Category Archives: Economics

Decison on Keystone XL Pipeline Delayed Until After Presidential Election

Tweet Via NPR‘s All Things Considered, from correspondent Richard Harris, Feds Delay Decision On Pipeline Project

The State Department is delaying a decision for at least a year on whether to approve the Keystone pipeline. The $7 billion pipeline would carry oil from the tar sands of Alberta, Canada, through the U.S. to Gulf of Mexico refineries. Nebraska’s state government and environmental groups have put intense pressure on the State Department and White House to reject the pipeline’s proposed route. NPR’s Richard Harris talks with Robert Siegel about the project.

Audio here (available after 1900 hours Eastern time, 10 November 2011).

Wikipedia’s entry Keystone XL Pipeline has a detailed – and, in our view, fair – account of the controversy. While on balance we do not support the Keystone pipeline, a very well-reasoned argument in favor of the pipeline can be foundon the blog of JEH Land Clearing, from which we’ve taken the following map of the proposed pipeline (route in red; other pipelines indicated are already in existence/operation).

The Texas economy will benefit from the increase in production. The area east of I-35 is consistently in economic hardship (Port Arthur’s unemployment rate is hovering around 15%), and the construction, land clearing, surveying and refinery jobs will help lower the staggering unemployment rate. It is estimated that the Keystone Pipeline will help create over 20,000 jobs. Texas alone will see over $2.3B in new spending and the US will see about $20B in new spending. The increase of personal income in the state will be about $1.6B and the US will see an increase of $6.5BB. Profits will be re-invested in the local economy improving the quality of life and increasing the number of business in the area. Regardless of where you stand on this issue, one fact remains; the only one way to get heavy crude from Canada to the Texas gulf coast is a pipeline.

Excerpted from Oil Pipeline Invigorates Texas Economy

We support public works projects as economic stimulus, particularly those which come with improvements to energy and other infrastructure; in our view a massive wind/solar public works project in Texas might have the same effective economic stimulus with a better energy outcome, with a significantly lower environmental impact

What JEH doesn’t mention are the costs in terms of environmental damage, water, and health effects. These are long term costs, which are, in the parlance of neoclassical economics, “externalized,”or pushed into the future, and pushed off the balance sheets, kind of like CDO’s, or Collatoralized Debt Obligations, made famous by the financial crisis. Ecological economics recognizes that these costs must be considered, just as recent economic history forces us to recognize the real value of mortgages and mortgage backed securities. As we are learning, ignoring risk is unwise. Put bluntly, the Keystone XL pipeline is kind of like a $1.0 Million “McMansion” sold for $25,000 down, with a $1.0 Million mortgage which is, of course, a negatively amortized interest-only note for the first 5 years – at which time the borrowers will have to pay $1.1 Million, plus interest. But in reality, the $5 billion pipeline is like an aggregated set of five thousand negatively amortizing $1.0 Million toxic McMortgages on McMansions built of radioactive materials on toxic waste sites below sea level.

We intend to elaborate on the costs, risks, and benefits of pipelines in future posts; as well as a series on the Bonneville Power Administration, which has been supplying electricity in the Northwest for almost 75 years, and which we think is a model for energy-related public works projects.

Connecticut Power – Failure

Tweet The few inches of heavy wet snow that fell in October took out power in parts of New Jersey and Connecticut. Millions lost power in the storm. Nine days later 50,000 remain without power in Connecticut. Hundreds are without power New Jersey and Massachusetts. Connecticut Outage map here. News coverage here: Business Week / NPR / NY Times.

People in New Jersey have installed over 400 MW of nameplate capacity solar. While this is a fraction of the 7.0 GW, or 7,000 MW, of generating capacity needed by the 8 million or so people who reside in New Jersey, and these systems don’t feed the grid when the power is out, let’s do a thought experiment.

Let’s imagine each of the 50,000 in Connecticut who remains without power had a PV solar array. They’d have power during the day. Lets also imagine that microhydro turbines along the Connecticut River, in other rivers, off the shores, and a set of utility scale wind turbines. The result? Power, day and night, without pollution. Power without the need to mine coal, drill for oil, fracture the ground for methane, or generate tons of radioactive waste.

Lets further postulate 50 MW on each of the public schools, and 1.5 to 5.0 MW on each of the colleges and universities in the state.

In the event of a major outage from a storm like the October Surprise of 2011, or Irene, the schools could be used as emergency shelters with power, during the day when the sun is shining – as it has been since the storm.

And these systems generate power in predictable amounts, with no fuel and no pollution.

An emergency backup power system is only used during an emergency. Solar energy systems are used every day – and so are a more efficient use of capital.

And as the picture above suggests – there’s an interesting feedback pattern when snow falls on a solar array. Solar arrays are pitched to face the sun. Snow is translucent – allows light to pass thru. The snow covered solar array generates power, which generates heat, which melts the snow, exposing the array to more sunlight – which generates more power.

Can Anyone Really Create Jobs? Yes We Can!

Tweet Writing in the NY Times, Adam Davidson of Planet Money, asks “Can Politicians Really Create Jobs? Davidson says “No.”

But with all due respect to Mr. Davidson, as Barack – The Candidate – Obama said, “Yes, We Can!”

And yes, Presidential candidates can create jobs – presidential campaigns are staffed by people. So obviously, the President can create jobs. Anyone can. All it takes is a need for something to get done. Whether you do it yourself or you pay someone else to do it, it’s a job. So the real question for the President, the Presidential Candidates, our elected Representatives in Washington and in State and Local Government, and for us ourselves, is not “Can we create jobs?” The real question is “How do we create 10 or 15 million good new jobs?”

Davidson talks about Keynes and the Chicagoans.

Chicagoans believe that economies can only truly recover on their own and that policy interventions only slow the recovery. It’s a puzzle of modern politics that Republicans have had electoral success with a policy that fundamentally asserts there is nothing the government can do to create jobs any time soon…. Romney, Perry, Herman Cain and the rest won’t come out and say, “If elected, I will tell you to wait this thing out.”

This is what Herbert Hoover said and why Franklin Delano Roosevelt won the election in 1932.

Instead, Republican candidates fill their jobs plans with Chicagoan ideas that have nothing to do with the current crisis, like permanent cuts in taxes and regulation. These policies may (or may not) make the economy healthier in 5 years or 10, but the immediate impact would require firing a large number of America’s roughly 23 million government workers.

What John Maynard Keynes said is less that “government can create jobs” but is more along the lines of

“in economic times such as these, when there is high unemployment because business will not hire people to create inventory that is likely to remain unsold, government is the only entity that has both the means and the will to create jobs.”

Less “government can” and more “Government Must!”

What is our government, after all? Lincoln said it best:

– “Government of the people, by the people and for the people.”

And there is much work to be done. We need to rebuild our infrastructure. This includes our crumbling current infrastructure of schools, roads, mass transit, etc. This will create jobs. We also know that domestic energy production peaked in 1971. International oil production seems to be peaking now, altho given the state of the world economy, and the state of infrastructure in Iran, Iraq, and Libya, the international peak may be a few years off. However, we should build a sustainable energy infrastructure. We will need it eventually. It is good for the environment, it will strengthen our economy and our state of national security. But rather than by using a simple program to provide loan guarantees to various corporations; the government should mandate that all government buildings should be well insulated, efficient, heated and cooled with geothermal, and powered with a mix of solar, wind, local hydro, biofuel (from waste, sewage, manure, etc., not food crops).

Just as police and courts exist to protect people from those who would point a gun at their heads and say “Your money or your life,” enforcement agencies must protect people from those who would discard toxic substances into the air we breathe, the water we drink, the food we eat, and the ground from which we farm. We need to regulate banks and other financial firms. This too will create jobs. We need to provide health care to all our citizens, not just 5 out of 6, or 265 million out of 307 million, leaving 1 out of 6, or 45 out of 307 million without access to health care.

Davidson is wrong about one other thing. It’s not either go into debt to create jobs or fire people to cut taxes. Government has two sources of revenue: debt and taxes. It seems fair to me that a progressive tax policy, can be used to generate the revenues needed to pay for the jobs society needs to be done. Wealth, after all, is not created in a vacuum. Wealth is created by people buying things that other people are selling. People want to buy Apple computers, music players, cell phones. The people who design and build them get wealthy. The wealthy benefit by living in society; therefore demanding that all, including the wealthy, pay a fair share, as illustrated here, in my post on Progressive Tax Policy is fair, balanced, reasonable, and smart.

Over $100 Million, 57.5%. Plus 5.0% Social Security Insurance & Medicare.
Between $10 Million and $100 Million: 52.5%. Plus 5.0% SSI & M.
Between $5 Million and $10 Million: 42.5%. Plus 5.0% SSI & M.
Between $1 Million and $5 Million: 32.5%. Plus 5.0% SSI & M.
Between $100,000 and $1 Million: 22.5%. Plus 5.0% SSI & M.
Below $100,000: 17.5%. Plus 4.0% SSI & M.
Royalty income should be taxed at the same rates as wages and salary.
Income in the form of unsold stock options is tax-deferred and taxed when sold.
Inheritances of $1.0 million and under from a grandparent, parent, partner, or child should not be taxed. Inheritances from distant relatives, or that portion above $1.0 million should be taxed as indicated above.

So can anyone create jobs? The answer is a resounding ‘Yes, We Can!’

Progressive Tax Policy

“Taxes are the price we pay for civilization.” – Oliver Wendell Holmes.

Progressive tax structures are not about punishing the rich. They are a recognition that wealthy people derive benefits from being in society. Warren Buffett, Steve Jobs, Bill Gates, Michael Jordan, Oprah, for example, got rich because people buy their products or watched them play basketball or on TV. Paris Hilton is wealthy because her great-grandfather built a successful business. Their successes are wonderful. But their success should not require me to subsidize their lifestyles.

This tax structure can be implemented by October 31, 2012, and effective January 1, 2013, if not by Congress, then by Executive Order.

| / Tweet / Zuccotti / mp3 | Continue reading →

Corporations Are NOT People

_ Tweet The Supreme Court, in “Citizens United (against the citizens)” said, as Gov. Romney put it “Corporations are people, my friend.”

The people at “Occupy Wall Street” say, “I’ll agree that ‘Corporations are people’ when the government executes one.”

and “If a Corporation is a person then why isn’t it murder to declare bankruptcy? ”

A lawyer I consulted rationalizes the notion that “Corporations are people” by arguing that corporations have the rights to be secure against unreasonable search and seizure, as guaranteed by the Fourth Amendment, in the Bill of Rights, ratified 15, December, 1791.

However, it is the people who own the corporation and the people who work in the corporation who have the right, guaranteed by the Fourth Amendment, to be secure against unreasonable search and seizure – not the corporation.

The corporation can not exist without owners. A corporation is a piece of property, like a car, a house, a gun, etc. These objects have no rights. When an accused shooter goes on trial, it is the person who allegedly squeezed the trigger, or the person who paid for the “hit.” It is not the weapon. As the National Rifle Association might say, “Guns don’t kill people, people use guns to kill people.”

While people can own one or more corporations, in whole or in part, people may not own other people. This, i.e. slavery, described by Barack Obama as the “Original sin of America,” was claimed under the rubric of “States Rights” referenced in the “Declaration of Causes of Seceding States” on 24, December, 1860. However, it was voided by the Thirteenth Amendment, ratified on 6, December, 1865 and the Fourteenth Amendment, ratified on 9, July, 1868.

Additional counter-arguments can be found in Marjorie Kelly’s “The Divine Right of Capital” (ISBN 1576752372).

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Protesting Marked Cards and a Stacked Deck

_ Tweet I spoke with two of the Wall Street protesters this morning. We discussed credit unions, other cooperative ventures, Buckminster Fuller’s ideas, capitalism, and productivity. (“A 4-day work week,” Fuller was quoted as saying, “would give us time to enjoy the wealth we create.”) We didn’t talk about Warren Buffett or President Obama, but it seems that both would agree with the protesters’ sentiments, as I do, that our financial system “favors the rich and powerful at the expense of ordinary citizens.” (The protests and the protesters’ motives were described here by Colin Moynihan in the New York Times, Sept. 17, 2011.) The protests are also covered by Think Progress, here.

Buffett, in “Stop Coddling the Super-Rich“, published in the NY Times, said

I paid … only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

Obama’s initiative is explained on White House . gov and Talking Points Memo, and by Obama in recent days, “It’s not class warfare,” he said, “it’s math” and “If it’s class warfare,” he said in Ohio and Kentucky, while discussing an old bridge between southwestern Ohio and Kentucky that needs to be renovated, “I’m a warrior for the Middle Class.”

Move On has a petition here, saying, “I agree with Buffett – and Obama.”

Despite the evidence, from the 2001 to the present, that cutting taxes on rich people does not create jobs, Charles Gasparino, in the New York Post, a Rupert “We-hack-cell-phones-for-fun-and-profit” Murdoch product, said, here, “taxing the rich will destroy jobs.”

Gasparino is clearly wrong. And Buffett and Obama are clearly correct. Rich people can afford to pay higher taxes, and asking them to pay 17.4% while others, who need to spend a much higher percentage of their income on food, clothes, and housing, pay 33% to 41% does not seem fair.

But the question is “What do we do with the money?” Buffett has also said that he would never have made the money he made had he not been born in the United States, and had he not gone to Columbia University and studied “Value Investing.” He basically argues that the cultural climate and economic systems in the United States enabled him to become wealthy, that this is a good thing, and others deserve the same opportunities. “We must plan for the future and invest in infrastructure. And the wealthy should pay their fair share. ”

Tax policy must be linked to fiscal policy. What we are doing today, Obama, Buffett, and the protesters would say, is using tax policy to make rich people more rich. They would argue, and I would agree, we should use tax policy to develop infrastructure. One idea is to build a 40 kilowatt photovoltaic solar array on each of the 92,000 public schools in the United States. Solar only generates power during the day; schools need most of their power during the day. This would use tax revenues to pay for infrastructure upgrade – and tax revenues pay public schools electric bills. PV Solar systems provide energy without pollution, without toxic wastes, without greenhouse gases. And in the event of an emergency, if disconnected from the grid, we would have a network of 92,000 local emergency shelters with power during the day, when the sun is shining.

Marked cards and a stacked deck are great when you’re doing card tricks. But don’t play poker against a cheater using them.

Nuclear Power: Present Tense

— Tweet — Nuclear Power: Accident in France Kills 1, Injures 4 — NPR, and the Associated Press report “An explosion at a nuclear waste facility in southern France killed one person and injured four on Monday… The Nuclear Safety Authority declared the accident “terminated” soon after the blast at a furnace in the Centraco site, in the southern Languedoc-Roussillon region, about 20 miles (32 kilometers) from the city of Avignon. One of the injured suffered severe burns.”

The DC Bureau reported “The workers were operating a high temperature industrial oven that burns low-level nuclear waste in a sealed building when the unit blew up. The worker who was killed was burned so badly his body was carbonized, according to officials.”

The French Nuclear Safety Authority, analogous to the US Nuclear Regulatory Commission, or maybe Vichy, designated the accident as a 1 on a scale from 0 to 9.

While a death in an industrial accident is tragic, and while a worker could die as a result of injuries sustained falling off the nacelle of a wind turbine or a roof while installing or working on a solar array, it is probably impossible for a worker to get ‘Carbonized’ working on a wind turbine or solar farm. Continue reading →

Saving the Economy, Part Deux

Tweet In Part 1, I criticized “How to Really Save the Economy“, an op-ed in the New York Times, published Sept. 10, 2011. So how do we really save the economy?

“One of the best kept secrets in New York City,” I wrote, “is the existence of a 40 kilowatt (KW) photovoltaic solar array on the Whitehall Street terminal of the Staten Island Ferry,” pictured above, and first covered in Popular Logistics in 2007, here.

There are 90,000 public schools in the United States. Suppose we were to install a 40 KW solar energy system on each of them. PV solar modules require very little maintenance over their 35 to 45 year life expectancy. My initial thought was $5 per watt or $5,000 per kilowatt, but $4,000 per kilowatt is more realistic for the near term price of solar, particularly at the utility scale. This is where we expect the cost of solar in the Q4 2012 timeframe, without subsidies.

At $4,000 per KW of nameplate capacity, each of these 90,000 systems would cost $160,000. This 3.6 gigawatts of distributed daylight-only capacity would cost about $14.4 billion.

It seems to make sense to use taxpayer monies to finance these systems; taxpayers pay the electric bills for public schools and other public infrastructure, so rather than pay a utility to burn coal, oil, or gas, or harness nuclear fission, we could buy solar modules, put them on the roof and transform sunlight into electricity. But what are the other implications? What would it give us? And what do we do at night? How much juice do we get?

The US Dept. of Energy’s (DOE) National Renewable Energy Lab’s (NREL) PV Watts solar energy calculator tells you the power you can expect from a given solar system anywhere in the US. Regarding night-time; solar is effective in conjunction with other sources of energy, and other clean, renewable, sustainable sources include wind, geothermal, micro-hydro, biofuel.

Every public school in the country would have a power plant that generates power, during the day, with no fuel cost and no waste., and no associated mining, processing, transportation, fuel costs and no waste management costs. At $5.00 per watt, or $5 billion per gigawatt, the capital costs are lower than the costs of new nuclear and significantly lower than the costs of coal with carbon sequestration, with none of the risks or hazards associated with the systems: no arsenic, mercury, lead, thorium, uranium, zinc, or carbon.

The systems would be tied to the electric grid, after all, while most of their operations are during the day, schools need power at night. If these systems could be disconnected from the electric grid, then we would have 90,000 structures distributed all over the United States, with power during the day in the event of power outages from storms, earthquakes, accidents, etc. Even if we lost 10% of them in a disaster like Katrina, or an event like Irene or the recent earthquake, we would still have 81,000 all over the country. Coupled with efficient refrigeration systems, we would have shelters with power to keep food and medications cold during emergencies; and these would be distributed across the country.

The solar systems would obviously have to be installed here, which would stimulate the economy, and we could even require the components to be manufactured here, further stimulating the economy.

Why not business as usual?

As reported here the North Anna nuclear plants in Virginia were shut down during the earthquake a few days before hurricane Irene. The Dominion plants in Virginia, and the Oyster Creek plant in New Jersey were shut down and the Millstone 2 & 3 plants in Connecticut and the Brunswick plants in North Carolina were brought to reduced capacity during Irene, and the Fort Calhoun plant in Nebraska has been shut down due to flooding, and losing $1 million per day, since June 6, 2011.

In Part 1, I criticized “How to Really Save the Economy, “an op-ed in the New York Times, published Sept. 10, 2011. “The United States,” according to Robert Barro, who teaches economics at Harvard and is a “fellow” at the Hoover Institution, “is in the third year of a grand experiment by the Obama administration.”

“This is inaccurate,” I wrote, Obama is the President, but the US Constitution provides a framework in which power is divided into three branches of the Federal government, and the power of the each of the branches is checked and balanced by the others, and “all power not expressly granted to the federal government is held by the states and the citizens.” It would be more accurate, therefore, to say,

“The United States is in the third year of an experiment in governance between the Obama administration, the Congress, the Judiciary, the Republican Party, various special interests, and the citizens. This appears to be an experiment in governance by not-governing. Due to significant differences of opinion with regards to the direction in which to drive the ship of state, the ship of state appears to be floundering. Governance by not-governing doesn’t work!”

In parts 3 and 4 I hope to present feedback from the telecommunications and wind industries. Meanwhile, another radioactive nail in the nuclear coffin – an explosion in a low-level waste management facility in France killed one person and injured four. DC Bureau, Associated Press reports “An explosion at a nuclear waste facility in southern France killed one person and injured four on Monday. Authorities said there was no radioactive leak, but critics urged France to rethink its nuclear power in the wake of the catastrophe at Japan’s Fukushima plant.The Nuclear Safety Authority declared the accident “terminated” soon after the blast at a furnace in the Centraco site, in the southern Languedoc-Roussillon region, about 20 miles (32 kilometers) from the city of Avignon. One of the injured suffered severe burns…. the body was burned so badly it was carbonized”

Saving the Economy, Numero Uno

Tweet “The United States,” according to Robert Barro, who teaches economics at Harvard and is a “fellow” at the Hoover Institution, “is in the third year of a grand experiment by the Obama administration.” This is inaccurate. Obama is the President, but the US Constitution provides a framework in which power is divided into three branches of the Federal government, and the power of the each of the branches is checked and balanced by the others, and “all power not expressly granted to the federal government is held by the states and the citizens. It would be more accurate to say that the United States is in the third year of a grand experiment by the Obama administration, the Congress, the Judiciary, the Republican Party, various special interests, and the citizens.

Barro published this flawed analysis in “How to Really Save the Economy, “an op-ed in the New York Times, published Sept. 10, 2011.

“How is the experiment going?” Barro asks rhetorically. “Not well,” he answers.

How could it? On January 16, 2009, a week before the Inauguration, Rush Limbaugh, one of the leaders of the right wing of the United States said, “I hope Obama fails.” (The text is on Limbaugh’s site. An audio is on You Tube.) As I wrote, on Popular Logistics, here, a hope that the President fails is hope that the United States fails.

As was reported, here, in the Washington Post on August 6, 2011, and here on Popular Logistics, on August 8, 2011, John Boehner, Eric Cantor, Paul Ryan, and the “Young Guns,” their Republican comrades in the House of Representatives, PLANNED as far back as January, 2009 to use the debt ceiling to create a political crisis. The Republicans have been trying to actualize Mr. Limbaugh’s hopes.

Barro is a professor of neoclassical economics, and a fellow of the Hoover Institution. What he doesn’t understand, and what President Herbert Hoover didn’t understand, is that under economic conditions such as we see today, while businesses and government are able to create jobs, business owners are risk averse, and won’t risk capital. The government MUST create jobs, because businesses won’t. Everyone who has a job and a 10 year old car, and is hesitant with regards to buying a new car, understands this. John Maynard Keynes understood this. Franklin Delano Roosevelt understood this. Herbert Hoover didn’t – which is why he lost to Mr. Roosevelt in 1932, and why, 36 years later, President Nixon said “We are all Keynesians now.” (Note that Mr. Nixon has been called many things. However, “Liberal” is not one of them.)

So how do we really save the economy? See Part Deux.

One of the best kept secrets in New York City is the existence of a 40 kilowatt (KW) photovoltaic solar array on the Whitehall Street terminal of the Staten Island Ferry, pictured above, and first covered in Popular Logistics in 2007, here.

There are 90,000 public schools in the United States. Suppose we were to install a 40 KW solar energy system on each of them. PV solar modules require very little maintenance over their 35 to 45 year life expectancy. At a cost of $5,000 per kilowatt of nameplate capacity, each of these 90,000 systems would cost $200,000. This 3.6 gigawatts of distributed daylight-only capacity would cost about $14.4 billion. The total costs would probably be less because PV Solar is subject to economic forces like Moore’s Law.

It seems to make sense to use taxpayer monies to finance these systems; taxpayer monies pay the electric bills for public schools and other public infrastructure.

Every public school in the country would have a power plant that generates power, during the day, with no fuel cost and no waste. And with no associated mining, processing, transportation, fuel costs and no waste management costs. At $5.00 per watt, or $5 billion per gigawatt, the capital costs are lower than the costs of new nuclear and significantly lower than the costs of coal with carbon sequestration, with none of the risks or hazards associated with the systems: no arsenic, mercury, lead, thorium, uranium, zinc, or carbon.

But what are the other implications? What would it give us? Again. see Part Deux

In Jersey Three Strikes Equals a Home Run

Tweet

Strike 1 – Solar Power

When the NJ Clean Energy Program started in 2001, there were six (6) solar energy systems and a nameplate capacity of nine (9) kilowatts. By December 31, 2010 there were over 7000 systems with a combined capacity close to 300 megawatts, MW, of solar electric generating capacity. In the first six months of 2011, another 100 MW was added, bringing the total to 400 MW by June 30, 2011. By these metrics, the NJ Clean Energy Program has been successful.

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The Federal Gasoline Tax

Funding Projections, courtesy of DC Streets

Tweet The 18¢ per gallon tax on gasoline is scheduled to expire on Sept. 30, 2011. Will it expire? Will it be renewed? Will that immediately lower gasoline prices by 18¢? Will state or local governments add 18¢ to state or local taxes (or both)? Will gas station owners pocket some or all of the difference?

And what are the monies used for? The answer is roads and other transportation projects.

If the revenue disappears then new roads won’t be built and existing roads won’t be maintained.

In the long run, we may drive less. In the long run there may be less air pollution. And, as Keynes once said, “In the long run we are all dead.”

Links: Treehugger, DC Streets Blog, Antiplanner.

Hon. Rush D. Holt, on the Budget Control Act of 2011

Tweet Popular Logistics is a policy blog, not a politics blog. However, politicians make policy. The Honorable Rush D. Holt, NJ-12, said this on Monday, August 1, 2011, when casting a vote against the “Budget Control Act of 2011.”

SPEECH OF

HON. RUSH D. HOLT

OF NEW JERSEY

IN THE HOUSE OF REPRESENTATIVES

MONDAY AUGUST 1, 2011

BUDGET CONTROL ACT OF 2011

Mr. Speaker, the default debate is, at its heart, a debate between two visions for America. One side envisions rebuilding our country, investing in jobs and education and infrastructure, and rising from the Great Recession as a stronger and more resilient Nation. The other side accepts a pessimistic vision of a weakened America with a shrunken government–a Nation hampered by deep cuts to the safety net and hobbled by a refusal to invest in our future.

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"Beyond Fuel" at the Space Coast Green Living Festival

Green Living Festival

Tweet I am presenting “Beyond Fuel: From Consuming Natural Resources to Harnessing Natural Processes,” a discussion of the hidden costs, or “economic externalities,” of nuclear power, coal, and oil, and the non-obvious benefits of wind, solar, marine hydro and efficiency at the Sp ace Coast Green Living Festival, Cocoa Beach, Florida, Sept 17, 2011.

The festival is sponsored by the Cocoa Beach Surfrider Foundation and the Sierra Club Turtle Coast Group. It will be at the Cocoa Beach Courtyard by Marriott.

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Mitt Romney: "Corporations are People"

Tweet On the campaign trail in Iowa, Mitt Romney said, “Corporations are people.” (NY Times, Washington Post)

An argument can be made that Mr. Romney meant that corporations are composed of people, that they magnify the abilities of individuals. However, Ayn Rand might suggest that the candidate made a collectivist statement. Mr. Romney could also have meant that corporate profits eventually wind up in the pockets of investors like himself and Warren Buffett, and their heirs, like his children and Paris Hilton. However, that may be a nuance that may be lost in the political debate.

It could also be that Mr. Romney meant exactly what he said.

But what is closer to the truth, I think, is that corporations are legal mechanisms by which people use to limit their liability and to develop and protect their wealth.

In my courses at the Marlboro MBA in Managing for Sustainability, we discuss corporations as a “nexus of contracts.” That’s not really a definition of a person that a flesh and blood person, a person whos DNA is DNA would use.

People, that is flesh-and-blood-based people, DNA-based people can own corporations. Corporations can own other corporations. But neither people nor corporations can own people.

In “The Divine Right of Capital,” Marjorie Kelly (Amazon, EcoBooks) clearly describes why corporations ought not be considered “persons.”

But that’s not the only issue I have with Mr. Romney’s statements in Iowa.

Mr. Romney also said, “Social Security, Medicare, and Medicaid account for about half of Federal Spending.” This seems to be factually incorrect. According to the Congressional Budget Office summarized on Wikipedia, Social Security, Medicare, and Medicaid account for 43% of total federal spending, in fiscal year 2010. (Note that total defense spending is greater than the 20% reported in the figure because certain programs and agencies, such as the CIA, the NSA, and other defense and intelligence agencies are funded, in part, out of the “Discretionary” category.)

While $1.491 Trillion, 43%, is $350 Billion less than 50% of the budget of FY 2010, you could argue that Mr. Romney was exaggerating for effect, something politicians do. However, I imagine if we were to raise taxes to 50% on the wealthiest 1% of Americans, people with over, say, $50 Million, Mitt Romney has $284 Million, and say, “It’s only about 43%,” he would at the very least question our understanding of mathematics.

Mr. Romney also said, “You can raise taxes, that’s not the approach I would make.”

That is the approach I would take. As noted here, taxes are “The price we pay for civilization.” They are revenues raised by the people in governments to pay for the things they understand must be paid for; things like education, infrastructure, security. I would raise taxes on people making more than $250,000 per year. And raise them significantly on people, making more than $1,000,000 per year, whether they make their money as actively as salary, or passively as dividends, capital gains, or distributions from trust funds.

I make less. A lot less. My expenses – my health insurance, the costs of food, fuel, etc., are going up. My income, however, is going down. In “real” terms, as inflation is going up, and in actual numbers, as the bonus I used to be given have shrunk or been eliminated because of, it has been said, “the economic conditions faced by the firm.”

The government Lincoln defined as “Of the people, by the people, and for the people” needs money to pay its obligations. It needs money to build infrastructure. And as has been noted, Keynesian economic theory suggests that in an economic conditions such as we face only the government can be willing to act to create jobs. The government can only really raise money by borrowing it or by raising taxes. We should be developing government programs to shift the energy paradigm to clean, renewable, sustainable energy. It will create 2.4 Million jobs, directly cut unemployment from about 9.1% to about 7.3%, indirectly cut unemployment by another 1.0 to 2.0% and generally stimulate the economy in a terrific manner. (Click here).

As we have noted before, and will doubtless do again, Popular Logistics is a POLICY blog, not a POLITICS blog. However, we do think about politics, at least occasionally. And it appears to this blogger that Mr. Romney just lost the election. Whether he has lost to Mr. Obama or to one of the other Republicans remains to be seen.

Socialists v Stalinists

Tweet The Washington Post reported, here, that John Boehner, Eric Cantor, Paul Ryan, and the “Young Guns,” their Republican comrades in the House of Representatives, PLANNED as far back as January, 2009 to use the debt ceiling to create a political crisis. It seems to have worked. The Republicans held fast, Obama and the Democrats blinked. The rating agency Standard & Poors, S&P, downgraded their rating of the credit-worthiness of the United States of America, President Obama’s core supporters seem to be abandoning him. And the stock markets are plummeting – the Dow Jones Industrial Average dropped 1000 points in 3 days.

Allowing US debt to be downgraded – forcing it to be downgraded – will cause a rise in interest rates, an increase in unemployment and bankruptcies. Altho a rise in interest rates will benefit bondholders. This is not the fiscal policy I expect from the party that claims to be fiscal conservatives. Altho, as noted, it does benefit bondholders.

The government should be creating jobs. Our elected representatives should be guiding the ship of state to a prosperous and sustainable future, not selling it short.

The NY Times reports, here, that S&P’s downgrade will spur the Republicans to demand more cuts in government spending, which will put more people out of work, furthor erode the economy. The only hope for the country is for Obama to realize that there is nothing he can do to win the love and admiration of the right wing, to ignore them and look to the center and to his base, and do what is good for the country, regardless of what Bachmann, Boehner, Cantor, Ryan and the Young Guns, and Grover Norquist want.

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