In case you haven’t been following the Québec student strike, here are a few videos to get you up to speed.
A nice overview:
A good interview on Democracy Now:
A great black-and-white video:
And one set to Arcade Fire, on a rainy night:
Last week, using the ideas that came from brainstorming around gaining traction on climate change, I did a quick brain dump of pieces of my framework that could generate it. This week, Iteration #2.
Question: if our economy isn’t “natural” and wasn’t inevitable, then what? What is an alternative that would actually work?
Answer: we have more power to create a just economy than we think we do – but only if we embrace the fact that we’re not as smart as we think we are.
I. From: The Economy Is Natural and Inevitable
To: We Have More Power To Shape the Economy Than We Think We Do
1) From: Government should intervene only to address “market failure”
To: Stack the Odds in Favor of the Good Guys
- How do we know we have more power than we think we do? Because of what we’ve already done
- Reality: we already massively intervene in the economy – and not just in ways obviously covered by “market failure.” E.g., creating the Internet, building suburbs & creating the credit-based 20th-century economy.
(Explain how this gets us to stack the odds) – creating jobs, creating markets
- government-created sprawl vs. smart growth
- When we act, they say we’re “job killers”; when they do, it’s “market forces”
2) From: Focus on Individual Choice
To: Also Focus on Movement Perspective: We Have More Power Than We Think We Do – but Only If We Build Power By Organizing
- Movement Power vs. Consumer Power
- Individual personal virtue vs. mobilizing/turning off other people through your actions
- “if we all do our part” vs. Scaling up
- Individual decisions matter, but Movement Perspective sees them differently: sees people as part of social webs of influence, sets goals of number of individuals needed to win (e.g., you choosing which shoe to buy vs.counting votes needed to win an election)
II. From: The Market Is Always Smarter Than Government Bureaucrats
To: We’re Not As Smart As We Think We Are
1) From: The Power of a Gazillion Consumers Making Decentralized Decisions
To: Everyone Should Have a Real Say
-How decentralizing many – but not all – decisions with bottom-up democracy can help address uncertainty (e.g., Open Source’s With 1000 Eyes All Bugs Are Shallow)
- if we assume it’s too complicated, set goals centrally but often – not always – decentralized creating solutions
- won’t get stepped on
- Positive: parklets
2) From: Focusing on Half of Reality
To: Balance the Tensions
(tensions are useful)
From: Power is bad, power corrupts
To: Checks and Balances: if power is always shipping the economy, need counterbalancing forces
From: Unleash entrepreneurs! (Don’t kill the golden goose)
To: Entrepreneurs/ Practitioner’s Perspective vs. Organizers’ Perspective (e.g., Neighborhoodland & food trucks)
From: “central planning” bad: decentralize! (In a world of Walmarts??)
To: Decentralize vs. Centralized
From: instead of bureaucracy, unleash power of competition!
To: Competition vs. Cooperation
3) From: Market Forces Will Fix Everything; Planning = Unintended Consequences
To: Feedback Loops & Culture of Accountability
- Did we make the decisions we thought we made?
- “more savings = investments = more good jobs” vs. whether good jobs actually get created
- Scale: getting real about what it takes to hold accountable, not just “small is beautiful”
4) From: People Are Too Selfish To Make Tough Choices (E.G., Gas Tax)
To: Spiderman’s Dad: With Great Power Comes Great Responsibility
- Create Structures to Promote Real Decision-Making: Participatory Budgets, She Rents, Etc.
- Easier with Everyone Should Have a Real Say
There’s a very cool company called TechShop that, as BusinessWeek says, is like being able to rent the most fabulous garage shop ever:
The TechShop chain is a paradise for people who like to make things. The average facility runs about 17,000 square feet and has all manner of apparatus, from Industrial Age staples such as sewing machines, metal lathes, and mills to $200,000 computer-controlled contraptions that can cut precise patterns out of slabs of metal. For about $100 a month, you can become a TechShop member and use all this equipment. For a few bucks more, you can attend classes that vary from Welding 101 to drawing 3D models on a computer.
TechShop started in Silicon Valley, but it’s gradually expanding in other parts of the country. And guess who is trying to help them? The Defense Advanced Research Projects Agency – the same folks who brought us the Internet.
In Washington, a very big partner has stepped up. In an interview, the Defense Department revealed it will spend $3.5 million to fund two TechShops near Washington, D.C., and Pittsburgh. Regular members will work in the facility by day, and then employees of Darpa, or the Defense Advanced Research Projects Agency, will arrive at midnight to conduct after-hours work. Their mission: to design factories that can be reconfigured on the fly. The project is called iFab. For a month, a given factory might use dozens of machines to make parts for helicopters. Then you reboot the software controlling the machines, and out come the parts for the drive train system in a tank. The Darpa workers at TechShop will try to figure out which tools and methods can be used to rewire factories in this fashion. “They are not there to interact with the general public or look at the ideas people have,” says Nathan Wiedenman, the program manager of Darpa’s tactical technology office. “They are there to work on iFab.”
Darpa could easily fund more tricked out machine shops just for its own folks. It’s investing in TechShop because, as have other parts of the military, the CIA, etc. have done in the past, it wants to underwrite a new market – in this case, the DIY/Maker movement.
Darpa has invested in TechShop as part of a broad mission to see if regular citizens can outinvent military contractors on some of its weirder projects. (The Department of Veterans Affairs, meanwhile, will be giving 1-year TechShop memberships to 2,000 veterans.) “We are pretty in tune with the maker movement,” says Wiedenman. “We want to reach out to a much broader section of society, a much broader collection of brains.”
Darpa is also laying other bets to nurture the budding DIY/Maker movement.
it’s looking to flood high schools with 3D printers, design software, and computer-controlled machines.
All of this is good news. But it’s a sad commentary on our political system that two decades after the astonishing success of the government-backed Internet, one of the few ways it’s okay for the government to help create/nurture new markets is by figuring out better ways of killing people.
I thought I’d be able to use last week’s post to start pulling together my framework. What I ended up with was fragments. It’s too early to try to turn them into something more coherent. So for now, here’s another brain dump.
I. We Have More Power To Shape the Economy Than We Think We Do
1) How we already massively shape the economy
- Start by asking, what have we already done before?
- Instead of talking about “market failure,” Stack the Odds in Favor of the Good Guys
- creating jobs, creating markets
- government-created sprawl vs. smart growth
- When we act, they say we’re “job killers”; when they do, it’s “market forces”
2) Movement Perspective: We Have More Power Than We Think We Do – but Only If We Build Power, I.E. Organize
- Movement Power vs. Consumer Power
- Movement Power vs. “My Personal Virtue” (mobilization/demobilization)
- Consumers vs. Parklets
II. We Aren’t As Smart As We Think We Are
1) Bottom-Up Democracy
- Everyone Should Have a Real Say: Participatory Budgeting, parklets, etc.
-How bottom-up democracy can help address uncertainty (e.g., Open Source’s With 1000 Eyes All Bugs Are Shallow)
2) Accountability
- “more savings = investments = more good jobs” vs. whether good jobs actually get created
- Scale: getting real about what it takes to hold accountable, not just “small is beautiful”
- Feedback loops
3) Tensions
- Practitioner’s Perspective (part of Stack the Odds In Favor of the Good Guys)
- Entrepreneurs’ vs. Organizers’ Perspective (e.g., Neighborhoodland & food trucks)
4) Responsibility for making tough decisions
(Spiderman’s dad)
On Friday, Finance blogger Felix Salmon used J.P. Morgan’s $2 billion fiasco to explain why “dumb rules” are a great way to try to stop bankers from taking too much risk based on really complicated models. I quote a longer section below to give you a better feel for the details – and a lot of it is pretty finance-geeky. But you don’t need to understand the details to get the main point:
Your sophisticated platform needs to be built on a foundation of dumb rules: simple limits on how big any one [financial bet ] can get, on how much exposure you can have to any one counterparty.
There’s enormous resistance to using “dumb rules”:
traders hate dumb rules, because they cap the amount of money they can make.
And that’s a good thing – we are trying to stop people from making lots of money by making giant gambles where we have to bail them out if it blows up. If the traders don’t hate it, it’s because we’re not doing it right. Generally speaking, people who try to stick you with the bill hate it when you stop them.
Here’s Felix’s longer explanation:
JP Morgan’s Bruno Iksil, it seems, managed to find an incredibly profitable way of hedging the bank’s positions. Like any other economically rational actor, when he saw a lot of dollar bills lying on the sidewalk, he decided to pick them up. But in Iksil’s highly-complex world, a dollar bill isn’t really a dollar bill. Instead, it’s the output of a model. And if a trader can’t trust his model, he’s flying blind.The problem is that pretty much by definition, it’s impossible to model model risk. We now know that Iksil’s model was deeply flawed. And indeed the minute that the rest of the world found out about his positions, they didn’t really pass the smell test: it’s very hard to see how writing an enormous amount of protection on an off-the-run CDX index would hedge anything much.
This is where grown-ups like Jamie Dimon are meant to step in. If they see billions of dollars in super-senior mortgage exposure, or in off-the-run CDX exposure, they’re meant to say “I know that your highfalutin’ models say that these exposures are risk free, but I don’t understand how this isn’t risky, so go unwind this trade”. Dimon has historically been very good at that — very good at refusing to simply trust that superstar traders earning eight-figure bonuses are doing nothing that might blow up in their faces. In this case, however, for some reason, he had blind faith in Iksil — and in Iksil’s models, which proved to be very faulty.
A modern trading desk is a bit like a high-tech airplane: nearly all of the time, you’re better off trusting your instruments than trusting your gut. But at the same time, if your instruments are broken, then trusting them can lead you to fly straight into the ocean.
This is why Basel I turned out to be much more robust than Basel II. Your sophisticated platform needs to be built on a foundation of dumb rules: simple limits on how big any one position can get, on how much exposure you can have to any one counterparty, or in general on any trade which is based on the hypothesis that your desk is smarter than anybody else on Wall Street.
Those kind of rules won’t prevent all blow-ups, of course, but they’ll help. They would have prevented this one, and they would have put an end to Jon Corzine’s disastrous MF Global trades, as well.
The problem is that traders hate dumb rules, because they cap the amount of money they can make. And traders have enormous power at investment banks these days, because they make the lion’s share of the profits. That’s why it’s important that the CEO of an investment bank not be a trader. And certainly it’s crucial that the CEO shouldn’t have his own trading account and buy and sell from his Blackberry during meetings, as Corzine did. That’s just a recipe for disaster.
A few weeks ago on Up with Chris Hayes, Chris Hayes asked his guests, how do we get traction on climate change? That question’s been burbling in the back of my head ever since, and I’ve got the beginnings of an answer that might help me tease out the framework that’s (I think) underlying how I think about the economy. In this post, I’ll lay out the argument. In a future post, I’ll try to uncover the framework behind it.
Let’s start from the beginning: why don’t we have traction on climate change? Why have so many people either tuned out or decided it might not be real?
Because they’re afraid that the solutions to climate change will hit them like a kick to the head. And after almost two decades of getting kicked in the head they can’t face it. So when the Koch brothers, oil companies, etc. spend buckets of money denying climate change, what they’re selling sure sounds better than the alternative.
So how do we get traction? By connecting to people – by speaking to where they are.
Start by framing climate change as the 1% versus the 99%. The 1% are trying to give us a no-win choice: protect our jobs now by not doing anything about climate change and sacrifice our kids’ future, or try to stop climate change & save our kids’ future by sacrificing our jobs now. It’s the same no-win game the 1% played with the financial crisis.
It’s a false choice. We can save our kids’ future and create a stronger economy now. In fact, it’s our only real choice. The 1% can afford to let tomorrow burn – they have enough money to escape the consequences of their actions. The rest of us don’t have that luxury.
In making this argument, we need to do two things. First, we need to argue that we have more power to shape the economy than we think we do. For example, one of Chris Hayes guests asked, what would you say to the people in a rural region of Texas where there’s been a huge upsurge in shale oil jobs? How do you convince them they should pay attention to trying to stop climate change when they finally have a chance at a little more security? My answer: stopping climate change 99% style is about making damn sure that those folks have jobs. We’ve spent decades massively subsidizing oil and gas jobs. No reason we can’t switch to massively subsidizing clean energy jobs that will safeguard our kids’ future instead of destroying it.
Second, we need to be very, very sensitive to the legitimate concerns folks have that they will get screwed by plans to stop climate change. Because right now there are awful lot of environmental elites and centrist economists who are tone deaf to the struggles most folks face. They talk about creating carbon taxes or jacking up gas taxes and blithely assume that it’ll work out for everyone. But the lesson most folks have learned from the last two decades is that when experts say trust us, run for cover. What happens, for example, to the folks where the only way they can afford to buy a home was to move way out? For them a high gas tax could be devastating. It doesn’t have to play out that way, but most folks are quite rightly afraid that it will. Starting from We’re Not As Smart As We Think We Are – instead of assuming it’ll work out for everyone, make damn sure that it does – is a much, much better way to meet these folks where they are and directly address their understandable fears. That’s likely to get more traction than what too many enviros are doing now.
A few more thoughts on specifics. First, since DC Republicans have choked off any chance of stopping climate change via DC – and since an awful lot of folks think corporations have so much power over government that it’s hopeless – don’t worry about DC. If we want to gain traction, focus on corporations and take on entire industries. Or go after cities and states. And in every campaign, look for ways to concretely show people that the 1% is lying when they say we don’t have the power to build a better, greener economy for all.
Second, when a lot of enviros talk about creating green jobs, they sound like a Whole Foods flyer. They might as well be talking about the wonderful antioxidants in a skin cream. They don’t sound like people do when they are serious about jobs – you can’t hear in their voice the sound of a baseball bat slapping against a palm. What does it sound like when folks are serious about jobs? Just listen to Republicans. A bill they don’t like? It’s a “job killing” bill.
Why does this matter? Because people aren’t stupid. They know what it sounds like when you are talking about something that really matters to you – something where your livelihood or your kids’ future is at stake – and when you aren’t. If more enviros talking about green jobs had the same level of fear & no-bullshit determination as New York City liberals when they’re talking about their kids getting into a good school, we would get a hell of a lot more traction.
This rant was a little more rambling than I had expected. But I think there’s some good stuff here that’s worth mining for nuggets of my framework.
Maybe you’ve heard Frederick Douglass’ line about the importance of struggle, “power concedes nothing without a demand.” Turns out there’s more to the quote – and it’s beautiful and lyrical.
Those who profess to favor freedom and yet depreciate agitation, are people who want crops without ploughing the ground; they want rain without thunder and lightning; they want the ocean without the roar of its many waters. The struggle may be a moral one, or it may be a physical one, or it may be both. But it must be a struggle. Power concedes nothing without a demand. It never did and it never will.
Amen.
Two weeks ago, DC’s Mayor Gray unveiled a plan called, A Vision for a Sustainable DC. Essentially it’s what you would get if you were to take every smart green initiative that any city has done and then wrapped it up with a bunch of benchmarks. In other words, it’s crazy ambitious:
In just one generation—20 years—the District of Columbia will be the healthiest, greenest, and most livable city in the United States. An international destination for people and investment, the District will be a model of innovative policies and practices that improve quality of life and economic opportunity. We will demonstrate how enhancing our natural and built environments, investing in a diverse clean economy, and reducing disparities among residents can create an educated, equitable and prosperous society.
How much of this will actually happen? Who knows. But the fact that he’s going for something so bold is a breath of fresh air.
How ambitious is it? Here are a few of my faves:
JOBS: Increase by 5 times the number of jobs providing green goods and servicesHEALTH: Cut citywide obesity rate by 50%
CLIMATE: Cut citywide greenhouse gas emissions by 50%
ENERGY: Cut citywide energy consumption by 50%; Increase use of renewable energy to 50%
FOOD: Bring locally-grown food within a quarter mile of 75% of the population
NATURE: Cover 40% of the District with a healthy tree canopy: Ensure 100% of residents are within a 10-minute walk of a natural space
TRANSPORTATION: Make 75% of all trips by walking, biking, or transit
WASTE: Achieve zero waste by consuming less and reusing everything else
GREEN ECONOMY: Develop 3 times as many small District-based businesses; Cut city-wide unemployment by 50%
What I particularly like about the plan is that it’s trying to focus on the needs of everybody, not just tree huggers. For example:
Ultimately, sustainability means good things for your health, your community, and your wallet. For example:• Sustainability means spending less on utility bills because it takes less energy to heat and cool your energy efficient home.
• Sustainability means saving up to thousands of dollars a year by walking, biking, and using transit more often, and not needing another car for your family.
And it talks about tackling the terrible job situation for poor folks of color in DC.
Overall, our city has an unemployment rate of just under 10%. However, it ranges from as low as 2% in Ward 3 to as high as 24% in Ward 8. With more than 50,000 unfilled jobs currently available across the city, there is a clear disconnect between the workforce and the skills and training required by these positions.There is a tremendous opportunity to train and employ workers in the District’s growing green economy. Each component of this vision should help generate and maintain quality jobs for our residents, while simultaneously addressing the training required to succeed in those positions. For each goal or action suggested, there is the opportunity to create new jobs at every rung on the career ladder.
Here and there it’s even got little signs of more radical approaches. For example, as part of its Green Economy strategy, it gives a nod towards the approach that succeeding in Cleveland known as Evergreen Cooperatives:
Universities, hospitality, and healthcare industries will pool their collective purchasing power to buy sustainable goods and services from local, cooperatively-owned businesses.
Is it perfect? Obviously not – not by a long shot. For example, one of the goals is to attract a large number of new residents while retaining existing residence, and it’s not clear if this is a commitment to prevent gentrification from pushing folks out of their neighborhoods or not. And undoubtedly lots of the great intentions will be plowed under or perverted into something other than that what they were intended (welcome to big city politics). But compared to most city plans? It’s pretty amazing.
And with a plan as ambitious as this one, it also creates new opportunities for organizing. That in and of itself can be a pretty big deal.
It’s not often that I get fired up by reading a city plan. I haven’t gotten involved in DC politics, largely because it’s felt like an unending uphill battle where the best you can do is not lose. But a plan like this, even if it turns out to be mostly smoke and mirrors, is enough to make me think maybe it’s worth putting my toes in the water.
On May 1, Occupy Wall Street said to the world, “We’re baaack!” also known as a general strike/day of festivities. In case you needed a reminder as to why the success of Occupy Wall Street is so crucial, some stats from economist Larry Mishel courtesy of Paul Krugman:
Larry Mishel has a systematic breakdown of the reasons for worker income stagnation since 1973. He starts with the familiar divergence: productivity up 80 percent, the compensation (including benefits) of the median worker up only 11 percent. Where did the productivity go?The answer is, it’s two-thirds the inequality, stupid. One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.
What this says is that widening inequality makes a huge difference. Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared.
That is so stunning it might not have registered the first time. So let me say it again: folks like yourself would be raking in 30-40% more money if the 1% hadn’t gobbled it up. That, ladies and gentlemen, is a hell of a lot of money that was taken from the pocket.
Liberal economists have been talking about this for a long time. And they’ve been completely ignored. A month after Occupy Wall Street? Inequality was back on the agenda. If we’re going to actually do something about the problem, we’re going to need a nice big dose of OWS.
