Wednesday, October 29, 2008

Ten Things We Must Do to Fix the Economy

Ten Things We Must Do to Fix the Economy

While we're waiting for our retirement savings to evaporate completely, and we continue to argue over how much the President can actually improve the economy, here are things we can do to stop the waiting and begin doing. Some are immediate actions, like legislation. Others are broad, country-wide undertakings that will take many years. There is a common theme, however: they all focus on authentic and long-term values that provide value to society.

Make congress live by the same rules as the citizens.

Until we remove our lawmakers from the protection of the fairytale land in which they live, we are unlikely to get things changed substantially. One doesn't have to be a conspiracy theorist to be concerned that our legislature is broken. To start with, they need to pay for healthcare. (I'd say "... like everyone else," but that's also a problem. Until we separate healthcare from paychecks it's more complicated than that.)

Eliminate the profit in day trading (tax same day profits at 100%).

After all the Enrons, Milkens, and Madoffs (and even whipping boys like Martha Steward) do you understand yet that the stock market is no longer the authentic economic engine that it had been? Whereas it started as an investment system, then tranformed into an auction house, the electronic age completed its change into a manipulation machine for capital companies. The Internet boom proved that, yes, it is a wonderfully efficient means for driving capital to a technological opportunity. But the Internet bust showed that it needs to be reined in just a bit. You should be able to take short term risks and get rewards; you shouldn't be able to get in every morning and out every evening to game the system. Simple solution: tax same-day (or even same-week) profits 100%.

Eliminate adjustable rate home loans.

The home loan business has created as large an economic catastrophe as we've ever known. Get it back to reality by eliminating loans that are so tricky no one knows how much they cost. Try to get a mortgage company to give you a table showing exactly what an adjustable loan's minimum and maximum possible amounts will be and you'll realize how we got into the $700 billion-dollar bailout dilemma we have now.

Invest 1/3 the cost of the Iraq war in solar and wind power.

Somehow we've lost the ability to frame problems and solutions in rational
—meaning ratios expressing proportions—terms. Here's a good example. Instead
of ranting about how we can't afford to invest in alternative energy,

Nationalize the preventive portion of medical care without waiting for a more comprehensive solution.

If we can't move fast enough on single-payer healthcare, perhaps the first step is to try to convert just preventive care. This will ensure that the portion of the problem that has the greatest return on investment is enacted.

Convert to the metric system.

This is the ideal combination of an idea that increases efficiency and creates productive business. Huge amounts of business infrastructure and materials will be rebuilt, renewed, and reprinted. In the end, we’ll have better, easier coordination with the rest of the world’s physical goods. If we change all road signs to meters immediately it will only take about six months for everyone in the US to understand what a meter is. Mr. President, you want economic recovery? Stop looking for pure fiscal manipulations and mandate the metric system now.

Require credit card companies to use PIN numbers.

The notion that most of our financial fraud is substantially one of "identity theft" is an outrageous lie. Rather, the problem is "credit card fraud," plain and simple. And if the only solution is for the credit card companies to be sued until they change their behavior, then so be it for the "litigious society"; our lawyers are asleep at the wheel. Credit cards need stratified levels of security features, first-and-foremost being PIN numbers. If you want a card with as little security as today's cards, fine; you'll just have to pay the highest annual and interest rates. Otherwise, on the lowest price cards we need photographs, PIN numbers, and various caps depending on how anonymous the purchase is. This problem is not hard. It's just that the credit card companies don't want to solve it because it cuts into their business. Think about it. Despite all their "spin," they probably want the fraud. The fraud that they catch they simply pass expenses on to us as a whole. The fraud they don't catch, we simply pay the bills... often with interest. What business would stop that?

Tax gasoline for public transportation.

Every sensible person in America seems to understand that the recent drop in gas prices from $4 to $2 is a great opportunity to tax gasoline for the greater good of future generations. How about $0.25 per gallon this year, followed by $0.25 raises each year. Businesses do not care about costs... they only care about the ability to plan and a level playing field.

Restore respect for truth in advertising.

Closely related to the problems of adjustable rate mortgages is the general problem of false, misleading, and indecipherable advertising and business terms. This includes everything from the seemingly harmless "small print" on TV shipping and handling charges, to the outrageous license agreements on the Web. This is a balance-of-power shift in our whole legal system. We need to shift back to an expectation that businesses cannot simply run roughshod over the consumer with no repercussions.

And what of that question, how much can the President improve the economy? If you ask me we just proved that the President is so influential he can very nearly destroy the American in just two administrations. The converse, while not as easy, should be no less conceivable.

Saturday, September 20, 2008

Was the Surge a Success?

No copyright claimed. Quite the contrary, everyone is required to repeat this information.

How should sane people answer this loaded question, particularly when asked in talk show interviews and presidential or vice-presidential debates? Thanks for asking:

"The outrageous fallacy of calling this a success any more than calling our first few weeks a 'mission accomplished' is that we will never know how many lives would have been saved or more successful results obtained with a plan based on making the Iraqis responsible much earlier.

Do you think the word success is used by the families of the 1000 (get the exact number since Feb 07?) American soldiers killed since the surge began?

Do you think it's success to the countless thousands of American businessmen and women, policemen, firefighters, and just plain moms and dads who are in their fifth tour of Iraq duty in the US Reserves?

Is it success to the Iraqi people whose cities are in shreds?

Are we supposed to be so gullible that we believe in this success in the same way as "mission accomplished?"

Will it be a success the minute we withdraw, or only after the Iraqis themselves sort it out no matter how long we're there?

When you finally do something you should have done 6 years ago, is that what you call success?

Is it successful enough that you'd want to visit Iraq?

If you call all those things success, then this administration has succeeded in lowering the bar like never before."

Do not allow yourself to be talked over when you answer this question.

If you reword the last line, make sure you think about possible retorts. Do not include the word "failure." The tiresome retort---suggesting that failure would mean nuclear annihilation at the hands of terrorists---should focus on the fact that that threat was escalated, not diminished, by the war.

Saturday, September 13, 2008

The End Is Near (and It's Still the Economy)

Short Version: As the economy becomes the focus of the election, the key question is whether the undecided, "hard-working" voters will come to realize that Democratic values fuel the economy and Republican values do not. The Clinton years might have been helped by the Internet boom but we've gone from surpluses and a great economy to the worst deficits ever and looming financial calamities because of decisions that don't work. To fuel the economy again, we just need to find a good cause to invest in, one that spreads the wealth around and ideally builds wealth in the process. The answer is plain as day, energy.

... the end of the election, that is, and once again it will boil down to the economy. Except for only the most moralistic issue of all, abortion, almost every other issue can be traced back to economics. Oil, energy independence, global warming, Islamic maniacs, healthcare, housing, mortgage banking, college cost? Make the American economy relatively sustainable, stable, and robust and all of those problems become less so. Some disappear entirely others change from calamities to management problems.

As voting time nears, the great masses of the newly-labeled "hard-working" Americans will choose the candiate to fix the economy. If you watch TV, you'd think the choice will be based not on potential for economic success but on skin color, ugly US-Vietnamese history, lapel pins, speaking style, pandering, and sex.

But it really comes down to only one thing: do conservative, blue-collar Americans really think that Republican values drive the engine of our economy? Did you notice that during the Clinton years we had the best job market ever, and a national treasury surplus(!), and a booming housing market? And now we have the biggest deficit ever and collapses in virtually every financial sector? How long will you pretend to think it was all explained by the Internet boom (for Clinton) and 9/11 (for Bush)???

This is not that hard, folks. Our economy is fueled by pushing money/prosperity/wealth/work DOWN to the huge masses. No less a capitalist than Henry Ford understood this when he distributed his wealth back to his workers to create a market for his cars. Yet all of the Republican values favor not distribution of wealth to the little guys but concentration of wealth among the wealthy. Tax cuts for the rich and the constant harangue of "leaving small business alone" won't do anything. They are somewhere between flagrant lies and pandering lip service that has been known to win elections when the electorate is gullible.

Despite all the damage done to our economy in the last eight years, fixing it is still straightforward even if it's not simple. Yes, in the Clinton years, the Internet was a huge economic engine, but we could re-create a new one at the push of an Oval Office button: declare an Iraq-scale war on private commuting in America's 20 biggest cities, and invest every bit of available capital in solar and wind energy. (Sustainable energy, even though it cannot solve our energy problem because it is mathematically insufficient, is financially magical because it recovers wealth every minute instead of consuming it.)

Of course this is a matter of the dreaded "government programs," which Republicans would have you believe are outright socialism. As long as you buy this non-stop, simpleton rhetoric, the problem will only get worse. The sad and continuing irony in this dilemma is that it will will be the blue-collar folks (the so-called "values voters") who will suffer first and worst if they choose the Republicans who pander to them. The progressive liberals, like me, who argue for more leadership, in the form of distribution of wealth, are in jobs that are one more step removed from the most direct damage to our economy. But only one more step, November is looming for all of us.

Why Didn't Experts See It Coming?

In my local paper, the Philadelphia Inquirer, three of the September 9, 2008 stories wrote about our surreptitiously collapsing economy. General Motors was asking for billions of dollars, the largest mortgage holder in the country was being bailed out, and a short blurb in the business section mentioned a financial expert who wrote a book about impending financial doom.

I'd like to help the newspapers out when we're all out of work (journalists are first) and there won't be anyone to write the following story, so Mr. Tierney (the new and very promising Inquirer publisher) will have the copy ready when he's running the presses all by himself:

"Dateline, Washington, D.C., February 2009: Why Didn't Experts See It Coming?

Now that collapse of the US auto industry, the mortgage banks, the job market, and the retail banking system have finally pulled the legs out from under Wall Street as well, everyone is finally (!) asking how did we miss the warning signs? Well, "we" didn't, just the experts and the press who we count on to call them out. For the last eight years, every decision and indecision has directly caused it. Regulation has been relegated to impotence; short-term values have trumped long-term at every Oval Office choice; borrowing has become infantile obsession; and intelligence—military, scientific, and common sense—has been ridiculed off the front page and dinner tables. Anyone with their eyes open realized that from Keating Five to Enron to trillion-dollar-Iraq to subprime to GM to Fannie/Freddie, we've been solving every problem by printing money in one way or another. The warning signs were loud and clear, and we got what we bargained for... superficial, lip-serving leadership that constantly told the people what they wanted to hear until there was nothing of substance left."

We're not dumb and the press has been cowed into covering it as margin copy.

Saturday, September 06, 2008

Why Republicans Can't Help "Hard-Working People" with Jobs, College, or Healthcare

Have you noticed how often in this election campaign you've heard the phrase "hard-working" people or "working class?" Can you remember when everyone was presumed to be the working class and the mere notion that we needed to especially distinguish them from the rich folks was unnecessary? The answer is simple... after 8 years of this complete vacuum of leadership, Americans have to work harder than ever... and do so for less financial security than we've ever had.

Thursday, June 12, 2008

A New Logic of Efficiency

Now that Americans are living with $4 gasoline, many things are coming into a sharp new focus. While for some, this means blaming a conspiracy against drilling more U.S. oil, or squeezing more oil from rocks, most—hopefully—dig deeper. Reasonable people are accepting that stored energy is limited, carbon-based fuels will destroy our grandchildren’s Earth, and oil and gas are precious gifts from the past... too important to send up in smoke. The effects on our economy are starting to appear, as billions of dollars that once floated us in prosperity are now sent to other countries. Only time will tell how deep the cracks will go before we shore up the structure.

A schoolgirl recently asked Barack Obama what he would do to immediately reduce gas prices. As a political candidate in our short-attention-span, sound-bite media crucible (media-crity?), we've put him in no position to tell this truth: genuine solutions to the fossil fuel situation can come only from long-term and mass-market change. Yes, we desperately need leadership to steer the ship in a new direction, but the right actions are completely unrelated to immediate relief.

Aside from inspiring people to change their ways—which great leaders will do— government only has two direct tools: taxation and legislation. Attempting reduce the price of gas with any fiscal chicanery is doomed to backfire. We will just burn more and make the problem worse. We can argue about the merits of laws such as vehicle mileage requirements, but there is no likelihood that legislation offers immediate relief.

While there is no short-term fix, there is plenty we can do immediately to start paying less for energy. In a peculiar twist of fate, America’s saving grace is that we waste so much energy in this country, we can simply start harvesting that waste. It's time to concentrate our political will on a new logic, one of efficiency.

Consider just some examples from my own day. I drive to work, 13 miles that I could attempt to bike if there were any space in which to do it. I wait at one particular traffic light where cars line up 1/4 mile on one side of the intersection while there is zero cross traffic... because there is no electronic sensor yet.

The office in which I work probably consumes three times the energy it needs. There are so many unused lights on that you would swear energy was actually free to this very day. There are public lights no on knows how to turn off; there are personal lights no one chooses to turn off; there are mysterious lights no one can turn off. There is no public stairway, despite its being only three floors so everyone uses an elevator unnecessarily. As with most American office buildings, there is no way to use cool or warm outside air when it would help.

I drive to the gym at lunch because there are no sidewalks in my office park on which to walk, even to the shopping center three blocks away for lunch. At the gym there are at thousands of watts of lights on immediately beside floor-to-ceiling windows... next to a 25-foot whirlpool that remains on every minute, all day no matter how empty. In the locker room, when I turn on the wall-mounted fan to dry off, it always pumps out heat even when I don't need it in the summer. And the 2000-watt unit stays on irrespective of how long I'm in front of it.

The examples go on endlessly for all of us, all day. I estimate that we might be using five times the energy we need in America. Some use the term conservation, as if we're trying to keep something, but that doesn't sound quite right to me. There’s no saving energy… just using it smarter. And I’m all for alternative energy by any means. But the closest thing we have to an instant solution is right in front of us.

If we would just convert our unbelievable waste into money, we will dramatically reduce the demand for energy which in turn will drive down prices as quickly as any other measure... immediately. If we start converting our old-fashioned devices with timers and sensors… building sidewalks, stairs, and bike lanes, and opening windows. It must start with a new mindset in which all Americans understand energy efficiency, and inefficiency when it is burning all around them.

Wednesday, January 16, 2008

America's Most Effective President Ever?

Americans now wake up every morning—amidst the reports from Washington that the economy is great—and anxiously check the news to find out what new financial shocker will be added to the house of horrors that we call our economy. Will it be a run-of-the-mill stock market plunge, sub-prime funny business that will turn our houses into big retirement savings sponges, runaway CEO and corporate greed, or just a past-due notice for a trillion-dollar war? (What color envelope will that come in, radioactive pink?) And what of our dependence on oil? Can we add that to the list, or do we have to wait until it completes its transformation from military grief to economic disaster?

In the latest installment of "it's the economy, stupid," the neo-con legacy will finally be measured in terms and actions blunt enough to cut through the tough talk and moralistic smokescreen. When the dust settles Americans will see that eight years of ass-backwards values have trashed our economy to an extent never imagined. While the current presidential primaries continue their misdirected obsession with race, gender, soundbites, and idiotic moralistic tokens, the real story continues to be the fiscal difference between liberal and conservative values.

And here they are. For eight years we have seen...
  • short-term values instead of long-term;
  • consolidation of wealth instead of distribution;
  • promotion of consumption instead of efficiency;
  • cultivation of corporate greed instead of responsibility;
  • distancing of the global community instead of participating in it;
  • abhorrence of governance instead of improvement of it.

Sure, the moralistic differences between the Democrats and Republicans matter, but not when the pocketbook is on the table. No, no, no. Abortion, guns, school vouchers, who cares?

Our economy is a juggernaut—it takes a lot to get it down. But eight years of backwards values, combined with the X factor—the end of cheap oil—are proving to be enough. If you're a conservative and you think that electing a Republican back to the presidency will turn this thing around, you need to think about this more carefully.

The Clinton years were prosperous because of values that promoted long-term interests, spread the wealth around, and regarded government as a productive sector of the economy. Spreading money to the little guys is what fanned the flames of the economy. It wasn't just the Internet boom that made the late 90's the most prosperous period we might ever see. It was values in the right direction. It's almost impossible to screw up this economy... but sadly, Dick and George have shown the way. Borrow $1 trillion from our grandchildren and give it to the halliburtons of the world; allow the automotive industry to lead us to the oil trough indefinitely with no real alternatives; give corporations enough freedom to melt down housing and finance; and do nothing to control runaway healthcare or college costs.

No one knows where it will end, but when the bill comes due, people will know who to point the finger at. This is not 'bortion, guns, or vouchers we're talkin' 'bout folks. Fin'ly.

Thursday, January 03, 2008

$100 Oil... Immutable Truths Facing America's Young People

Now that oil has hit the symbolic but all-too-real threshold of $100 per barrel, perhaps people are ready to take the problem of fossil fuel depletion more seriously. Although the painful truths of oil, coal, and natural gas should be of concern to leaders and consumers alike, there's a chance that current leaders will fail miserably and only young people will be forced to take the matter seriously. For their sake, let me spell out some facts. Mastering these facts and strategizing against them, or failing to do so, will spell the difference between economic pain and pleasure for the next 50 years.

  1. Fossil fuels are limited. I learned in college, in 1977 that they would start running out somewhere around the turn of the century. Some new techniques in drilling have stretched the supply a little, but there is no more to be found. The last major find was over 20 years ago.

  2. Prosperity in China and India are radically acclerating the consumption of what little oil is left. Picture that in less than 100 years we've used almost all of the globe's oil, and for 75 of those years we barely consumed anything compared to our current rate. Do the math.

  3. Radical alternative mining techniques, such as tar sands and coal shale are environmental disasters once you have a firm grasp of the logistics... the huge amount of energy we consume, vs. the material that must be harvested. Do you understand that unlike oil and gas, which spew almost unaided from the ground, these alternates NEED HUGE AMOUNTS OF ENERGY JUST TO HARVEST?

  4. Current alternative "fuels" such as ethanol and fuel cell cars are a mirage . Ethanol, while having some merits, takes substantial energy to create. Whether there's a net positive energy yield is apparently debatable. Fuel cell cars run on hydrogen. Do you know where the hydrogen comes from? Again, unlike oil, it does not spew forth from a hole in the grould. As described in Consumer Reports magazine, current techniques use natural gas to produce it.

  5. Pure sustainable energy, such as solar, geothermal, wind, and ocean currents, are great and should be maximized but if we exploit them to near perfection, they do not come close to meeting our current consumption. For the next 50 years we desperately need to safely use nuclear energy. Fear over its use, while once excusable in the face of corporate shortcuts, is no longer an option.

  6. Our energy consumption is about 2/3 industrial and 1/3 consumer. No matter how efficient we try to be as individuals, it won't solve the problem. Only when the price of fuel goes way up will individuals or businesses radically cut back on consumption. If we double the mileage of gasoline cars, there will be twice as much driving. (In fact, be prepared for twice as much car traffic because of the constantly increasing wealth of society and the durability of cars.)

  7. If we are fortunate enough to produce inexhaustible, clean energy, such as nuclear fusion, biomass, or genetically controlled bacteria, the global warming problem may ultimately occur.. The unanswered question will be "How much pure heat can we continue pump into the ecosphere?"

  8. Oil and terrorism, whether you like it or not, are simply two sides of the same coin. The problems of the Middle East are now occurring in Nigeria where American oil company employees are kidnapped because of our activities there. The world is no longer ours to do with as we please.
My message boils down to this: developing alternative fuels, while attractive, is a distraction from the action we need to take. The next three generations will learn this the hard way or the easy way. We must stop presuming that the goal is to find other energy-producing methods to bolster our energy-burning ways. Instead, we must learn to live with a sustainable amount of energy consumption. In the meantime, we must hoard more oil, for national defense and for the production of critical goods that only oil can produce. We already do, but we need to reevaluate it.

Except for the damage already done to the environment, this challenge does not have to translate to hard times or economic peril. The collective wealth of our society is many times greater than our average standard of living. All we have to do is ensure that the activities needed to solve the problem are translated into jobs, not corporate handouts.