New Geography

Category: Politics

  • It’s Not the 1980s in Britain Anymore

    Britain’s public sector workers came out on a one day strike last week over government plans to raid their pension funds. Government ministers did the rounds of television studios denouncing the strikers as mindless militants. Both sides are echoing the class struggles of the Thatcher-era, but the truth is that it’s not the 1980s.

    My children were off school, and like many children, glad of it. Schools are among the more solid parts of the public sector action today, and in London were struck out, though in the country the teachers’ unions have not achieved the 90 per cent shut down they were aiming for. Unlike the last great wave of union opposition to Conservative spending cuts, back in the 1980s, the teachers’ unions were supported by the National Association of Head Teachers.

    At the college where I teach, the lecturers in my department were solidly behind the strike, and boldly leafleted and informed students of their decisions in lectures and circulars. Administrative staff, by contrast, crossed the picket lines.

    Overall the strike is well-supported, but not quite the quantum leap of opposition to the Conservative-Liberal coalition that seemed to be in the air. Those joining the marches were 30,000 in London, and a few thousand in the other major cities, which is many more people than the deracinated petit bourgeois mobilised by the #Occupy camps, but does not compare to the bigger union mobilisations of the 1980s.

    Union activists have tried to paint the coalition (which they call the ‘Con-Dem’ government) as Margaret Thatcher’s Conservative government of the 1980s reborn.  As they see it, some ‘anti-Thatcher’ spirit would give the rank and file more fire in their bellies.

    Prime Minister Cameron and his ministers have been trying to spark up a Thatcherite spirit, too. It is their only blueprint for handling the challenge of the public sector union revolt. They have been going around the studios denouncing mindless trade union militants in the same way that Thatcher’s ministers Cecil Parkinson and Norman Fowler did back then. But they have not done it very convincingly. Most of all they have failed to get the public to blame the state sector for the budget deficit, as Mrs Thatcher by and large did. The public is just not in the mood to turn on any group of workers with that much anger. It is people in power that are distrusted, newspaper editors and politicians. The specific plan to cut pensions and raise the pension age is not accepted, but widely seen as the chancellor robbing from people’s rightfully earned savings. Chancellor Osborne has failed to persuade many people that they need to take his harsh medicine.

    It is perhaps typical of the strident Mrs Thatcher that her ghost is haunting the country even though she is still with us, if a little frail. It is a generational thing – anyone over forty either hated or loved Thatcher and by and large it is the ones who hated her who went on to be opinion formers, whether in TV studios, newspapers or teaching in colleges and schools. The under thirties take their idea of the Thatcher era from those teachers, or from the novels of Jonathan Coe, or most recently from the Meryl Streep film. There is a touch of nostalgia for an age that was a bit more black and white, where the choices were starker.

    Today’s class struggle is by no means as clear. As much as the unions talk up the coalition as a return to Thatcherism there is nothing like the determination to lead an offensive against trade union power in Cameron’s cabinet, which, remember, is a coalition with some sceptical Liberal Democratic partners. What is more, the party he leads got elected on the express promise that it had left the ‘nasty party’ image of the Thatcherite 1980s behind. This was the nice Tory party.

    Cameron’s one distinctive policy, the Big Society, if it were to work, would surely be carried along by the kind of people who are on strike today – who struck me as people with a social conscience, and an interest in their communities. It cannot be comfortable for him that this is the very constituency that he most offends.

    Mrs Thatcher was not so bothered about the Social Workers and Community Activists, generally painting them as a big nuisance. What she was good at was rallying the establishment – the newspaper editors, City financiers, industry managers, senior police chiefs and judges were a formidable establishment ready to face down any rebellious mood among the scruff trade unionists or rioting youth. Mr Cameron, though, does not have any such united establishment on his side. They have all been attacking each other for some time now. Right now, Lord Leveson is enquiring into the scurrilous phone tapping done by Rupert Murdoch’s News International. It is a ghoulish picture of the newspaper magnate that emerges, and not the kind of thing that is likely to persuade him to get behind the Cameron government in the way he was behind Mrs Thatcher’s.

    The left, too, is in a weaker state than it looks. There is a kind of trajectory to events, from the student demonstrations of a year ago, through the summer riots and this autumn’s version of #Occupy Wall Street – a tent city in the gardens of St Paul’s cathedral. The rhythm of these protests – and protest is legitimated emotionally by the events in the Middle East, however different those protests are – give the impression of a rising crescendo. But that is deceptive. The anti-capitalist mood is not deeply rooted. Last week they had an opportunity to make their organisation a bit stronger. But without a concerted assault from the government, the opposition is also a little tentative.

    Overall the country is much more exercised by the throwaway line from TV presenter Jeremy Clarkson, that the strikers ought to be shot – for which he has been roundly condemned – than it has been by the strikes.

    On the night Cameron went around the television studios saying that the strikes proved to be a bit of a damp squib. It is a smart spin to put on things. It conveys that he is not rattled, and that it is all a bit of a fuss about nothing. But it is not true enough for him to get away with it. The unions did not land a big punch, but they had a respectable day. Worse still for Cameron is that it sounds like his own strategy is a bit of a damp squib so far.

    James Heartfield’s latest book The Aborigines’ Protection Society: Humanitarian Imperialism in Australia, New Zealand, Fiji, Canada, South Africa, and the Congo, 1836-1909 is published by Columbia University Press, and Hurst Books in the UK.

    Photo by Flickr user Ben Sutherland

  • The Precarious State of the Highway Trust Fund

    On November 18, President Obama signed into law a bundle of appropriation bills for FY 2012  including appropriations  for the U.S. Department of Transportation. The measure had been passed earlier in the House by a vote of 298-121 and in  the Senate by a vote of 70-30. 

    The bill provides $39.14 billion in obligation limitation for the highway program, a reduction of almost $2 billion from FY 2011; however, an additional $1.66 billion is appropriated for highway-related "emergency relief." The transit program is funded at $10.31 billion (incl. $1.95 for New Starts), a $400 million increase from FY 2011, and Amtrak at $1.42 (incl. $466 million for operating expenses). The discretionary TIGER program is retained at $500 million, a slight decrease from FY 2011.

    Conspicuously absent in the new budget is any funding for high-speed rail and the Intercity Passenger Rail Service program — a fact cheered  by fiscal conservatives but mourned by boosters of high-speed rail and supporters of the California bullet train. The California High-Speed Rail Authority relies heavily on further federal funds to complete the project. According to its business plan, it expects $33-36 billion to come from the federal government. Failure by Congress to appropriate money for high-speed rail for a second year in a row makes the prospect of future federal support for the California rail project increasingly doubtful. 

    Also refused any funding in the FY 2012 congressional transportation appropriation are two other Administration priorities:  the Livable Communities Initiative ($10 million requested in the President’s budget); and the National Infrastructure Bank ($5 billion requested).  The conference committee action would seem to put an effective end to any further attempts to create the Bank, at least during the remainder of this session of Congress.      

    Solvency of the Highway Trust Fund in Jeopardy
    The congressional conferees have warned that the bill will deplete almost all resources from the Highway Trust Fund (HTF) by the end of fiscal year 2012.   "Without enactment of a new surface transportation authorization bill with large amounts of additional revenues this year," the report said, "the Highway Trust Fund will be unable to support a highway program in fiscal year 2013. The conferees strongly urge the committees of jurisdiction to enact surface transportation legislation that provides substantial long-term funding to continue the federal-aid highways program."

    As Taxpayers for Common Sense (TCS) pointed out in a commentary, the appropriations committee is willing to acknowledge the problem, but quickly passes the buck to the authorizers to come up with more cash for future years.  But the authorizers aren’t doing any better. The Senate Environment and Public Works (EPW) Committee passed a $109 billion reauthorization bill that would fund two years of transportation spending by essentially drawing the HTF balance down to zero (and still unable to identify the remaining  $12 billion in offsets). To House Transportation and Infrastructure Committee Chairman John Mica (R-FL) the implications of the Senate action are clear.  In a November 14 letter to Senate EPW Committee Chairman Barbara Boxer (D-CA)  he warns that the Senate bill will "essentially bankrupt the Highway Trust Fund and make it impossible to provide any funding for fiscal year 2014."

    To its credit, the Senate Environment and Public Works Committee recognized the precarious state of the Trust Fund and took steps to impose spending controls to prevent the Fund from falling into insolvency.  The Senate bill provides (in section 4001) for mandatory reductions in the obligation limitation should the Trust Fund  balances in the Highway Account, as estimated by the CBO, fall below a certain pre-determined level (for example, in the event gas tax revenues fail to match expectations). The designated triggers are $2 billion at the end of FY 2012 and $1 billion at the end of FY 2013. In other words, the Senate EPW committee has wisely provided for a mechanism to reduce highway expenditures below the authorized  $109 billion level in order to prevent the Trust Fund from going bankrupt.

    The House, for its part, is exploring a different way to fund a longer-term, five-year reauthorization. On November 17, Speaker Boehner announced he will unveil in December a combined transportation and energy bill, dubbed the "American Energy & Infrastructure Jobs Act,"  (HR 7). The bill  would authorize expanded offshore gas and oil exploration and dedicate royalties from such exploration to "infrastructure repair and improvement" focused on roads and bridges. 

    However, many questions have been raised about this approach. Several lawmakers —  notably, Rep. Nick Rahall (D-WV), Ranking Member of the House Transportation and Infrastructure Committee, Sen Barbara Boxer (D-CA) chairman of  of the Senate Environment and Public Works Committee  and Sen. James Inhofe (R-OK) the committee’s ranking member—have criticized the aproach as problematical and potentially miring the bill in controversy. They allege that  the royalties the House is counting upon would fall billions of dollars short of filling the gap in needed revenue  (the gap is estimated at approximately $75-80 billion over five years). They further allege that the revenue stream from the royalties would not be available in time to fund the measure. 

    Other critics have pointed out that states in whose jurisdiction drilling may occur, will assert a claim to a lion portion of the royalties. Also, using oil royalties to pay for transportation would essentially destroy the principle of a trust fund supported by highway user fees.  For all the above reasons, the House proposal is likely to meet with a skeptical reception in the Senate.

    As the TCS memorandum aptly concluded,  in the end it’s a big game of "kick the can." The appropriators kick the can to the authorizers. The authorizers kick the can down the road a couple of years or rely on speculative and uncertain revenue that may or may not materialize. In the meantime, the fate of the Trust Fund continues to hang in a precarious balance, victim of Congressional indecision and new fiscal imperatives.    
     
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    Note: the NewsBriefs can also be accessed at www.infrastructureUSA.org

    A listing of all recent NewsBriefs can be found at www.innobriefs.com

  • Is Industrial Strife a Sign of Housing Stress?

    Industrial disputes – including a spate of on and off again strikes at national carrier Qantas – are becoming once again a frequent feature of the Australian media. Unions are pushing for wage rises in the face of the falling buying power of the fixed wage (as costs of living rise). Those wage push pressures are being resisted by businesses trying to stay afloat in a very ordinary domestic economy and amidst rising global competition.  

    But instead of a conflict between labor and business, perhaps we may consider   lower living costs as a solution which benefits both? Fundamentally, this boils down to addressing our biggest cost burden: housing. 

    The rapid escalation of housing costs have occurred under the aegis of Labor dominated state governments. Whether in Queensland, New South Wales or Victoria – Australia’s three largest states – their imposition of artificial growth boundaries that limited land supply, the introduction of upfront taxes on new development, and ever more complex planning and development regulation have driven housing prices to unsustainable levels.

    This is ironic since the worst impacts of those policies have been most felt by the very working class constituency which Labor traditionally sought to represent. Having presided over and championed policy mechanisms which have driven up housing costs for workers, these same governments then resist attempts to recover that standard of living through wage growth.

    Now before you think I’ve gone all Marxian militant on you all (trust me, I haven’t), here’s an example of what I’m driving at.

    Much has been said about housing affordability and what it will mean to lock an entire generation out of the housing market.   Recently this story documents yet another report attesting to falling home ownership and the rise of a renting class.   Particularly hard hit are the people who are trying to buy a first home in which to raise a family. They could typically be around their mid to late 20s, biologically in their prime for having and raising children. At this stage of life, you are probably below the average income for your career or profession so the reality of the affordability problem is most acute.

    In Queensland, this might be a teacher in their mid 20s, with two or three years of training, married to a constable who together earn after tax income around $87,500 per annum. (This combined income would be much less of course if, for example, one of our young couple was a child care or retail worker).

    Now, take a modest new family home in an outer suburb like North Lakes or Springfield. Let’s assume they’ve saved a small deposit, and with a loan of $400,000, they buy something for around $450,000. That’s hardly McMansion territory. But that loan, over 30 years at 7.8%, will cost them close to $35,000 per annum in repayments, or 40% of their combined after tax incomes.

    This, of course, is before they even think about children, and the prospect (despite generous maternity and paternity pay and leave provisions) of enduring a significant household income reduction while one of them isn’t working. Even on returning to work, there would then be child care fees, which quickly erode their pre-child household budget.

    Buying a home and starting a family have become a huge financial consideration, instead of a fairly normal and unremarkable pattern of generational and social growth. And it is now absolutely dependent on a dual income family, with both of them preferably good incomes.

    This is a profound change over the last decade. As a result, fewer people are buying homes, people are postponing children (until they can afford them) and when they do, they’re having fewer children. A countless stream of statistical and demographic reports are now underlining this change on an all too frequent basis. Although some greens may celebrate it, this is very bad news long-term for the economy, for society and the community as a whole. 

    So is it any wonder we’re seeing wage push pressures?

    Consider the cost of the $450,000 modest home they’ve bought. Within that price is roughly a $50,000 up-front ‘developer levy’ (better called a new home buyer tax). There’s probably a similar cost of in inflated land costs, brought on by artificial land supply constraints in a country of abundant land. There would also be a raft of minor additional building costs introduced under the guise of ‘green’ or ‘sustainable’ building guidelines, in order   ‘to prevent the sea from rising’. Plus there’s a hard-to-quantify compliance cost because getting the approval to develop the land for new homes now takes 10 years instead of a few months, engaging teams of town planners, lawyers, and other hangers on.

    The total cost of all of these additions to the price paid by our young couple could easily be well over $100,000. If you don’t believe me, check out this old report which I commissioned some years ago.

    A quick bit of math’s now follows. That extra $100,000 (conservatively) has been funded via our young couple’s mortgage. That’s an extra hundred large they’ve borrowed, to cover the costs of additional taxes, fees and compliance introduced under the watch of a State Labor Government. That $100,000 is worth an extra $8,640 per annum out of their pockets. If their repayments fell by that amount, their mortgage costs would be around $26,000 per annum in total, or just under 30% of their combined household income – not 40% of it.

    There you have it. At 30% of household income, not only the home becomes more affordable, but so do children. But at 40%, it’s proving to be touch and go.

    There are two ways, simply put, to improve the cost of living equation faced by younger workers on largely fixed incomes. You can increase their wages (which the unions want and which businesses and governments resist), or you can reduce their costs of living.

    This has somehow eluded people working in state treasuries and planning departments. I haven’t even commented on the insanity of the carbon tax, which is only going to exacerbate basic costs for energy further and likely weaken Australian exports.

    The simple economics of what we’re talking about was summed up beautifully over 160 years ago, in Charles Dickens’ novel David Copperfield, when Mr Micawber lectured the young Copperfield on the perils of exceeding budgets:

    "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

    Mr Micawber, you’ll note, wasn’t implying the need for more income, he was highlighting the important role played by expenses.

    In the Australia (and Queensland) of 2011, the same still applies. Rather than push for more income, unions could do better to lobby their Labor Parties to reduce their living costs. Reducing the housing infrastructure levies, relaxing the rigidity and ideology of urban growth boundaries, reducing compliance costs, cutting green taxes would drive down the costs of housing.   

    In this era of globalization, fighting pitched industrial battles with employers for a few extra dollars a week in income seems futile compared to pressuring   governments over the induced inflation associated with the providing a family home you can afford and raise a new generation of Australians.

    Ross Elliott has more than 20 years experience in property and public policy. His past roles have included stints in urban economics, national and state roles with the Property Council, and in destination marketing. He has written extensively on a range of public policy issues centering around urban issues, and continues to maintain his recreational interest in public policy through ongoing contributions such as this or via his monthly blog The Pulse.

    Photo courtesy of BigStockPhoto.com.

  • The Secret of Where Good Energy Comes From

    In the wake of Solyndra’s failure, pundits have latched on to a simple, compelling narrative: government can’t do energy right.

    From synfuels to solar panels to "clean coal" (written, inevitably, with knowing quotation marks), demonstration projects funded by the Department of Energy are described as one failed white elephant after another. Today the DOE is the agency everyone loves to hate (and, at least in Texas Gov. Rick Perry’s case, the agency to forget).

    What gets left out (and forgotten) is that virtually every one of today’s major energy technologies exists thanks to sustained US government investments in research, development, and demonstration. Consider:

    To be sure, not every DOE investment has succeeded. But even the projects frequently named as failures were often secret successes.

    Take synfuels. After the oil shocks of the 1970s, the US government created the synthetic fuels program. The program worked to produce fuel competitive with oil at $60 a barrel — the program’s objective. But when the price of oil dropped to $10 a barrel in the early 1980s, Congress sensibly abandoned the program. The total amount spent by Congress on SynFuels ended up being just $2 billion — cheap insurance against future oil embargoes and price shocks, which had sent the United States into a costly recession.

    Most people are surprised to learn that the SynFuels program was a success in another way: it led to the development of the technologies today used for coal gasification and carbon capture and storage, which captures coal plant emissions.

    Clean coal is ridiculed by greens and libertarians alike as pie-in-the-sky. In fact, carbon capture and storage has been demonstrated around the world. One descendent of SynFuels, Dakota Gasification, is to this day still producing gas and sequestering several million tons of CO2 each year at Weyburn in Canada.

    Or consider the case of an abandoned next generation nuclear plant on the Clinch River. The Washington Post singled it out to make a sweeping case against all public investments in advanced energy. What the Post didn’t mention is that, since 1949, the U.S. government has successfully demonstrated and tested more than 50 experimental reactor designs at the National Reactor Testing Station (now Idaho National Labs). One of them — the EBR-II — ran for 30 years at the testing station and was the technological predecessor to the integral fast reactor (IFR), which is increasingly viewed by experts as promising since it is so efficient, burning conventional nuclear reactor waste as fuel.

    Sometimes pundits point to natural gas drawn from shale as an example of how the private sector does the job better. They claim fracking and horizontal drilling were developed by a solitary entrepreneur named George Mitchell in the 1980s. In fact, the key breakthroughs in the development of shale gas technologies occurred thanks to intensive DOE demonstration efforts pursued by President Jimmy Carter, the frequent butt of energy-related jokes, in response to the 1970s oil embargoes.

    Look at what industry and independent experts say. "The Department of Energy was there with research funding when no one else was interested," said the head of Julander Energy, a member of the National Petroleum Council, "and today we are all reaping the benefits." A Senior Director at Halliburton said, "In the early 1980s, the industry as a whole did not have a clear vision for producing gas from shales, and benefited from DOE involvement and funding of [electro-magnetic telemetry] EMT technology… there is a clear line of sight between the initial research project and the commercial EMT service available today." Dr. Terry Engelder of Penn State calls the DOE’s Eastern Gas Shales Research Program "one of the great examples of value-added work led by the DOE."

    In the case of the "shale gas revolution," as in so many examples of breakthrough American innovations, it is this key interplay between public sector research, demonstration, and testing and private sector ingenuity and entrepreneurship that drives major advances in technology.

    To be sure, US investments in energy must be reformed. We should stop bluntly subsidizing the deployment of more of the same energy technologies — whether current-generation wind, solar, biofuels, or nuclear — and retool energy incentives to demand steady and continual innovation and cost improvements. Firms that out-innovate their competitors with next-generation clean energy improvements should be rewarded, and clean tech industries should put themselves on a clear path to subsidy independence over time. The big story about energy innovation remains unwritten. For most insta-experts on energy, it’s easier to just recycle the old one.

    Shellenberger and Nordhaus are co-founders of the Breakthrough Institute, a leading environmental think tank in the United States. They are authors of Break Through: From the Death of Environmentalism to the Politics of Possibility.

    Image from BigStockPhoto.com

  • Does a Big Country Need to do Big Things? Yes. Do We Need a Big Government to do them? No.

    TV network MSNBC’s left-leaning commentator Rachel Maddow has opened herself up to ridicule by the conservative blogsophere over her advert featuring the Hoover Dam. The thrust of the spot is that “we don’t do big things anymore” but that we should. But critics say the dam couldn’t be built today due to environmental opposition to exactly these kinds of projects. Indeed many in the Administration and their green allies are more likely to crusade for the destruction of current dams than for the building of new ones.

    Both sides have their points.

    Building the Hoover Dam was not uncontroversial, to say the least. But it has proven to be beneficial to millions of Americans (flood control, hydroelectric power, recreation, and water for homes, farms and factories). Truly, it has allowed the desert to bloom.

    Public goods like dams are not excludable (their use is not limited to paying customers), so only government can provide them, right? Well, as economist Jodi Beggs points out, there is certainly a case to be made for private ownership of seemingly public goods. The questions to be asked are:

    • Do the benefits to society of these projects outweigh the costs?
    • Could private enterprise provide this good or service if the government did not undertake the project itself?
    • Is there a compelling reason to ensure that everyone have access to this good or service?
    • If so, is there a way to ensure access without wholly providing the good or service?

    In support of the case for private ownership Beggs cites Dingmans Bridge, which provides a crossing of the Delaware River between Pennsylvania and New Jersey, one of the last private toll bridges in America. Ironic she should mention it, because for the past 40 years Dingmans Bridge was supposed to be deep under the water behind the Tocks Island Dam.

    The Big Dam that Never Got Built

    Although Tocks Island Dam was never built, 72,000 acres of land were acquired by the U.S. government, often by condemnation, including farms, homes, and businesses. Whole towns disappeared when people had to move away, including many historic roads and structures that featured prominently in the Revolutionary War. This land now constitutes the Delaware Water Gap Recreation Area, which I visited last August on my summer vacation. It was eerie, haunting, beautiful and amazingly empty on a warm summer’s day within a 90-minute drive from Manhattan (okay, maybe two hours).

    Many of the condemned homes, farms and buildings still exist, abandoned. As I drove through the area I could not help but think something has gone terribly wrong here, but what? Is it a story of government incompetence or good intentions gone bad? Or perhaps a story of NIMBYism run amok to throttle progress, development and future opportunity for future generations?

    The Tocks Island Dam Project had been under consideration even before the 1955 flood, which caused several deaths and immeasurable damage to the Delaware River basin. In 1965 a proposal was made to Congress for the construction of the dam. The Tocks Island National Recreation Area was to be established around the lake, which would offer recreation activities such as hunting, hiking, fishing, and boating. In addition to flood control and recreation, the dam would be used to generate hydroelectric power and to supply water to the cities of New York and Philadelphia.

    There was much local opposition to the project. My sister and brother-in-law have been locals for over 40 years and I can tell you, it’s still a touchy subject. The dam was disapproved by a majority vote of the Delaware River Basin Commission in 1975. With the United States still funding the Vietnam War, financial considerations came to the fore. Also, the geology was questionable for what would have been the largest dam project east of the Mississippi River.

    In 1992, the project was reviewed again and rejected with the provision that it would be revisited ten years later. In 2002, after extensive research, the Tocks Island Dam Project was officially de-authorized. But the heartache of dislocation remains.

    What are the lessons of the Tocks Island Dam?

    Well, if we apply Beggs’ qualifications, we find that the project’s benefits did not outweigh its social, political and economic costs. It would have been nice to know this before all that land was acquired, causing those homes, farms and businesses to be condemned and abandoned by force. Would the dam have prevented the recent damaging floods in New Jersey and Pennsylvania? No, the recent floods were off the Passaic River, not the Delaware. Have New York and Philadelphia experienced major water and/or electricity shortages in the past 40 years that the dam would have ameliorated? Not apparently.

    So we are left with this: even with highest purposes, best intentions and smartest people, government tends to get things wrong. It is not just the law of unintended consequences, but the law of government efforts having the opposite effect of those intended.

    What ever happened to Reinventing Government?

    In 1992 the concerns over government debt, deficits and unfunded liabilities were national issues (sad, ironic and maddening, isn’t it?). So strong were these concerns that they drove a Presidential candidate, Ross Perot, to the largest vote ever received (nominally and percentage-wise) by a national third-party candidate since the Bull Moose Party of Teddy Roosevelt. After Bill Clinton won that election – largely because of the votes Perot took away from George Bush – the newly-elected President would famously say, “The era of big government is over.” Oh, would that it were so.

    That same year saw the publication of a book by David Osborne and Ted Gabler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector. Oh, would that it were so. The most compelling concepts in that book (to me) were the privatization and contracting-out of government services – the transformation of government from the entity that provides services to the entity that makes sure needed services are provided.

    What happened? The concept of reinventing government is still alive, at least on the local and state levels; David Osborne is still fighting the good fight with the Public Strategies Group, but as he writes, “Reinventing public institutions is Herculean work.” And at the federal level we have had orgies of spending, debt and deficits.

    Of course, we still need to do big things: Keystone pipeline, anyone? How ironic the opposition to building big things comes from the political left, the greens. In contrast, big Labor generally supports infrastructure projects, but not universally and often with prohibitively expensive terms. One big advantage that FDR enjoyed – something rarely cited by progressives – was the lack of public employee unions.

    Meanwhile, a whole generation of underemployed blue collar youth is coming up, with few prospects and little of the can-do ethic that once propelled us to do big things. The President recently bemoaned this too – citing the Hoover Dam and Golden Gate Bridge. What he does not realize is that, more times than not, big government is now more of a hindrance to, than an agent of, needed and desired change.

    Dr. Roger Selbert is a trend analyst, researcher, writer and speaker. Growth Strategies is his newsletter on economic, social and demographic trends. Roger is economic analyst, North American representative and Principal for the US Consumer Demand Index, a monthly survey of American households’ buying intentions.

    Dingmans Bridge photo by Charlie Anzman via Flickr.

  • Occupy Wall Street: About D@%& Time!

    "Privileged people don’t march and protest; their world is safe and clean and governed by laws designed to keep them happy. I had never taken to the streets before; why bother? And for the first block or two I felt odd, walking in a mass of people, holding a stick with a placard…" Michael Brock in John Grisham’s The Street Lawyer (Doubleday, 1998).

    I’ve been waiting for three years for Americans to get out in the street and protest the actions that created the Financial Crisis that sparked the Great Contraction. As ng.com frequent commenter Richard Reep put it back at the beginning: “What happened to people’s outrage? Where are the torch-bearing citizens marching on Washington?” If some third-world leader had pillaged the national treasury on their way out of town the way Hank Paulson did – with the full and enthusiastic support of New York Fed chief and now Treasury Secretary Timothy Geithner – when he convinced Congress to spend $750 billion to bailout the Wall Street banks, there would be angry mobs, riots and possibly UN Peacekeepers.

    Three years later, all we can muster is a sort of hippy sit-in – but I’ll take it! It’s better than letting it run over us, drip-by-drip, until there is no middle in our increasingly bifurcated economy.

    Let me summarize what 99% of Americans should protest. It started in the early 2000s with good intentioned policies directed toward leveling the playing field by re-designing consumer credit ratings to allow more Americans to own homes. The move was embraced by Mike Milken and his followers as a way to further the cause of The Democratization of Capital – oddly enough, an idea born out of the outrage of the Watts Riots of August 1965.

    Republicans and Democrats alike joined in the movement and a great boom in home prices was born. Expanding homeownership opportunities, especially for minorities, was a fundamental aim of the Bush Administration’s housing policy, one strongly supported by Democrats in Congress. Then everyone got greedy, including wanna-be real estate moguls who started flipping houses instead of working for their living.

    Banks that were writing mortgages soon turned to securitization – bundling mortgages into bonds called mortgage-backed securities – so they could use the proceeds to lend more money to subprime borrowers. The banks were collecting fees at every step. They charged fees for making the mortgage loan and for putting together the bond deal; then they charged commissions for trading the bonds. The interest paid on the bonds was high because the interest charged on the mortgages was high – after all, these were less-than-credit worthy borrowers by traditional standards.  The banks wanted to be compensated for taking the risk – even though they were selling the risk to someone else. It was all about making money on money and eventually demand overtook supply. But that didn’t stop Brother Banker!

    According to a story on PBS (originally aired November 21, 2008), managers at Standard & Poor’s credit rating agency were pressured to give mortgage bonds triple-A ratings in the pursuit of ever higher fees. In essence, the banks paid credit rating agencies to get triple-A ratings for their mortgage bonds so that insurance company and pension fund money could be added to the scheme. Insurance companies and pension funds are highly regulated in order to protect investors who rely on them for compensation in disasters and retirement.

    If the bank couldn’t get the top credit rating for some mortgage bonds, they turned to selling an unregulated kind of insurance called Credit Default Swaps. The swaps became so popular that people who didn’t even own the bonds were buying the swaps. Eventually, there were more credit default swaps than there were bonds – and the banks were making fees on top of fees with no incentive to stop. In the end, there was more money to be made in mortgage defaults than mortgage payoffs and some banks even stopped taking mortgage payments to force the defaults. It was a little like the failing businessman who burns down his own shop because he can make more on the insurance than he can trying to sell it.

    When the swaps came due, companies like AIG collapsed under the pressure of the payments – and American taxpayers were left holding the bag. Using your insurance and pension benefits to create their bonfire, Wall Street staged a weenie-roast! Two years ago you could have purchased all the common stock of Lennar Homebuilders for $1.2 billion – but if they went bankrupt you could collect $40 billion on the swaps. (The European Union fixed this problem in their markets – the US did not.) Like any Ponzi scheme, this one also required that “new money” continue to flow in so that the early investors could receive payouts – hence the need to get your benefit money invested in these things. When Uncle Sam took 80% ownership of AIG in Hank Paulson’s bailout scheme, again approved by our current administration’s financial geniuses, the US Treasury in combination with the Federal Reserve provided an unlimited source of new money. THAT is what you should be protesting today because it can – and probably will – happen again.

    Critics of the protesters like to equate Wall Street with all the companies that create jobs. This ignores how the stock market works. The only time that a company gets money from its stock is in the initial public offering. Those shares are mostly sold to syndicates, underwriters, and primary dealers, not the general public. What happens day in and day out on Wall Street is simply stirring the pot. When the company’s stock goes up, it is the next seller and his broker that make money, not the company. The stock market should have everything to do with jobs. When households have excess earnings – more money than they need for their expenses – they make savings deposits or investments in the stock market through banks. Banks channel savings from households to entrepreneurs and businesses. Entrepreneurs use the money to create new businesses which employ more people, thus increasing the earnings that households have available for savings and investment, which would bring the process fully around the virtuous circle. But Wall Street doesn’t exactly do that anymore. It just makes jobs for Wall Street.

    The other argument is that the problem isn’t Wall Street, it’s the government. Anyone who thinks that only one or the other is to blame doesn’t understand how politics is financed. According to the MAPLight.org’s analysis, Senator Barack Obama’s presidential campaign received more money in 2007-2008 from Wall Street than anyone else, but it was only $2 million more than the $22,108,926 that went to Senator John McCain.

    Blame the government and blame the Wall Street banks that sponsor their political campaigns – they are blaming each other anyway. The occupy protestors – with the possible exception of the violent black band anarchists – are not the perpetrators we need to put in handcuffs.

    The sad fact is that nothing in Washington, D.C. or Wall Street, NYC has changed since that day in September 2008 when Hank Paulson told Congress that the world would end if they didn’t give him $750 billion to spread around Wall Street. For many people, like a Michael Brock, it takes a life-changing event to make you look at the truth all around you. Fixing our broken financial markets requires systemic reform of a great scale.  

    I think a lot of people who joined the 2008 tea parties – myself included – thought we were mounting a petition against bank bailouts and the misuse of public funds. The U.S. Government Accountability Office audit of the Federal Reserve, released in July 2011, proves that petition failed. Call your Representative, write to your Senator, and show up for the #Occupy or Tea Party events in your city. Like Michael Brock, you may find yourself savoring the exercise in civil protest.

    A version of this article appeared in the Omaha World Herald on November 4, 2011.

    Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. She participated in an Infrastructure Index Project Workshop Series throughout 2010. Her training in finance and economics began with editing briefing documents for the Economic Research Department of the Federal Reserve Bank of San Francisco. She worked in operations at depository trust and clearing corporations in San Francisco and New York, including Depository Trust Company, a subsidiary of DTCC; formerly, she was a Senior Research Economist studying capital markets at the Milken Institute. Her PhD in economics is from New York University. In addition to teaching economics and finance at New York University and University of Southern California (Marshall School of Business), Trimbath is co-author of Beyond Junk Bonds: Expanding High Yield Markets

    Occupy Wall Street Photo by Paul Stien.

  • Political Footballs: L.A.’s Misguided Plans For A Downtown Stadium

    Over the past decade Los Angeles has steadily declined. It currently has one of the the highest unemployment rates (roughly 12.5%) in the U.S, and there’s little sign of a sustained recovery. The city and county have become a kind of purgatory for all but the most politically connected businesses, while job creation and population growth lag not only the vibrant Texas cities but even aged competitors such as New York.

    Rather than address general business conditions, which sorely need fixing, L.A. Mayor Mayor Antonio Villaraigosa and the other ruling elites have instead focused on revitalizing the city’s urban core, which has done little to boost the region’s overall economy in generations. The most recent example of such foolishness is a $1.5 billion plan to build a football stadium, named Farmers Field, downtown,unanimously approved by the city’s City Council and backed by the city’s “progressive” state delegation.

    Like most of  the dominant political class, California Senator and former City Council member  Alex Padilla cites the sad state of the local economy as justification for approving the plan. But, in reality, it’s hard to find something more profoundly irrelevant than a football stadium.

    Indeed years of independent investigations have discovered that urban vanity projects like sports teams and convention centers add little to permanent employment or overall regional economic well-being. As a Minneapolis Fed study revealed, consumers simply shift their expenditures from other activities to the new stadium. Certainly mega-stadiums have done little to boost sad-sack, depopulating cities such as St. Louis, Baltimore or Cleveland.

    Commitments to mega-projects tend to further drive urban areas into debt, largely by issuing more bonds that taxpayers are obligated to pay back. One particularly gruesome case can be found in Harrisburg, Pa., whose underwriting of a minor league baseball team helped push the city into bankruptcy. To get the stadium deal, Los Angeles, already over-indebted and suffering a poor credit rating, will issue another $275 million.

    Such projects often obscure the real and more complex challenge of nurturing broad-based economic growth. This would require substantive change in a city or regional political culture. Instead the football stadium services two basic political constituencies: large unions and big-time speculators, particularly in the downtown area. The fact that the stadium will be built with union labor, for example, all but guaranteed its approval by the city’s trade union-dominated council.

    Downtown developers and “rent-seeking” speculators, the other group behind the project, have siphoned hundreds of millions in tax breaks and public infrastructure in the past decade. They have done so – subsidizing companies from other parts of Los Angeles, entertainment venues and hotels — in the name of a long-held, impossible dream of turning downtown Los Angeles into a mini-Manhattan. Perhaps no company has pushed this more effectively than the stadium developer Anschutz Entertainment Group, a mass developer of generic entertainment districts around the world. AEG has expanded its influence by doling out substantial financial donations to Mayor Villaraigosa and others in the city’s economically clueless political class.

    This explains how the stadium was exempted from the state’s draconian anti-greenhouse gas legislation. The city promises that the stadium will be the “most transit-friendly” football stadium in the nation, which strikes locals as absurd. Football crowds tend to be drawn largely from  affluent types who don’t live anywhere close to downtown and rarely take public transit to their jobs, much less over the weekend. D.J. Waldie, a leading Los Angeles writer, described the entire project as “cloaked in green snake oil.”

    An even more nebulous claim is that downtown needs the investment in order to drive regional growth. To be sure, recent years have seen the growth of a central city restaurant scene, and some 30,000 residents now live in the area compared to closer than 20,000 a decade ago. Yet just outside the immediate, highly-subsidized core, population growth in the surrounding parts of central city over the past decade stood at a mere 0.7%, the lowest rate since the 1950s. The vast majority of the region’s population growth took place in the far-flung regions of the San Fernando Valley.

    As an economic engine, downtown LA simply does not warrant the attention, nor the special treatment,  that the city’s ruling elites give it. For one thing, it represents a far smaller part of the city’s economy when you compare it to the urban cores of Washington, D.C., or New York City. Indeed, in New York and D.C. roughly 20% of all employment is in the central core; in Los Angeles it’s barely 2.5%.

    And, despite all the hype, fewer people now work in downtown L.A than in the 1980s and 1990s, when the area was populated by corporations and small businesses, many in manufacturing and trade, instead of hip hangouts. A more recent analysis shows that, despite all the hype, the downtown area has created virtually no new net jobs over the past decade.

    LA’s leaders should therefore focus on the systematic causes for the region’s ailing economy. One source of the problem lies in tough environmental rules that, although lifted on behalf of football, clamp on growth of virtually every other industry, including the city’s port and manufacturing sector. Powerful green interests, for example, make any plan to modernize the port all but impossible. This could prove catastrophic when the widening of the Panama Canal will allow aggressive, cheaper posts in the Gulf or Southeast U.S. to compete with the Pacific Asian trade that has driven LA’s port economy for decades.

    Los Angeles’ huge industrial sector has also been a victim of the regulatory tsunami. Manufacturers have lost roughly one-third of their jobs over the past decade as firms head out to more congenial regions with less onerous regulatory burdens. Sadly, Los Angeles has benefited little from the recent upsurge in manufacturing nationwide when compared with metropolitan areas such as Detroit, Salt Lake City and San Antonio.

    Even Hollywood, an industry less affected by green regulations, has begun to lose steam. Film production has dropped by more than half over the past 15 years. LA’s share of film and television production has eroded as well, with much  of the new work headed to Toronto, New Mexico, New Orleans, New York and Atlanta. All these cities offer richer incentives to attract productions than the world’s self-proclaimed “entertainment capital.”

    Faced with these serious regional challenges, officials should place less emphasis on football and creating another generic downtown and more on the city’s uniquely vibrant and heavily immigrant-driven small-business sector, which has been stifled by the state’s regulatory excess as well as the city’s legendary bureaucracy. Business consultant Larry Kosmont notes that the system is particularly tough on smaller, less politically connected firms. “It usually takes two to three times more to process anything in L.A., compared even to surrounding cities,” Kosmont told the Wall Street Journal. “It makes a big difference if you are a major Korean airline or AEG or if you are an independent entrepreneur.”

    Yet to date these entrepreneurs  receive little respect from City Hall. They  are unlikely to be granted the sort of papal dispensations from green legislation so readily given to the football stadium and other downtown projects. Until the disconnect of the leaders from the city’s real economic essence ends, Los Angeles, a city uniquely blessed by its population, climate and location, will continue to flounder, a perpetual underperformer among America’s great urban areas.

    This piece originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo "LA Night Lights" by flickr user Steve Jurvetson

  • Florida Gets Dragged Into the 21st Century

    Righteous cries of outrage and anger dominate Florida these days, as unreasonable assaults upon common sense seem to roll with regularity out of the governor’s office. Recently, Governor Scott   published a list of Florida’s higher education faculty, matching salaries to names.  This act was disingenuously styled as an effort towards transparency, but it was really a good old-fashioned right-wing poke at the eggheads. 

    Sadly, this does the Governor no favors, and reinforces the public’s perception of Scott as a reactionary Neanderthal with no heart or soul, perpetually on the wrong side of every issue.   Perception is important because Scott has done some very useful things:  cutting government, eliminating a bloated bureaucracy, stimulating private development, and questioning the economic benefits of all forms of higher education.  Unfortunately, he seems to cloak these actions in such vindictive, uncivil arrogance that the actions themselves remain mostly unexamined.

    The CEO-turned-Governor drove far-reaching budget cuts and deregulation, putting the state legislature into reactive mode, causing many to long for the days of milquetoast former Governor Charlie Crist.   The end result, however, was a budget that went down, not up, for the first time ever, an accomplishment that eluded Crist and his Republican predecessor, Jeb Bush.

    Along the way Scott also eliminated an entire state agency, the Department of Community Affairs (DCA). Some Floridians reacted badly, seeing their state stripped naked of its only protection against the large, out-of-state developers responsible for much of the economic growth in past decades.  While the governor claimed this move would allow towns and cities to determine their own destiny, no more protection from big brother could also mean that small towns, starved for tax revenue, will quickly cave to development pressure regardless of the broader consequences for property values.

    Taking out the DCA was a bold swipe at a bureaucracy that had seen its day come and go.  Established in 1985 to “manage” growth, the DCA failed to manage its own growth, encountered few real estate deals that it didn’t like, and guaranteed that only the largest, most deep-pocketed developers would prevail.  In this moribund economy, developers have yet to gear up for the next boom.  Instead, smaller, more agile players that meet more specific, localized needs are becoming more active.  Now that this large, lawyer-intensive burden is removed, small businesses may have a chance to compete.  Public outcry at large developments may, in fact, be more effective than an easily co-opted bureaucrat when it comes to land values and protection of sensitive wetlands.

    Scott also made national news by rejecting high speed rail between Orlando and Tampa.  Floridians, who were promised this by Barack Obama, were shocked and surprised.  The loss of this vision, along with the potential jobs that it created, was widely bemoaned.  Scott’s move set off a domino effect that has now come to doom the whole program.

    Federal rail programs, given a bad name by the quaint but inefficient Amtrack, make little practical sense today between Tampa and Orlando.  The distance is so short that the train would not be really high-speed in the true sense of the word; just as it reached its cruising speed, it would have to slow down again for Lakeland and other stops.  Missing some key stops such as Disney and lacking connectivity with other rail systems diminishes ridership, there was a real possibility that it would become a white elephant.

    Typecast as a hatchetman, Scott went against type this summer to fund central Florida commuter rail, and it looks like this 19th century spine running north-south through the region will soon be home to Sunrail.  At the recent panel discussion put on by the Orlando Chapter of the American Institute of Architects , “Sunrail” presented plans for 62 miles of track, complete with dreams of low- to mid-rise density clusters at various stops.   Perhaps figuring that the real costs won’t be known until after he is out of office (Sunrail will be 50% federally funded until 2019), Scott threw the region a bone that will create jobs to build and operate the trains. 

    Symposiums on the best way to develop around train stops are already being held.  Job growth and employment-related cluster development plans at least are being discussed. This is some rare good news for Florida’s development community, whether or not the rail system is capable of supporting itself financially .

    True to his form, however, Scott drew hisses for publicly disparaging anthropology, rhetorically asking the Northwest Business Association if it wanted to spend tax money to “educate more people who can’t get jobs in this field ,” preferring instead to focus tax subsidies on science, engineering, and technology.  The remark reinforces the public’s perception of Scott as a man with no heart or soul who seems bent on alienating – often unnecessarily – many whom he needs for support.

    His words mirror the country’s irrational political rhetoric and serve little purpose other than to inflame emotions.  Intent on making enemies with the media, his abuse of the fourth estate prevents constructive dialogue from taking place.  Fatigue at this rancorous rivalry is so high that Scott has become a big turnoff , and whatever he is associated with could quickly be undone the moment he leaves office.  

    It is important to recognize that Florida, under Scott and previous governors, has made strides in diversifying its economy by adding biomedical research through some shrewd venture capital investment.  The state is badly in need of evolving its education system to support these science, technology, engineering, and manufacturing jobs, in order to keep these employers close to home. Bringing Scripps, Nemours, and other research laboratories to the Sunshine State will mean little unless they are reinforced by curriculums producing graduates that will remain in these fields. 

    Scott can and should promote these ideas with a positive spin, mostly because we don’t want to repeat our 1990s experience with the entertainment industry.   A similar state-sponsored effort to bring the film studios was not coordinated much with education, so when state subsidies vanished, moviemakers quickly relocated elsewhere, leaving little trace of their presence behind.

    Scott’s actions have set changes into motion that will all have long-lasting effects in the state of Florida, if they are allowed to remain in place.  It is important for Floridians to realize these achievements and not be too put off by nasty words, nastily delivered. The important long-term effect may be that Scott, while dividing Floridians often unnecessarily, has begun to position the state for recovery.    When the wounds heal, the Sunshine State will emerge more nimble and less bound to institutions that did not serve it well, and will be better positioned to take advantage of the growth potential of America’s fourth most populous state.

    Richard Reep is an Architect and artist living in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.

    Photo: Matthew Ingram

  • Arab Spring – American Winter

    2011 brought us the Arab Spring, a year of protests, turmoil, and revolution. 2012 will usher in the American Winter, a new era of withdrawal and separation for America and the Middle East. Contrary to conventional wisdom, America is poised to step back from the dominant role it has played in the Middle East since 1948.

    The author has traveled to the Middle East for more than two decades during which time there was little change among the dictators, strongmen and mullahs that ruled the desert lands. The author has watched Dubai convert itself from a dusty port to a world-class city with the world’s tallest building and biggest airport. Like most people, he has observed the price of oil rise from $17 per barrel to $145 per barrel at its peak. At $80 per barrel, the developed nations of the world ship a trillion dollars each year to the Persian Gulf, representing the largest transfer of wealth in the history of the world.

    It was said that the Arab people were not ready to embrace democracies like western civilizations. It was a clash of cultures like the Crusades a millennium ago. Suddenly, a political tsunami, known as the Arab Spring, swept away rulers in Tunisia, Algeria, Libya, Egypt and Yemen. It threatens next to topple Assad in Syria and may yet undermine the Islamic regime in Iran.

    The aftermath of the tsunami has been as unexpected as the Arab Spring itself. Ten months after its revolution, The Islamic Party of Tunisia, winners of that country’s free elections, will impose Sharia Law on its people. Sharia law is based on the Koran and the cornerstone of Islamic rule. The United States cannot complain. The elections were free, fair and represent the choice of the people. The Libyan National Transition Council announced they too would seek governance under Sharia law. Free elections are to be held in Egypt. The Muslim Brotherhood is expected to become the dominant party in Egypt. Islamic law will be imposed on all Egyptian citizens in what was a secular country.

    The Iraq Parliament refused to vote to keep American troops in that country, a decision that paves the way for closer relations with the Islamic government of Iran. In Afghanistan, President Karzai stated that in the event of a war he would side with Pakistan over the U.S. The Arab Spring, once believed to be a pro-democracy movement, friendly to the U.S., has not tilted that part of the world in our direction.

    After two decades of military involvement, a trillion dollars spent and the loss of 5,000 soldiers, America ends up withdrawing  from the Middle East with very little to show for its efforts. The fledgling democracies are not likely to be following the writings of Thomas Jefferson but the words of Mohammed and the strict laws of the Koran. The dreams of liberty and multiple democracies in the Middle East, unleashed by President Bush in 2003, have been replaced by popular votes for traditional rule under Islamic law. This could not have been foreseen by those – including many around President Bush – who believed that the people of the Middle East yearned for freedom as we did more than two hundred years ago.

    Welcome to the American Winter. 2012 brings new political realities to bear. America can no longer afford to spend a trillion dollars on foreign adventures and nation building. Its domestic needs are too pressing. One way or another, under a President Obama or a President Romney, America’s military adventure in Iraq and Afghanistan will wind down. In particular, Americans have Muslim fatigue, and rightly so. The cost and duration of the war in Afghanistan, the nation’s longest, the war on terror, the nation’s most invasive, and the two Iraqi wars have exhausted its collective patience, squandered our treasure and divided the country. The never-ending Israeli-Arab conflict that drains $6 billion each year from our Treasury has little to show for the effort. Americans do not believe Muslims appreciate the sacrifice of blood and treasure made to save the Bosnian Muslims from the Serbs, rescue Kuwait from Saddam, free Iraq, remove the Taliban in Afghanistan and now evict Gaddafi from Libya.

    Americans have had enough and, significantly, this now includes many conservatives who in the past supported interventions. Americans will never understand the Tunisians or the Libyans voluntarily voting to impose Sharia law on themselves. They especially are dumfounded by women who vote to legalize polygamy and agree to wear the burka. The American people are through with intimate ties to the Muslim Middle East.  They are ready for the American Winter.

    Overall, Americans will welcome a reprieve from the focus and expenditure of time and treasure on that part of the world. It will be good to take a break for a decade or two. It will be healthy for Americans to allow the Middle East to straighten out its own house. Our military has done a wonderful job decimating the terrorist infrastructure. Predator drones will keep Al Queda volunteers to a minimum. The CIA and FBI have infiltrated enough networks that they no longer have to play catch up. The Arab Spring will force Arabs to look inward to solve their own crisis and not to focus on American involvement in their affairs.

    And for us, there’s the opportunity to turn away from dependence on this region. We now have the energy to power our own economy, yet another reason to take a walk from Arabia.  There are more pressing security concerns – like our economy and mass unemployment at home – and the more potent challenge posed by China.

    An American Winter is coming.   The season couldn’t have turned at a more opportune time.

    Robert J Cristiano PhD is a Contributing Editor at New Geography, the Real Estate Professional in Residence at Chapman University in Orange, CA, Senior Fellow at The Pacific Research Institute and President of the international investment firm, L88 Investments LLC. He has been a successful real estate developer in Newport Beach California for thirty years.

    Arab protest photo by Bigstockphoto.com.

  • All in the Family, 2011

    We overheard this phone conversation recently between tea party activist Bill Francis and his 19-year-old daughter and Wall Street occupier Serena: 

    Bill:  I understand why you’re protesting but I think you’re missing the point.

    Serena:  What’s that?

    Bill:  You’re mad at rich people and upset that you can’t get a job.

    Serena:  True.

    Bill: And you think that by camping out on the street you’ll get attention?

    Serena: We’ve already made a difference.

    Bill: Tell me how?

    Serena: The media is talking about our issues.

    Bill: They’re just using you.

    Serena:  So what.

    Bill: Liberals like the idea of class warfare.

    Serena:  You used the media.

    Bill:  We knew what we were doing.

    Serena: You were rude.

    Bill:  We made our point.

    Serena: You called Obama a socialist.

    Bill: He is.

    Serena:  What do you mean by that?

    Bill: He wants the government to run our lives.

    Serena: Who do you think is running your life now?

    Bill: That’s the point.  We want to control our own lives.  That’s what being an American means.

    Serena: I think the corporations are in charge and you don’t even realize it.

    Bill: Listen, honey, I can ignore the corporations – I don’t have to buy what they sell.  I can work for anyone I choose.

    Serena: You’re not facing facts.  Corporations and banks are telling politicians what to do.  And they’re moving jobs to other countries.

    Bill: That’s because of taxes.

    Serena:  What’s because of taxes?

    Bill: Jobs leaving the country.

    Serena: Dad, they barely pay any taxes.

    Bill: The point is that they’re free to do business wherever they want.

    Serena: You don’t want to see how much power they have over us.

    Bill: I agree there’s corruption.

    Serena: And greed.

    Bill:  That’s human nature.

    Serena:  Now you’re going to tell me that corporations are people.

    Bill: I just don’t like that you’re sleeping in a tent every night, that’s all.

    Serena:  Don’t worry Dad, I’m safe.  You taught me to take care of myself.

    Bill: I still don’t understand what you’re trying to accomplish.

    Serena:  We’ll figure it out as we go.

    Bill: But, anyway, as long as you’re coming home to take showers and wash your clothes, I suppose it’s o.k.

    Serena: Got to go.  Love you dad.

    Bill: Love you too honey.

    This first appeared at LaborLou.com.