Politics

My Utility COOP & Solar Power

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There’s a crucial difference between an energy utility company being concerned about the costs associated with moving toward new technology like net metering, and the company pretending concern as a tactic to avoid changing the status quo.

According to a Deutsche Bank study, related in
a great article by Lucas Mearian for Computerworld, ten US States already “boast solar energy costs that are on par with those of conventional electricity generation.” And by 2016, the study expects price parity in all 50 states. Comparing American solar capability with that of the world leader, Germany, the study says cloudy “Seattle is the worst place in the continental U.S. For solar. Germany’s worse than Seattle.”

Last August, my local electric utility’s quarterly PR magazine included a letter by the utility’s General Manager, saying the company was concerned that in “traditional individual-owner net metering applications, the solar owner’s share of the utility fixed costs is transferred to other members.” I was unsure whether this was a real concern or a smokescreen, so I wrote to the GM and received a response from both her and from one of the technical managers.

The utility’s idea of implementing solar seems to be a scheme that would allow customers to buy a “share” of the output of a solar generating plant operated by another nearby utility. While there may be some economies of scale in a big “on-grid” solar farm, the successful model in places like Germany where solar has really taken off has been rooftop. Solar farms seem like just another way for the utilities to retain control and hang onto a lion’s share of the benefit. To make matters even stranger, my local utility is a cooperative. And its most recent PR magazine featured an article urging customers to fight the proposed new EPA carbon rule under the Clean Air Act.

So what’s the solution for electricity customers interested in trying new technology? As Photovoltaic costs continue to come down, there will certainly be more of us. The government confers monopolies on public utilities, using the logic that a region only needs one, and competition would be bad because the streets would constantly be torn up by new companies laying redundant cable. This makes sense, as long as the company granted the monopoly remains focused on the best interests of the community. I don’t see how advocating for less regulation on coal and dragging your feet on new, sustainable technology benefits the community in the long run.

My utility coop’s approach seems more likely to drive the really interested users off the grid entirely. We’ve all heard stories about the local visionary northwest of Bemidji who installed solar panels on his roof, only to have the utility issue a rate increase to all his neighbors to cover the cost of retrofitting to the smart grid. Talk about driving away precisely the people who could be your best allies! I’ve got to admit that faced with that type of attitude, my response is, “Well, is there a way I can do off-grid power for part of my needs, and just reduce my dependence on the utility?” this may be good news for battery manufacturers, but it’s probably not the most efficient or effective way to move the community toward a sustainable future.

Change the 1%??

I've been listening to an audio-book version of Thomas Piketty's Capital in the Twenty First Century, and I've been very interested in the fact that Bill Gates has chosen to blog about the book. I've commented on his post and on others' comments a number of times, including this today:

I think another of the important things Piketty does is to refocus attention on Wealth rather than Income. I read this today, from a 1967 book (Ferdinand Lundberg's The Rich and the Super Rich) quoting a 1940 US Government Report (the Temporary National Economic Committee's Investigation of Concentration of Economic Power):

"The ownership of the stock of all American corporations is highly concentrated. For example, 10,000 persons (0.008 percent of the population) own one-fourth, and 75,000 persons (0.06 percent of the population) own full one-half, of all corporate stock held by individuals in this country." 
As for shares held by non-individuals, I think we can assume that the stock held by foundations and trusts, although its dividends might be pledged to foundation goals, tends to strengthen the "stakeholder" control of the families who fund the foundations. 

Two conclusions you might draw from this. 1.) As Piketty implies, the 1% is not a new issue. And 2.) The name of the game may not be stirring up a grass-roots revolution, but convincing more members of the 1% that their best interests are served by a slightly more egalitarian society.

Moyers: Taibbi & Freeland

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As I was reading Chrystia Freeland's Plutocrats, I frequently wondered what Matt Taibbi would say. I read his book The Divide a couple of weeks ago, and like Freeland, Taibbi is a critic of the oligarchs and has worked in Russia. So I was please to discover Bill Moyers had them on his show together. It's a great episode. Freeland begins the interview by observing that talking about inequality is "is still a taboo in American political life and in American cultural life." Taibbi agrees and says "the shift really began with Clinton and the New Democrats…you don't see it in the debates, because neither party is really an advocate for that kind of left behind class anymore."

Freelander makes a good point, that "Okay, technology revolution, we love it. Globalization, I love that too. And I think it's great people are being raised up in India and China and now Africa. But let's think about how our society and our politics need to change to accommodate this. And no one is doing that." Jerry Davis makes the point in
Managed By Markets (which I'm about halfway through) that what we think of as social welfare (health insurance, old-age pensions) was once provided by America's giant corporations. Ford, GM, GE, and US Steel employed hundreds of thousands of people each and provided a lot of these benefits, ironically, to forestall government from getting into the business like the "socialist" European welfare states. The problem, as Freelander says here and Davis agrees, is that these big monolithic corporations no longer employ hundreds of thousands. The corporate welfare has evaporated, leaving big portions of the population out in the cold.

Taibbi describes the feeling of alienation a 22-year old kid in a bad neighborhood feels after being stopped and frisked over 70 times. Freeland agrees, and blames the intellectuals, saying "I think there is a broader cognitive capture of, you know, you might call it the intellectual class, the public intellectuals, around maybe the inevitability of plutocracy. You know, as Matt was saying, this notion that if you're poor, it's your own fault. You're part of this dependent 47 percent. Unions are very bad. All of that sort of stuff."

Taibbi and Freeland both cut their teeth as journalists living in Russia covering its transition to capitalism. Comparing Russia in the 90s with America today, Taibbi says  "that's the key part that I think people don't understand, is that what happened in Russian was really a merger of state and private power that empowered this one tiny little class." How much less do people understand that when it happens in a nominally "free" market like ours?

Moyers mentions that Freeland writes about the plutocrats with empathy and Taibbi writes about them with "complete irreverence." Taibbi agrees that this limits his access to people at the top, but clearly shares my suspicion that these people aren't the geniuses Freeland portrays. He says "I'm hearing a lot from people sort of from the middle on down on Wall Street. And what they're really upset about is corruption. Is this merging of state and private power, where the losers don't lose anymore. I think the people who get really upset are small hedge funds, small banks. And they see companies like, you know, Citigroup and Goldman Sachs and J.P. Morgan Chase make mistake after mistake. And they get rewarded for it what with bailouts and even greater market share than they had before."
Then the conversation moves on to what Taibbi calls a schism within Wall Street and Freeland calls the battle between the millionaires and the billionaires.

Everybody she talked to, Freeland says, was happy to divide the elite into "good plutocrats and bad plutocrats." Of course, everyone insisted they themselves were the good guys. Freeland says " this very sincere, absolutely, absolutely sincere self-justification, I think, is one of the most dangerous things that's happening…you know, what he thinks about how society should be ordered, we should all listen to because he, after all, is the hero of our time, is the hero of capitalist narrative."

The interview concludes with Freeland observing that part of the problem fighting these changes is that they are real economic changes -- we are never going back to the 50s and recovering those manufacturing jobs. But another part is that no one has really articulated a solution. There's no manifesto to get up on the barricades and wave. So, that's part of the job waiting to be done…

Different Laws for Rich & Poor

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I like Matt Taibbi a lot. I love his Rolling Stone articles and I used to love his weekly blog there. I'm glad he's back at RS and publishing articles. I think he was one of the best reporters of the financial crisis, and I especially love his ability to make the details of these issues understandable. I also love the freedom RS gives him to drop the f-bomb on some of these "vampire squid" executives.

That said, I liked
The Divide rather than loving it. I think there's a ton of great information in it, and I agree with Taibbi's thesis: that there's something broken about a society that fails to pursue any of the Wall Street criminals who egregiously broke laws and ruined lives in search of bigger year-end bonuses, especially when that society is simultaneously cracking down on -- and cracking heads of -- poor folks in "bad neighborhoods." My only objection to the book was that I thought the anecdotes went on a bit too long, and I thought they were too exclusively focused on the problems of the urban poor, especially in greater New York City.

The book begins well, with a stark comparison. "At its peak in 1991," Taibbi says, "according to FBI data, there were 758 violent crimes per 100,000 people. By 2010 that number had plunged to 425 crimes per 100,000, a drop of more than 44 percent" (p. 1). The contrast: "In 1991 there were about one million Americans behind bars. By 2012 the number was over 2.2 million, a more than 100 percent increase." Taibbi believes "
We’re creating a dystopia, where the mania of the state isn’t secrecy or censorship but unfairness" (p. 12). The process begins, in Taibbi's story, with a 1999 memo written by an obscure Clinton staffer named Eric Holder. "Bringing Criminal Charges Against Corporations" is an interesting memo, and it had an interesting role in the reinterpretation of the Justice Department's role. For me, it was a little too much of an insider story, though. I was more interested in the connections between Holder (and his associate Lanny Breuer) and the law firm of Covington and Burling (one of whose founders wrote extensively in opposition of the New Deal back in the 1930s). When Holder and Breuer were running Justice, twenty-two other lawyers from that single firm held key positions in the Department. I'd like to hear more about that.

Taibbi has collected a lot of these bizarre, unjust contrasts. "
For instance , in 2011, the state of Ohio —the same state that lost tens of millions in the early 2000s when its pension fund bought severely overpriced mortgage-backed securities from a Lehman Brothers banker named John Kasich, who would later become governor —tried to recoup some of its losses by sending out 22,000 notices to Ohioans seeking 'overpayments' in either welfare or food stamps"(p. 341). In a passage that reminds me of Chrystia Freeland's discussion of cognitive capture, Taibbi describes President Obama's remarks on 60 Minutes in December, 2011, suggesting that a lot of the "least ethical behavior" on Wall street wasn't strictly illegal. "The thing that’s interesting about this claim," Taibbi says, "isn’t that it’s factually wrong, which incidentally it almost always is, often to a humorously enormous degree. What’s interesting is that the people who make this claim usually believe it to be true. Even Barack Obama , despite the fact that he’s almost universally understood to be an outstanding lawyer and should know better, probably believes it to be true. This weird psychological kink is where the Divide lives. Increasingly, the people who make decisions about justice and punishment in this country see a meaningful difference between crime and merely breaking the law" (pp. 397-398). Crime, it turns out, is what poor people are increasingly assumed to be doing, even when they're just standing outside their apartment building having a smoke at 1 AM. Breaking the law is just being "aggressive" with the rules of the game, and it's perceived as victimless -- even when taxpayers have to ante up billions of dollars in bailouts.

And let's not forget to follow the money. While the Financial Crisis Inquiry Committee got $10 million in funding, "
the federal drug enforcement budget leaped from $ 13.275 billion to $ 15.278 billion. That meant that just the increase in the national drug enforcement budget for the year of the biggest financial crisis since the Depression was roughly two hundred times the size of the budget for the sole executive branch effort at formally investigating the causes of financial corruption" (p. 407). Policing and incarceration are big business in America. It's the one thing, after all, we can't outsource overseas.

Cromnibus: We couldn't Help It!

So the Omnibus spending Bill/Continuing Resolution people are calling the Cromnibus has passed the House. The President apparently pushed hard for it, and our representatives "held their noses" and voted for it in order to keep the government running. Leaders like Nancy Pelosi lamented "I was so really heartbroken ... to see the taint that was placed on this valuable appropriations bill from on high," but you know, we've gotta keep the government running.

Bull.

The riders attached to this bill more than tripled the amount individuals can contribute to political campaigns. And most notably, they weaken the half-hearted attempt the government made with the Dodd-Frank Bill a few years ago to prevent another 2008-style financial crisis by (slightly) regulating the activities of the too-big-to-fail banks. The bailout bankers were all too happy to take billions in taxpayer money, but they're insulted by the regulations. So
Citigroup lawyers wrote a bill and our representatives attached it to the thousand-plus page Cromnibus. So it wouldn't get read and bogged down in, you know, debates and votes and all that.

Democracy?

What amazes me is that somehow most people still seem to believe there are two parties and there's some type of
meaningful process going on here. This isn't the first time corrupt legislation that wouldn't stand the light of day has been attached to a "must-pass-to-keep-the-lights-on" bill. It's become a regular ritual -- so much so that a lot of people nowadays just sigh and look the other way. But let's look at it for a minute and call it what it is.

Fraud.

Not in the sense that something has been pulled over on us. Of course it's that too. But in the sense that it allows the people who we've voted in there to represent us
to pretend they had no choice. But looked at another way, it's a win-win for Congress. They get to satisfy their real constituents (the ones who pay for their re-election) while at the same time making noise about how they really don't like this, but forces "from on high" left them no alternative.

Vote them out.

Find an alternative candidate. Register as an independent. Or stay away from the polls (we're doing that already in record numbers). But if nothing else, let's stop pretending that there's a "dime's worth of difference" between the parties anymore. That phrase was coined by a nut-job, George Wallace, decades ago. The irony is, only the nut-jobs on the far left and far right of the parties voted no. The center doesn't hold because it's rotten. But the big secret may be that the regular people that the populist radicals appeal to on the far left and the far right may have
more in common with each other than they have with the 1% being served by both parties in the corrupt middle.

Hug a Tea-partier or an Occupier

 
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The way out is to stop being led around by the machine and its media, which magnifies trivial differences, throws gasoline on racial fires, and does everything possible to keep us focused on fights that don't threaten them. It's "divide and conquer." Sure, those issues are important. But really, don't you think it would be easier to resolve some of them if the economy most poor and middle-class Americans live in wasn't circling the drain? The Titanic didn't sink in this story. The rich just threw all the steerage passengers into the water, and now we're fighting for space in the lifeboats. But the ship is still there, and maybe we can get back on it before it sails away.

Engaging the Other Side

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When I was a young undergrad studying economics, I attended a summer seminar at the Foundation for Economic Education (FEE) at their headquarters on the banks of the Hudson River. My views have changed a bit since then, and I was recently reminded of FEE by another blogger and visited their website. There's a Freeman article posted a couple weeks ago called "Adventures in Economic Fairyland." It claims that "practitioners of economics not only use numbers to mislead the public; they use both theory and data to self-deceive." The author (unnamed) admits "no social scientist can operate free of his own values and biases." The assumption of the article, however, seems to be that FEE does a better job than other organizations at keeping these biases in check.

The article asks us to consider a list of statements they say are "accepted as common knowledge." These are:

  • Government spending make-work programs got the United States out of the Great Depression.
  • Scandinavian countries are proof that you can have high taxes and income redistribution without negative economic effects.
  • International trade makes some countries richer and others poorer.
  • Encouraging consumer spending stimulates the economy.
  • Minimum wages have a net positive effect on employment and on the living standards of the poor.

The implication is these are all myths with no basis in reality, used by unscrupulous economists to advance a (socialist) agenda. But where's the evidence that government spending had no effect on the Depression? Why is it illegitimate to ask what elements of the Scandinavian economies (where among other things, the gap between executives and regular employees is much narrower) mean, and why they differ from our own? Why must we assume that international trade lifts all boats? How are we to imagine that consumer spending, which increases the velocity of money if nothing else, doesn't have an effect on the economy? And what do we understand by "net positive effect" and why is the "net" perspective more true and important than the local, individual effect (which may be much different)?

FEE says most economic myths have common features, and they list ten factors they consider hallmarks of these myths. One they don't mention is framing the question in a way that leads inexorably to the desired answer. I think each of the myths they seek to debunk in the list above is an example of this careful framing. Let's take the shortest statement: "Encouraging consumer spending stimulates the economy." There are several assumptions buried in this statement, about who is doing the encouraging, about the time horizon over which we're measuring results, about the alternatives to such spending, and about the desirability of such stimulation. It might be true to say that "consumer spending stimulates the economy." But one might still object to the "encouraging," if for example it's the government that's encouraging spending on credit to boost the year-end numbers, or the mortgage industry of 2007 encouraging homeowners to refinance at 100% of valuation and buy a plasma TV with the proceeds. Although it might not be the same person objecting, in those two examples.

Looking at FEE's list of ten common features as a friendly outsider, I'd suggest to them their estimation that their counternarratives lack these features is a little less true than they suppose. But I also believe feature #4: "They seem motivated by good intentions." And I think it's time for well-intentioned people on both sides of these issues to engage with each other and stop supposing the other side is either stupid or evil. So I'm going to start reading and responding to
The Freeman and other FEE publications. We'll see what comes of it.

Is Climate Skepticism Religious?

There's an interesting story on Scientific American. Posted Dec. 22nd, the article is titled "What Have Climate Scientists Learned from the 20-Year Fight with Deniers?" The article tells the story of Benjamin Santer, who was responsible for the original IPCC statement in 1995 that "The balance of evidence suggests a discernable human influence on climate change." Santer has been vilified and hounded by climate change opponents since then, according to the article. Although he's apparently a very private person, Santer decided "Climate scientists don't have the luxury of remaining silent."

The article goes on to discuss the ways climate change has been turned into a political debate. One interesting element is the idea that it's everybody's fault: that "all 7 billion of us" are equally, "collectively responsible for industrial greenhouse gas emissions." The implication, of course, is that we can only change the situation by radically changing our lives -- every single one of us. That's hard.

 
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In reality, a study by the
Union of Concerned Scientists has found that nearly half (48%) of the atmospheric CO2 contribution since 1854 has been made by twenty organizations. The largest contributors have been the former Soviet Union and China (each considered as a whole), followed by Chevron, Exxon/Mobil, Saudi Aramco, BP, and Shell. Another seventy organizations account for 15%, so in all we can trace nearly two thirds (63%) of all the carbon pumped into the atmosphere to 90 organizations.

That's not to say that we aren't all partly responsible. Nearly everybody in the developed world is a customer of one or more of these organizations. We heat our homes and drive our cars with their oil and gas. But it does at least suggest that as a society we may have some leverage on the issue. That we may be able to develop technology that would allow these 90 organizations (or their successors) to provide us with needed energy more cleanly than they have since 1854. There may be efficiency trade-offs involved in this -- which may be why for-profit corporations haven't yet done all they can. At the very least, it's a different problem (calling for a different solution) than the "we're all equally to blame" scenario.

The article continues by observing that climate scientists have learned a lot about their opponents by studying the creationist response to evolution in American politics, and also by understanding the tobacco industry disinformation campaigns of the 1990s, when "tobacco companies ran media campaigns that equated smoking with freedom of choice" and regularly obscured scientific findings showing that smoking and second-hand smoke cause cancer and other serious diseases. It's been well-documented that cigarette manufacturers actually lied about the results of their own research on the issue -- although ironically just this week climate skeptics commenting on Google executive Eric Schmidt's recent remarks about climate got into a side-argument in which they
reiterated the claim that second-hand smoke wasn't really dangerous.

Which brings us to the main issue: core beliefs. If climate skeptics are also arguing for the safety of second-hand smoke and
claiming that HIV/AIDS is not a real disease, what should climate scientists do to get their message through? Is there any hope of a sincere dialog? The article concludes that "people's belief in climate change often correlates with their ideology and their religious and cultural beliefs." The author tries to tie up the article and bridge this gap by suggesting that religion and science are compatible. He concludes (no kidding, in Scientific American) by quoting a Brown biology professor's assertion that "God is not the antithesis of scientific reason but the reason why it works in the first place."

I have trouble not believing the argument about scientific evidence of climate change is already lost if you start with start it with, "I'll give you your religious preconceptions, but…" Because if you really believe, then climate change isn't a problem because:

  1. God made the earth and can fix it if he chooses to,
  2. This isn't really our home. We (those who count, at least) are going somewhere more important.
  3. The Bible says we have dominion and can do what we want with nature.
Of course there are other traditions within the same religions that say we are stewards of nature and have some type of responsibility. Sometimes religions even acknowledge the social responsibility issue and the idea that environmental impacts (climate or otherwise) don't effect everyone equally. Last spring, the new Pope Francis made a Biblical case for addressing climate change, saying "If we destroy creation, creation will destroy us." The problem with religion is, which tradition are you going to subscribe to?

Even with the Pope's statement, though, I'm still concerned by that first step of caving on religion. Seems like it's at least necessary to draw a line and say
this discussion is in the realm of science. Invoke a separation of church and state for what basically amounts to a discussion of public affairs. We could argue that in order for people of all faiths (and none) to have a discussion about this, we have to keep arguments from faith out of it. But if your basic world view is informed by faith and you're told it has no place in the discussion, don't you then just spend your time not believing in the discussion? Maybe even trying to derail it? And using skeptical arguments if the faith argument has been ruled out of bounds?

Campaign Spending has RULED since 1860

Occasionally (really, pretty frequently) I'm struck by all the interesting stuff you can find in books written by people marginalized by the history profession. For example, Ferdinand Lundberg's 1937 book, America's 60 Families, includes a chart of presidential campaign spending beginning in 1860. I've never seen anything like this in a mainstream history book. But it should probably be there, because it turns out that the guys who won the highest office were almost always the guys who spent the most, from Abe Lincoln on.

National Party Funds in Presidential Years

Year
 
Republican
 
Democrat
 
Winner
1860
 
$100,000
 
$50,000
 
Lincoln -R-
1864
 
$150,000
 
$50,000
 
Lincoln -R-
1868
 
$150,000
 
$75,000
 
Grant -R-
1872
 
$250,000
 
$50,000
 
Grant -R-
1876
 
$950,000
 
$900,000
 
Hayes -R- (lost popular vote)
1880
 
$1,100,000
 
$355,000
 
Garfield -R-
1884
 
$1,300,000
 
$1,400,000
 
Cleveland -D-
1888
 
$1,350,000
 
$855,000
 
Harrison -R-
1892
 
$1,850,000
 
$2,350,000
 
Cleveland -D-
1896
 
$16,000,000
 
$425,000
 
McKinley -R-
1900
 
$9,500,000
 
$425,000
 
McKinley -R-
1904
 
$3,500,000
 
$1,250,000
 
Roosevelt -R-
1908
 
$1,700,000
 
$750,000
 
Taft -R-
1912
 
$1,071,548
 
$1,131,848
 
Wilson -D-
1916
 
$2,500,000
 
$2,000,000
 
Wilson -D-
1920
 
$9,700,738
 
$2,537,750
 
Harding -R-
1924
 
$4,370,409
 
$903,908
 
Coolidge -R-
1928
 
$9,433,604
 
$7,152,511
 
Hoover -R-
1932
 
$2,900,052
 
$2,245,975
 
Roosevelt -D-

So in every election except two, the party that spent the most money won. The two exceptions were Woodrow Wilson's 1916 re-election (when Wilson promised to keep the US out of a European War), and Franklin Roosevelt's 1932 landslide victory over Hoover (who was blamed for exacerbating the Great Depression). In both those cases, though, the winning party spent three quarters of the money the money spent by the loser.

What I found interesting was that the historic break in the Republican Party's half-century in the White House were the two non-consecutive terms of Grover Cleveland. In 1884, Cleveland outspent his Republican rival, Maine Senator James Blaine, by raising a million dollars more than the Democrats had spent four years earlier. The general consensus of Political Historians is that "popular outrage at the influence of money in politics helped put Grover Cleveland into the White House." (Heather Cox Richardson,
To Make Men Free, 2014, p. 122) A standard undergraduate textbook remarks that "the election of 1884 was one of the dirtiest ever recorded." But it fails to mention that the mudslinging in the media was fueled by a doubling of the money spent by the campaigns four years previous. The textbook paints Cleveland as a reformer of sorts, although it mentions without explanation that Cleveland "vetoed two out of every three bills brought to him [by a Democrat-controlled Congress], more than twice the number of all his predecessors." (Davidson et. al, Nation of Nations, 2005, 676-7)

In 1888 the Republicans outspent the Democrats by nearly a half million dollars, and Cleveland lost to Benjamin Harrison. Harrison's victory is portrayed as the accomplishment of "a rising kingmaker named Mark Hanna." (
To Make Men Free,123) Cleveland "decried the takeover of government by the wealthy," which some historians take as a suggestion the Democrat believed himself to be a people's candidate. The Republicans tried to insure their control over the presidency by bringing western territories into statehood, buying newspapers like Frank Leslie's Illustrated, and stuffing the Civil Service with their cronies. But in 1892, Cleveland's campaign outspent the Republicans by a half million dollars, and the Democrat became the only President to be elected to non-consecutive terms.
Cleveland is often considered a political outsider and champion of the common man because he was from Ohio. But by the end of the 19th century, Ohio was not the wild frontier it had once been. Five other presidents including Cleveland's rival Benjamin Harrison claimed a close connection (birth or public service) with the state, which during the last decades of the 19th century was the home of Standard Oil. While John D. Rockefeller "habitually contributed large funds to the Republicans in return for lucrative concessions; Colonel Oliver H. Payne, his partner, gave liberally to the Democrats." (
America's 60 Families, 54) Payne's son-in-law, William C. Whitney, became Cleveland's Secretary of the Navy.

While it is too simplistic to claim that the results of all these elections simply followed the money, the standard approach of political historians and the authors of history textbooks seems to go too far in the other direction. They say nothing -- leaving "fringe" historians like Ferdinand Lundberg the task of pointing out the fact that kingmaker Mark Hanna was considered by many the "statesman of Standard Oil." Luckily, the writings of these fringe historians, although left out of the history books, are not that hard to find online.

FEE Quotes Weber, Misses Point

Yesterday FEE posted an excerpt from Max Weber, under the title "Politics is Violence." While I think I get their point, and I even agree that the ways contemporary governments -- including our own -- use their powers is a big problem, I think the article oversimplifies the issue in a way that supports a core libertarian narrative about the difference between government and business.

In a 1918 article titled "Politics as a Vocation," Weber says:

"Today, however, we have to say that a state is a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory.

"Note that 'territory' is one of the characteristics of the state. Specifically, at the present time, the right to use physical force is ascribed to other institutions or to individuals only to the extent to which the state permits it. The state is considered the sole source of the 'right' to use violence."

The problem is, there's a disconnect between the first and second statements. The "human community" and the agency of the humans in that community of the first paragraph disappears from the second, and the state is reified. That is, the state becomes a monolithic agent -- a "person" with one particular outlook and agenda. I don't think this reflects reality, where "the state" can be better understood as an ongoing, never-ending negotiation between its members. Name me a state that speaks with a single voice, where there is no dissent, no disagreement on ends or means. And since this is so, the question of violent means is much more complicated than FEE is trying to suggest.

Also, in the real world, although "the state" may
claim a monopoly on violence, it is clearly not the only agent of violence. So really, what's the point of retreating into a hundred-year old theoretical argument about abstractions that didn't reflect reality then or now?

Approaching WWI with Thomas Lamont

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Continuing my notes on America's 60 Families, with a digression to a little-known speech:

Lundberg says "total wartime expenditures of the United States government from April 6, 1917, to October 31, 1919, when the last contingent of troops returned from Europe, was $35,413,000,000. Net corporation profits for the period January 1, 1916, to July, 1921, when wartime industrial activity was finally liquidated, were $38,000,000,000…" (134)

By the end of the American involvement, US national debt had reached $30 billion, "or more than thirty times the prewar national debt. The only way the people could recover some of this money was by taxing the corporations" that had made some extreme windfall profits during the war. But the Republican administrations that followed Wilson's "saw that taxes on the rich were sharply reduced rather than increased." (135)

JP Morgan and Company acted as purchasing agent in the US for the European allies. Wilson's Secretary of State, the Populist William Jennings Bryan, warned the President in August 1914 that Morgan was seeking credit for Britain and France. Bryan told Wilson "money is the worst of all contrabands," and that if the loan was permitted, "the interests of the powerful persons making it would be enlisted on the side of the borrower, making neutrality difficult, if not impossible."
Wilson concurred, and Bryan wrote to JP Morgan in his official capacity as Secretary, outlining the administration's position that "Loans made by American bankers to any foreign nation which is at war are inconsistent with the true spirit of neutrality."  So on October 23, 1914, "with Bryan out of town," the bankers tried an end run. Samuel McRoberts, vice president of National City Bank, approached a State Department advisor named Robert Lansing, who called on Wilson. "Between them they drew a Jesuitical distinction between credits and loans: credits were held to be permissible…the Allied governments…began buying supplies in large quantities on bank credits…it was only a little more than six months before Wilson secretly gave permission for the flotation of the huge Anglo-French loan." (Wilson's good friend and trusted advisor Cleveland Dodge was a director of National City. 136-7)

Lundberg then moves on to JP Morgan and Company and especially to Thomas Lamont, who was to play an important role in financing the war and negotiating the peace at Versailles. Lamont gave an important but little-known speech in April, 1915, Lundberg says, which laid out the bankers' agenda for the war. Lamont spoke to the American Academy of Political and Social Science. Although Lundberg observes the speech, titled "The Effect of the War on America's Financial Position," was "neither reported in the newspapers nor was it brought to light by the Nye Committee." (139) Luckily, a transcript was published in the
Annals of the Academy. Here are some highlights:

Lamont begins by recounting that at "the outbreak of the general war…We saw our high-grade securities fall with great violence; we saw the entire fabric of our foreign exchange, built up over many generations, knocked completely awry; we found ourselves unable to buy sterling exchange wherewith to pay our debts in London. Our gold was exported in great volume…Domestic rates for money advanced to a high figure, and even at that money was scarce and hard to obtain." This alarming chain of events, Lamont recalls, was met with swift and decisive action. "Our securities were being dumpoed upon us in large volume by foreign holders. Therefore, we closed our exchanges…Gold was being exported and there was danger of a money panic. Therefore…under the Aldrich-Vreeland Act $400,000 of additional currency was almost immediately issued." To forestall the calling of foreign loans, the financiers of New York "sold $100,000,000 of its 6 per cent notes," raising $80 million in gold. When the South was panicking over the breakdown of the cotton market, the financiers "organized a banking pool to lend up to $150,000,000 on cotton." In these ways, Lamont says, "a comparatively few active and patriotic men acting as leaders, but with the loyal and united support of the whole financial community," saved the American economy.

Since the initial crisis, Lamont continues, the situation has turned to America's advantage. "Money is easy, we are importing gold on a good scale, having already brought back over $50,000,000 of what we sent out last year…we are turning from a debtor into a creditor…We are piling up a prodigious export trade balance [with] war orders, running into the hundreds of millions of dollars." Lamont lists a half dozen countries the financiers have loaned money to since Wilson allowed "credits," concluding "these foreign loans that we have made since war broke out [are] well above two hundred million dollars." But that's just the tip of the iceberg. "Many people seem to believe," Lamont says, "that New York is to supercede London as the money center of the world. In order to become the money center we must of course become the trade center of the world." So instead of a dangerous crisis, the European war might just be a tremendous opportunity for America.

But it's not a sure thing. In order to take advantage of this opportunity, the financiers will need to be both smart and bold. And a lot rests, Lamont admits, on "the duration of the war." If it's over quickly and Germany is able to regain its competitive position in international trade, "we should find that the building up of our foreign trade would be a much slower matter than if the war were to continue indefinitely…If we should continue to buy such securities [of US companies] back on a large scale -- and the chances are that if the war continues long we shall do that -- then we should no longer be in the position of remitting abroad vast sums every year in the way of interest…If the war continues long enough…then inevitably we shall become a creditor instead of a debtor nation, and such a development, sooner or later, would certainly tend to bring about the dollar, instead of the pound sterling, as the international basis of exchange."

So what's it going to take to bring about this historic reversal of America's financial fortunes? First, of course, American financiers need to be allowed to loan (and American manufacturers to sell) as much as possible to the warring Europeans. But in order to do this, Lamont says the US government needs to turn control over to the patriots who saved the economy at the war's start. "We are witnessing extraordinary developments on the other side of the water," he says; "we are seeing government control of industry being undertaken on a gigantic scale. Will such control continue in part or in whole after the war? Will the value of the cooperative effort which is now being demonstrated, be so great as to demand continuance after the war is over?" This passage may be confusing to people reading today, since we now expect businessmen to be against government involvement. Lamont is
calling for government cooperation with business -- but with himself and his fellow financiers calling the shots.

"Here in America," Lamont asks, "shall our manufacturers and merchants be able to take effective steps, with the active cooperation of the government for the development of foreign business? Will American producers be able to arrange for cooperation among their organizations?" To make America the world leader in trade and finance, Lamont says, things will have to change because "Today our laws do not allow them." In order to take advantage of the opportunity before them, "this year to one billion dollars," Lamont says the government needs to start looking the other way on antitrust and let business "cooperate."

"Some fail to realize," Lamont concludes, "that finance and general business are so interwoven that the success of manufacture and trade depends entirely on the cooperation of finance." Trusts and the holding companies that followed them, by the logic of the day, allow financiers to rationalize industries and make them more efficient and profitable. Bigger is better -- this is an idea we still recognize as part of the philosophy of big business. Lamont is calling for unlimited size, and also for cooperation by government to turn control over American foreign financial policy over to the people who took "those great remedial and protective steps that I have briefly alluded to…taken by a few gentlemen quietly and without legislative action."

The Elite Stay Elite

The Son Also Rises: Surnames and the History of Social Mobility
Gregory Clark, 2014


I just finished reading a book that claims social mobility in modern America is basically the same as in modern Sweden, and that both are in fact just about the same as in sixteenth-century England. Everywhere, Gregory Clark says, persistence of social status is much higher than we normally suppose. Where most sociologists estimate persistence in the range of 40%, Clark puts it between 75% and 80%. And as mentioned, he says it has never really changed throughout history and that it's the same pretty much everywhere. As a result, the descendants of the victorious Normans  of 1066 are still disproportionately represented in the British Parliament, and the famous but tiny Pepys family has sent many more than its share of young men to Oxford and Cambridge.
 
First, I've gotta say that it doesn't really come as a surprise to me that the elite stay elite or that it can take 20 or 30 generations for a family at the top of the heap to "revert to the mean." Although Clark says it's statistically improbable for the Pepys clan to have continued to send more than its share to the best British schools, I don't think it's socially improbable at all. In fact, it's the outcome I expected.
 
The interesting thing about this book, though, is that Clark posits (without ever really coming right out and saying it) a genetic component to elite status and persistence. Rather than saying that the Pepys boys were accorded special privileges at elite British schools or that the sons and grandsons of hereditary MPs were more likely to be elected to Parliament, Clark says there's something called underlying social competence, and that it is inherited.
 
Hang on, what? Clark says that elite status is in the genes? Well, not exactly. What he says is that there's an unknown cluster of characteristics that, taken together, make a person socially "competent," and that these characteristics seem to be inherited. Although Clark's equation has a term built in for dumb luck, he thinks the randomness is much less than we normally believe it to be. If you're looking for a marriage partner, Clark says, don't trust the status of the individual alone. It might be luck. Look at the status of the whole family, and you'll get an indication of your potential partner's "competence" genes.
 
I haven't been able to find any reviews of this idea by historians (and just a couple by economists), possibly because the book was only published in 2014 and the glaciers of academic reviewing haven't ground it down yet. However, Richard V. Reeves of the Brookings Institution wrote a three-part take-down called "
The Good, the Bad, and the Ugly" in March 2014. Reeves, who also recently wrote a long essay supporting the rags-to-riches perspective of Horatio Alger, says Clark's perspective is racist. Or at least genetically deterministic, which he suggests is basically the same thing. Clark responded that he wasn't being racist, some of the elite groups he tracks in the book are in fact of African descent. But Reeves has a point. "Racism is not History," he says. Yeah, the guy from Brookings is saying the effects of slavery and the rest of America's racist history are still being felt. Wow.
 
Clark's main point isn't really about race, though. He uses adoption and twin studies to suggest that there's an element to life success that isn't explainable by nurture. Even if that effect isn't as complete as Clark implies (I think he brushes by some of the caveats and exceptions in the studies he cites a little to quickly), it's a challenging idea.
 
The problem is, there's not enough to grab onto. The 11 herbs and spices remain secret -- we never find out what mental, emotional, physical, or other characteristics make a person "socially competent." And it's hard to believe that the factors that made people successful in the sixteenth century are all the same as those that make people successful today. Nor is there any real explanation of how particular families got to the top of the heap in the first place. The mobility equation takes center stage, and we don't really get to look under the hood at the social factors that could have led to success and then sustained it. This is unfortunate, because since Clark hasn't really identified the machine working behind the scenes, it's entirely possible that the effects he's measuring to derive the equation are in fact social rather than biological.
 
When Clark says the social mobility in Sweden is as low as in America or early-modern England, he's not saying that inequality is the same. The penalty of being at the bottom in a welfare society like Sweden is obviously much lower than it was in England or is in the US (I wonder if the lesser downside of low social mobility in Sweden doesn't have something to do with it continuing?). Clark does suggest that in a society like the US where Reeves's Horatio Alger dream is pretty much an illusion, we ought to think harder about our safety net.
 
Clark's numbers suggest that a person's status at birth can predict a lot about their life chances. That's a slap in the face to the American Dream. But let's think about it. If he's right at all -- even if we have no idea why he's right and disagree with the theory he advances to explain it -- then we really ought to be doing more to make it less painful to be average or poor in America.

The Dangerous Naivete of Risk Consultants

I'm always looking for places online to read and possibly write about Environmental History and current issues. Recently I discovered Medium, and today I searched on "environment" to see what would turn up. One of the articles returned was called "The Dangerous Naivete of Back-to-the-Garden Environmentalism," by Harvard instructor and Risk Perception Consultant David Ropeik. I don't know how many other people have read this article (I was first to comment; it also appeared on BigThink, Google+, and elsewhere), but I thought it represented a particular attitude I wanted to respond to.
 
The article begins with the author standing at the foot of a glacier in Iceland, which Ropeik says will someday disappear, but mostly due to forces much larger than anthropogenic climate change. Ropeik continues with a mild criticism of the idea contained in the three Abrahamic religions that humans have dominion over nature. The author rejects this idea, but excuses it. He doesn't say it's ancient superstition, but that it reflects what Einstein called the "optical delusion" of self and other.
 
But he's much harsher when it comes to modern environmentalists. Bill McKibben's breakthrough book's title,
The End of Nature, he says, is arrogantly anthropocentric and scientifically naïve. McKibben is a "modern environmental prophet of hypocrisy," although it's initially unclear to me, aside from the journalistic hyperbole of his title, how McKibben has offended. Biologist Edward Wilson is described as "another high priest of modern environmentalism." Is this continued use of religious language a clue to the real argument of this article?
 
At the end of part one, Ropeik argues that the "anthropogenic arrogance" that humans are not part of nature is a "central conceit of classical environmentalism." He uses Joni Mitchel's lyric from "Woodstock" to illustrate the naïveté of the idea that we can return to the Garden. And I agree with that sentiment. But he extends this to suggest there's something ridiculous about McKibben's claim that "we possess the possibility of self-restraint." We can't restrain ourselves, he says. Our "believing that we are
so intelligent that we can consciously conquer our ancient animal instincts" is pious, ignorant, and dangerous.
 
In part two, which begins in the White Mountains of New Hampshire,
Ropeik introduces James Lovelock's Gaia, which he says is an interesting example of "eco rather than anthropo-centrism." The Greek gods punished Prometheus and unleashed Pandora's box of horrors on humans, the same way the Judeo-Christian deity punished humans for gaining knowledge. Knowledge and fire (reason and technology) gave us great gifts, he says, but threaten Nature "in it's current state" (his italics). The point, apparently, is that our view is myopic, short-term, and human-centered. Nature will continue, even if we cause a few extinctions.
 
This brings Ropeik back to the refrain, the "selective hubris classical environmentalists have" that we can "solve these problems." This is my big beef with the argument. Not the straw-man "classical environmentalists," but the idea that anyone is saying we know how to fix all these problems. A lot of people are saying,
let's just try to stop causing the problems! I can't help thinking that the whole point of this article is going to be, let's keep drilling, because in the long run some new Nature will work itself out, regardless of what we do.
 
I admit, I have some sympathy for the irony of Ambrose Bierce's definition of the brain as "
the organ with which we think we think." But I'm also struck by the irony of a guy who teaches at Harvard saying this. Who is this "we" he refers to, anyway? Part two ends with a reiteration of the danger posed by believing we can think ourselves back to the Garden, when  religion has been telling us all along that reason is the enemy.
 
Part three begins in the Himalayas near Tibet. The author has apparently gone there to see an eclipse, which again impresses him with the immensity of nature and the puniness of human intention. He then goes on to draw a series of false dichotomies intended to illustrate the silliness of "classic environmentalism." We're asked to choose between monoculture agribusiness and organic local farming. Between nuclear power and wind; between biotechnology and the paleo diet.
 
The byproducts of "our" technologies, he says, are "our" monsters, and as Bruno Latour says, we must love them. At no point, though, does Ropeik recognize that those benefiting and profiting from these technologies and those facing the monsters aren't the same people. In a striking moment, he criticizes Indian environmentalist Vandana Shiva, who he says also wants to go back to a biblical Garden. While I sympathize with Ropeik's frustration over the it-all-began-with-Francis-Bacon argument, I think he trivializes Vandana's actual position every bit as much.
 
The article concludes by admitting that humanity and the biosphere "are headed for an inevitable nasty crash that will certainly largely be our fault." And that this crash is
unavoidable, not because we've already passed some ecological tipping point, but because we just can't stop ourselves. Again the we. Is this the we that loses children when American chemical factories explode in India, or the we that can jet off to the Himalayas to watch an eclipse?
 
In an epilog, Ropeik describes meeting a cuttlefish on a dive in the South Pacific. He remarks that the area where he's diving had been barren ten years earlier, bleached by El Nino warming. The reef recovered, which apparently goes to show that we really aren't doing that much damage after all. Sort of like how a cold day in Harvard Square challenges global climate change.

Pollution Permits and Monopolies

So I'm reading this op-ed piece in the Guardian by George Monbiot. He's talking about keeping the coal and oil in the ground. Because if it comes out, it will be used. And I'm thinking yeah, that sounds logical, but impossible, given human nature. How are you ever going to get people to leave it in the ground? He talks about a global auction in pollution permits. I'm not sure if the real point of that is making the added expense to corporations a disincentive to using fossil fuels (and an incentive to explore cheaper alternatives), or to build up a slush fund (pun intended) to mitigate the effects when they go ahead and use the fossil fuels anyway.

But as I'm wondering this, an image comes to me. I was cleaning the garage yesterday and on a shelf I found a bag from the local fleet store containing a couple of packages of yellow rope. It's your basic braided synthetic, I remember buying it. And what I particularly remember is that it's made by Koch Industries.

I needed some rope for a job. I went to the store to get some. I noticed that the type I wanted had a little Koch Industries logo sort-of hidden on the back. I'm a little bit politically aware, and I thought, I'd really rather not give my money to the Koch brothers. What other type of rope will work for my job?

It didn't matter. Every variety of rope and twine on the shelves was from Koch Industries. Didn't matter if it was synthetic or natural fiber. Whatever I bought, the Koch brothers were going to get my money.

My point is, so what if big corporations have to buy pollution permits. It's just another tax that they'll either avoid, or offset with tax savings wrung from the nations, states, or cities where they operate. Or, failing that, they'll pass to cost on to their consumers.

As long as we don't do anything to address the overwhelming (and still growing) power of monopolistic multinationals, we're basically just taxing the little people.

Market Failure in Minnesota

During a recent "special" session of the Minnesota legislature, a bill was snuck through the House and Senate eliminating the Minnesota Pollution Control Agency Citizen's Board. Established in the 1960s, the Citizens' Board had consisted of eight members and the Commissioner of the MPCA. Their bylaws called for one member to be "knowledgeable in the field of agriculture." According to former Board member Jim Riddle, "The Citizens’ Board came under fire from corporate agribusiness interests last fall, after we required an Environmental Impact Statement (EIS) for a proposed confined animal feeding operation (CAFO)."

The owners of the CAFO didn't have enough land to spread even half the manure they would generate. They had no idea (or interest) how much their water use would impact existing farms in the area. Their water plan consisted of building a twelve mile pipeline from a well that had been permitted seven years earlier for an ethanol plant that had never been built.

The Board's request for an environmental impact statement angered the
Agri-Growth Council, whose Directors include executives from Cargill, CHS, and General Mills. Although Riddle says the Board didn't prohibit the CAFO, apparently agribusiness is unhappy with the idea that anyone has the authority to insure that "more information be provided on the environmental and economic impacts of the proposed facility, in order to demonstrate that Minnesota’s laws would be followed and the health and safety of area residents and the environment would be protected."

Advocates for a lot of schemes like CAFOs, sulfide mining on the Iron Range and pipelines through the Headwaters like to portray the opponents of these schemes as head-in-the-sand Luddites. Elimination of the Board, says Riddle, will make it "easier for industrial agriculture, mines, pipelines and other extractive and polluting activities to be approved with little or no citizen participation."

The reality, it seems to me, is that the advocates of these schemes fear their plans won't stand up to close scrutiny. The point is not that CAFOs should never be built, that copper should never be mined, or that oil should never be transported. People could argue those points, but that's not the point here. The point is that politically powerful owners and corporations want to do these things in the cheapest, sloppiest way possible, with no oversight. This makes good economic sense, if your economic perspective extends only to the next quarterly or year-end report. The corporations are acting rationally, from their economic point of view, when they behave this way. CAFOs and companies like Enbridge and Polymet have a long history of cutting corners to save money, and then trying to evade the penalties and costs of cleanup when things go wrong.

But clearly this kind of sensible economic behavior is not in the public interest, or even in the long-term interest of the companies involved. The decision to do it anyway and try to silence the opposition is what economists call "market failure." It is precisely why we can't have a completely free market (despite the fantasies of Ayn Rand-readers), and why regulatory agencies and citizen boards need to exist.