benjelloun, technical lead of Google’s public data team, wrote more about Public Data Explorer and the different ways that the search giant has been working with public data:

“Together with our data provider partners, we’ve curated 27 datasets including more than 300 data metrics. You can now use the Public Data Explorer to visualize everything from labor productivity (OECD) to Internet speed (Ookla) to gender balance in parliaments (UNECE) to government debt levels (IMF) to population density by municipality (Statistics Catalonia), with more data being added every week.”

Mind you, fancy tools only get you so far. You still need folks who understand the data and now how to turn it into a story that the rest of us will understand. But at least those intrepid souls now have tools at their disposal that make their job a little easier.

To Save State Pension Funds, Make Them Guardians of the Middle Class

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As we saw last week in the tale of John Kasich and the Ohio state pension funds, the biggest danger facing these pension funds is the unchecked power of Wall Street companies. The economy’s rules enshrine a predatory set of values, encouraging Wall Street to act like wolves and treat pension funds like sheep – and to push the economy over the cliff.

Right now, most state pension funds have very narrow mandates. If we are going to protect state pension funds in the future, we need to expand their mandate and turn them into the guardians of the middle class. I don’t know the nitty-gritty details of what is feasible, such as what we could change by ballot initiative in states like Wisconsin or Ohio. But before anybody worries about those details, first we need to decide what’s worth fighting for. Here’s my list:

1) Sheepdogs, not Sheep: To protect the middle class, state pension funds should act as Checks & Balances on Wall Street. We should create a national network of aggressive watchdogs like Amer Ahmad to sound the alarm. Because if predators like Lehman Brothers are trying to sell toxic assets in Ohio, you can bet their bonuses they’ll be trying the same scam on other states. State pension funds’ attitude should be like Danny Moses in Michael Lewis The Big Short:

When a Wall Street firm helped him get into a trade that seemed perfect in every way, he [usually] asked the salesman, “I appreciate this, but I just want to know one thing: How are you going to f**k me?”

And when a politician like Kasich shows up in sheep’s clothing at a state pension fund’s door, it shouldn’t take years & a lot of work for public to know what’s going on. That politician should expect their visit will get tweeted.

This national network shouldn’t just look out for state pension funds. It should also use its muscle to sound the alert whenever Wall Street is starting to do things – like, say, turn home mortgages into Russian roulette — that could seriously burn the middle class and/or blow up the entire economy.

2) Stack the Odds in Favor of the Good Guys : We might want to consider using state pension funds to help create more good jobs. For example, they could invest a not-too-risky portion of pension funds in creating long-term good jobs, such as working with other investors to create statewide Angel Investor funds that have been used successfully by states to support small businesses that are trying to scale up. We’d have to take a serious look at the risks involved – although they’re certainly not as bad as the risks pension funds took with folks like Lehman.

But there’s something else state pension funds could do that carries virtually no risk and could have a big payoff: pushing for changes in the rules that all of Wall Street operates by, to help Stack the Odds in favor of the Good Guys. They could fight for rules that encourage corporations to think in the long-term, push companies to try to create more jobs in the US, favor investing for the long term, etc. One state acting alone couldn’t do much good, but a national network of state pension funds working together – perhaps even with some private pension funds – could make a real difference.

Not only would this strategy help create good jobs, but it would also shore up state pension funds long-term financial health. Unlike a hedge fund, a state pension fund has a vested interest in making sure that its members do well in the many years before they have to retire. And unlike traditional funds, state pension funds care about how the state is doing. Strong state revenues = no pension shortfalls (assuming the funds also have the chops to smack down governors who try to pay less when times are good).

Ditto for housing bubbles that are inflated in part by Wall Street games around risky mortgages. Pension funds were burned by the financial products that were created from this Russian roulette. And when the bubble they helped inflate popped, helping to cause the worst economic plunge since the Great Depression, state pensions got burned once again as state government tax revenue tanked.

3) More Security for All : Republican governors thought now was the time to strike against public sector employees because there wasn’t much sympathy for them. It turned out they were wrong. The public is ready to cut state pension benefits but not get rid of them – or public unions. State pension funds may not be so lucky next time. If they’re going to survive, they need to start explicitly acting as a powerful voice for increasing the security of working families who don’t have state jobs. For example, the funds could fight to create new options for workers who aren’t public employees and who want to get out of the roulette game of 401(k)s, who want to save for the future and know they can count on being able to afford to retire.

4) Make Themselves More Accountable: The key to making all of this work is making it easy for state pension fund’s members and the rest of the public to hold state pension funds accountable. We need transparency to stop corruption. But even more importantly, we need it so we can act on the principle We Aren’t As Smart As We Think We Are. Given how complex the financial world is and how easily folks can be seduced by fast talking sales people from places like Lehman Brothers, pension fund managers can easily get themselves into trouble. We’ve got to create lots of feedback loops to catch them when they do.

For example, state pension funds could take advantage of the folks who already publicly analyze financial data for free — sophisticated finance blogs like Rortybomb, Felix Salmon, naked capitalism, The Baseline Scenario, etc. They could actively enlist these financial bloggers’ help, getting ideas from them about how to make it as easy as possible to get and analyze the pension data needed to keep a close eye on the funds and easily spot red flags.

All of these ideas could do a lot of good – and they’d certainly protect pensions a hell of a lot better than gutting public employees’ right to organize.

I’m no expert when it comes to the nitty-gritty details of how state pension funds operate or how, for example, ballot initiatives work in Wisconsin or Ohio. But what I do know is that if we don’t start asking questions about the role state pension funds should play in our economy and in rebuilding the middle class, if we keep treating decisions about pension funds as if they were mostly complex accounting & financial issues, state pensions are going to go the way of the dodo bird.

What Next?

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Yesterday’s loss in Wisconsin was a real blow, although the folks in Wisconsin and their supporters around the country did a damn good job of fighting back. Now they’re gearing up for the next battle. Their immediate target: recall the jackasses who voted for it.

I’m glad they’re aggressively going for recalling these jokers. But I hope at some point, once the dust settles, they also start figuring out a strategy for going on the ideological offensive – and not just around winning back state workers’ rights to join a union.

Public workers have gotten an incredible amount of support from voters — the last few polls showed solid majorities against taking away state workers’ rights to organize – in large part because many folks see this as a symbol of the beating the middle class has been taking. But conservatives keep making inroads. “Why should public employees get ___ if you don’t?” has been selling pretty well. If public workers aren’t going to lose the war, they’ve got to pick some aggressive fights that help all working families.

Let me explain what I mean. Public sector unions already fight for lots of issues that don’t directly benefit their members. AFSCME, SEIU, and others were at the forefront of the drive for health care reform last year, and they’ve both strongly supported increasing the minimum wage. But now that conservatives have decided it’s time to stop chipping away at public sector unions and try to take them out, unions have got to fight back to create more power for all working families.

That means figuring out a Plan B on empowering folks to organize and join unions without getting fired (Plan A was the Employee Free Choice Act, which has no chance of getting past a filibuster in the forseeable future). For example, I bet some smart organizers could come up with a short list of issues you could run as state ballot initiatives in places like Ohio and Wisconsin that would make organizing easier.

Ditto for state pension funds – more on that on Monday.

And we oughta have at least one ballot initative in each of these and other states where unions are on the defensive in which we smack big corporations and the wealthy, either making them fork up more of their fair share to save libraries, school programs, firefighter jobs, etc. or putting the money into Infrastructure Banks that could help rebuild states and create good jobs.

Three initiatives – around the right to a voice on the job, retooling state pension funds to be a guardian of the middle class, and getting the rich to pay their fair share – plus recalls would give us plenty to organize our anger and outrage while also creating a clear contrast between what we stand for and what they stand for. If we do that, we’ve got a real chance to turn this war around and take back our country.

Nice Smackdown of "I Earned It, so It's Mine"

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In the past few months, right wingers have been arguing that we shouldn’t tax rich folks more because they earned their money all by themselves. British writer Johann Hari has a nice, quick smackdown:

They said that [Topshop CEO and billionaire Philip] Green “earns all his money on his own,” so why should he have to pay any of it back to the rest of us? I responded on TV and in a blog post by suggesting a small experiment. Let’s take one branch of Topshop, and for twelve months we’ll deny any services funded by collective taxation to that store. When the rubbish piles up, we won’t send garbage men to collect it. When the rat outbreak begins, we won’t send pest control. When they catch a shoplifter, we won’t send the police. When there’s a fire, we won’t send the fire brigade. When suppliers want to get their goods to the store, there may be a problem: we won’t maintain the roads. When the employees get sick, we won’t treat them in the publicly funded hospitals. Then let Philip Green come back and tell us he does it all himself.