Monthly Archives: September 2011

You Just Can't Make This Stuff Up

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I really would like to stop writing about the Solyndra pseudo-scandal, but the Republicans are making it hard. The latest: House Oversight Committee Chairman Darrell Issa, who’s been leading the charge, explains why denouncing the idea of government loan guarantees while fighting hard to get them for your district isn’t hypocrisy:

Issa defended Republican lawmakers who sought the loan guarantees on behalf of constituents.

“Members of Congress will always ask for money from whatever pool is available to help their constituents,” Issa said. “The question is—and Solyndra is an example—is the process one in which it is truly competitive and is without political interference.”

I think we have a new definition of chutzpah.

(Almost) Everybody Wants to Tax the Rich

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Republicans and a lot of Beltway pundits have been attacking Obama’s “Buffet Rule”– “Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett” — as class warfare. But according to a new Daily Kos/SEIU poll, almost nobody else sees it that way:

Q: Do you support or oppose ensuring that people who make over a million dollars a year pay the same percentage of taxes or more on their total income as those who make less than a million dollars a year?
Support: 73
Oppose: 16
Not sure: 11
…

Indeed, every demographic sub-group favors the idea. Republicans back it 66-17. Hell, even self-identified tea partiers, the weakest supporters, are at 52-29. Oh, and those making over $100,000? 73-16.

The numbers on regular folks are strong but not surprising. But Republicans and Tea Partiers?

Of course, pre-2012-reelection Obama would never push for this rule. Even if it’s ridiculously popular, it’s not “nonpartisan.” But luckily, we’re beginning to get a little bit of I-want-to-stay-president Obama, so maybe we’ll start getting a little bit more of this type of attempt to change the terrain we’re fighting on? A boy can hope.

SubsidyScope: Great Stats Site on How Fed Government Picks Lots & Lots & Lots of Winners & Losers

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Courtesy of a friend, just discovered a great site that fits in perfectly with the latest round of Republican hypocrisy over “picking winners and losers”: Pew’s Subsidyscope.

The site has great stats on the way the federal government subsidizes housing, energy, transportation, Finance, and nonprofits. Rather than trying to cover every type of federal subsidy, it focuses on the ones that are easiest to generate numbers are hard to argue with — contracts, grants, tax subsidies, loans, and loan guarantees. Plus all of its data is downloadable, so if you are a real geek you can play with them to your hearts content.

So the next time your uncle starts complaining about all those government bailouts for poor people, send him to Subsidyscope.

Engineers to Pols: Stop Pretending We Can't Solve the Climate Crisis Because We Don't Have the Tech

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This just in: engineers are pissed off enough that they are calling politicians on their shit around the climate crisis (hat tip to Jess Zimmerman):

The technology needed to cut the world’s greenhouse gas emissions by 85% by 2050 already exists, according to a joint statement by eleven of the world’s largest engineering organisations.

The statement was presented on Friday 23 September to the South African Deputy High Commissioner ahead of December’s COP17 climate change talks in Durban.

The statement says that generating electricity from wind, waves and the sun, growing biofuels sustainably, zero emissions transport, low carbon buildings and energy efficiency technologies have all been demonstrated. However they are not being developed for wide-scale use fast enough and there is a desperate need for financial and legislative support from governments around the world if they are to fulfil their potential.

Dr Colin Brown, Director of Engineering at the Institution of Mechanical Engineers – one of the eleven organisations supporting the statement – said:

“While the world’s politicians have been locked in talks with no output, engineers across the globe have been busy developing technologies that can bring down emissions and help create a more stable future for the planet.

“We are now overdue for government commitment, with ambitious, concrete emissions targets that give the right signals to industry, so they can be rolled out on a global scale.”

The statement calls for:

•A global commitment at Durban to a peak in greenhouse gas emissions by 2020, followed by substantial reductions by 2050;
•Governments to ensure that green policies do not unfairly and unintentionally act to the detriment of one particular industry or country;
•Intensive effort to train and retrain workforces to ensure we have the right skills for the new industries that will spring up around green technologies;
•A heavier emphasis to be placed on boosting energy efficiency, which is the best available measure to bring down emissions in the short and medium term.

The eleven organisations include the Danish Society of Engineers (IDA), India’s Institution of Engineers (IEI), Germany’s Association of Engineers (VDI), Australia’s Association of Professional Engineers, Scientists and Managers (APESMA) and the UK’s Institution of Mechanical Engineers (IMechE). Collectively they represent over 1.2 million engineers spanning four continents.

10 out of 23 Republican Reps Recommend Do as I Say, Not as I Do

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The dustup over Solyndra’s failure is getting more entertaining. Courtesy of a NYT editorial, a great stat. Even by Republican standards, this is pretty impressive:

at least 10 of the 23 Republicans on the Oversight and Government Reform Committee — including Mr. Issa — have lobbied the Department of Energy to approve green projects in their own districts

These are the same House Republicans who have been fiercely arguing that the failure of Solyndra, which got government loan guarantees, shows the futility of picking winners and losers. ‘Nuff said.

Why Our Solar Industrial Policy Is Failing: China, Not the Market, Is Smarter Than Us

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One more thought about Solyndra, the solar energy startup that was the poster child of the Obama administration and just went belly up. A lot of folks saying this is why the government should stay out of the market — it’s not smart enough to pick winners and losers. Now, the US may have made some mistakes in how it backed Solyndra — or deciding to back this company at all. But as Todd Woody — a writer for the self-described “Capitalist Tool” Forbes magazine — shows, the bigger picture here isn’t how picking industries a failture. China’s doing pretty damn well and — well, let’s just say it’s not because the Chinese government is leaving the market alone.

Part of the reason Solyndra got intro trouble is that their business model assumed solar panel prices would stay high for quite a while. Instead, as Woody’s article back in October 2010 showed, solar companies have been

finding that the economics of the new industry have already been transformed, by the Chinese. Chinese manufacturers, heavily subsidized by their own government and relying on vast economies of scale, have helped send the price of conventional solar panels plunging and grabbed market share far more quickly than anyone anticipated. …

“The solar market has changed so much it’s almost enough to make you want to cry,” said Joseph Laia, chief executive of MiaSolé.

What has China done? Poured millions into the solar industry. For example,

Until very recently, Hunan Province was known mainly for lip-searing spicy food, smoggy cities and destitute pig farmers…. Now, Changsha and two adjacent cities [in the province] are emerging as a center of clean energy manufacturing.

Take the case of Sunzone.

The company has only 360 employees, who work in a modest two-story building and small factory. Many of them live in a six-story dormitory. The compound also has a demonstration house powered by solar panels.

But the government has granted Sunzone enough cheap land to make room for an orchard of orange trees, a nearly finished golf driving range and winding country lanes — all of it across the street from 17-story apartment buildings near the heart of downtown Changsha… As a clean energy business, Sunzone was allowed to buy the land two years ago for $90,000 an acre, Mr. Zhao said. That was one-third of the official price then for industrial land from the government.

This not only benefits Sunzone directly, but it also gives it a big advantage when it comes to its assets and debts. Continue reading →

Government Can't Pick Winners — Unless They Pick My Friends

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A few weeks ago, the solar panel company Solyndra, which had gotten a loan guarantee from Uncle Sam, went belly up. The Right has been out in full force, arguing that this is a classic example of crony capitalism and an example of how the government is too incompetent to pick winners and losers and should just leave the free market alone. There definitely may have been some iffy moves by the Obama administration — and the Bush administration — in giving Solyndra the loans without enough due diligence — although as to whether it was a bad bet, pretty savvy folks like the Wal-Mart family didn’t think so. But all the handwaving about the government should never pick winners and losers? Grist’s David Roberts gives us Mr. Republican a.k.a. McConnell’s track record:

Senator Mitch McConnell of Kentucky, the Republican majority leader, supports loan guarantees as a step to build 100 new nuclear reactors….

Senate Minority Leader Mitch McConnell … pressed Energy Secretary Steven Chu to save a uranium enrichment facility in western Kentucky run by USEC Inc. that does contract work for the federal government. USEC is looking to expand its business with the agency through a $2 billion loan guarantee for a new facility in Piketon, Ohio, but its application stalled before the DOE….

Mr. McConnell made two personal appeals in 2009, asking Energy Secretary Steven Chu to approve as much as $235 million in federal loans for a plant to build electric vehicles in Franklin, Ky.

“I hope you will realize the importance of such job creation to Kentucky,” Mr. McConnell said in a July 2009 memo supporting an application from Zap Motor Manufacturing.

Federal lobbying disclosure records show that Mr. McConnell’s support for the project came after Zap Motor hired a Kentucky-based lobbyist, Robert Babbage, who has been a frequent contributor to Mr. McConnell’s campaigns and boasts on his own Internet site about his close ties to Mr. McConnell.

So once again, the government is incompetent and should stay out — unless my friends want them to stay in.

Four Perspectives I Need to Respond to

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Wrestling with what I learned last week, I’ve realized that part of the problem is that I’m not clear enough on who I’m arguing with. So for the moment, here are four perspectives on shaping the economy that I need to respond to.

1) “We just need the right policies” (a.k.a. no power)

2) “We just need more democracy,” a.k.a., our only real problem is evil corporations and the profit motive (all power)

3) “We should let the markets do their job — efficiently using our resources. All we need to do is just to fix ‘market failures’ and ‘negative externalities.’” And to fix these problems, use “market-based solutions.”

4) “The economy is too complex to spell out solutions — ‘specific instructions in the form of regulations’ mostly can’t cut it.”

 
These are simplified perspectives, of course — almost no one believes in them exactly. But as counterpoint, to help me figure out what I think and how the pieces of my responses to these perspectives fit together, I’m it’s good enough.

Taxes, Regulations Killing the Economy? No, Says Small Businesses

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The next time a conservative tells you that the reason the economy is in bad shape is because taxes and regulations are crushing small businesses, show ‘em this study by McClatchy.

Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy canvassed a random sample of small business owners across the nation.

“Government regulations are not ‘choking’ our business, the hospitality business,” Bernard Wolfson, the president of Hospitality Operations in Miami, told The Miami Herald. “In order to do business in today’s environment, government regulations are necessary and we must deal with them. The health and safety of our guests depend on regulations. It is the government regulations that help keep things in order.”…

McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business.

Their response was surprising.

None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath….

For many small businesses, their chief problem is an old one: navigating the bureaucracy of the Small Business Administration to secure government-backed loans…. Kansas City-based Summit, 20 years old, supplies college-licensed clothing to university bookstores in four Midwestern states. Sweeney hired his fourth employee in August. He’s adding licenses to sell apparel to colleges in the Southeast and Atlantic region, but his company doesn’t have inventory or other collateral that bankers usually want to secure loans. And the small local banks Summit deals with frown on the red tape required for SBA loans, after a loan he got in 2008 took three months of nightmarish documentation. “It was only $35,000,” Sweeney said. “Our bank basically said it would never do that again.”

Other small firms say their problem is simply a lack of customers.

“I think the business climate is so shaky that I would not want to undergo any expansion or outlay capital,” said Andy Weingarten, who owns Almar Auto Repair in Charlotte. He’s thinking about hiring one more mechanic.

Added Barry Grant, the regional president of Meritage Homes Corp., in California, “It starts with jobs. … There’s an awful lot of people sitting on the fence; they’re waiting for a sign.”

For Labor Day: How Managers and CEOs Screw It up for Everyone Else

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Wall Street melts down, taking the rest economy with it. Who’s to blame? Unions and workers, of course. In honor of Labor Day, the fabulous Wall Streeter Yves Smith gives Exhibit 23,234 of what a load of crap this is. The whole post is definitely worth reading; here are some highlights:

Let me give you an all too typical example of how American management has contributed to the demise of our industrial competitiveness, namely, the former Mead Corporation paper mill in Escanaba, Michigan, which is now part of NewPage, owned by Cerberus.

The Escanaba mill makes coated paper. Coated paper is shiny paper, the sort you find in most magazines, catalogues, and art books. Coated paper is fussy to manufacture, which makes it daunting in a continuous process setting like a mill. In a highly-capital intensive continuous process business, downtime is hugely expensive.

In 1969, Mead added a #3 machine in Escanaba….

#3 machine was not operating at the expected efficiency level. Management nevertheless pressed forward with a further mill expansion in 1970-1971, of a kraft-recovery system. The best workers on the #1 machine were moved to the #3 machine which did not solve the problems on #3 and worsened the results of the #1 machine. It took an over two year turnaround effort to get the mill operations up to a good level of productivity.

By the mid 1970s, the Escanaba mill had gone from being the dog to the star…. The mill was recognized as one of the best coated paper makers in the US, and demanding publishers such as National Geographic, Smithsonian, and Playboy sought out its product…

Mead had had a series of record-breaking profit years, each higher than the last, yet sought to squeeze the unions in 1989.

The 1980s were the heyday for papermakers. By the later 1990s, Mead had started scrimping on shutdowns, which is when the plant’s equipment gets maintenance and repairs. Twice a year shutdowns were replaced by annual shutdowns.

In 2002, Mead merged with WestVaco to form MeadWestVaco. The shallow dot-bomb era recession led to further reductions in reinvestment. A $5 million shutdown budget for Escanaba was reduced to under $2 million, even as the departing Mead CEO received a $30+ million golden parachute. Continue reading →