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Food for thought, or empty calories?

Michael Pollan for Secretary of Agriculture! Pollan wrote a letter to Obama on food policy (posted on here: "Sun food is local food"), and it turns out (kudos to the staff) that Obama actually read it. I'll start with the exchange, and through circuitous paths arrive at some suggestions on method for a critique of the coming Obama administration, ending where I started: with food.

Pollan's letter is worth re-reading in full, but here's an excerpt:

It may surprise you [Obama] to learn that among the issues that will occupy much of your time in the coming years is one you barely mentioned during the campaign: food.

You will need not simply to address food prices but to make the reform of the entire food system one of the highest priorities of your administration: unless you do, you will not be able to make significant progress on the health care crisis, energy independence or climate change. Unlike food, these are issues you did campaign on — but as you try to address them you will quickly discover that the way we currently grow, process and eat food in America goes to the heart of all three problems and will have to change if we hope to solve them. Let me explain.

[1] After cars, the food system uses more fossil fuel than any other sector of the economy — 19 percent. And while the experts disagree about the exact amount, the way we feed ourselves contributes more greenhouse gases to the atmosphere than anything else we do — as much as 37 percent, according to one study.

[2] You cannot expect to reform the health care system, much less expand coverage, without confronting the public-health catastrophe that is the modern American diet.

[3] The impact of the American food system on the rest of the world will have implications for your foreign and trade policies as well. In the past several months more than 30 nations have experienced food riots, and so far one government has fallen. Should high grain prices persist and shortages develop, you can expect to see the pendulum shift decisively away from free trade, at least in food.

And (via Green Daily) we read Obama's response in his interview with Joe Klein:

[OBAMA] I was just reading an article in the New York Times by Michael Pollen about food and the fact that our entire agricultural system is built on cheap oil. As a consequence, our agriculture sector actually is contributing more greenhouse gases than our transportation sector. And in the mean time, it's creating monocultures that are vulnerable to national security threats, are now vulnerable to sky-high food prices or crashes in food prices, huge swings in commodity prices, and are partly responsible for the explosion in our healthcare costs because they're contributing to type 2 diabetes, stroke and heart disease, obesity, all the things that are driving our huge explosion in healthcare costs.

Yep. It would have been excellent had Obama gone on to actually advocate some food policies -- there's that pesky demand for detail, again -- but instead Obama soars up to the 30,000 foot level:

[OBAMA] That's just one sector of the economy. You think about the same thing is true on transportation. The same thing is true on how we construct our buildings. The same is true across the board.

But wait. Before we look at what's true across the board, there's a key policy issue on food about which Obama is silent. Bradford Plumer:

[N]ote what's missing: Our agricultural system's also built on artificial subsidies for overproduction that, at this point, do far more harm than good. The very subsidies that Obama... still supports. So, uh, maybe it's time to stop snuggling up to King Corn.

Meaning: It's difficult to see how the country will get from point A (petrofood) to point B (Pollan's sun food) if we continue, through subsidies to industrialized agriculture, to base our diet on corn syrup, the SUV of plants. That's why it's worse than useless to say OMG He "READ THE ARTICLE. And COMMENTED ON IT!"; the real question is how Obama will take action based on his reading, in concrete policy terms*.

Back to Obama at 30,000 feet, where pesky policy details disappear:

[OBAMA] For us to say we are just going to completely revamp how we use energy in a way that deals with climate change, deals with national security and drives our economy, that's going to be my number one priority when I get into office, assuming, obviously, that we have done enough to just stabilize the immediate economic situation. In conversations with folks like Warren Buffet, Larry Summers, and the other people that I've been spending time with on this, I described it as we've got a boat with a lot of leaks and we need to get it into port. That's what the financial rescue package is about. But once we get it into port, once the credit markets are functioning effectively, then it's time for us to go back to the fundamentals of this economy. Now, the one other point I want to make about this, though, we can't divorce the energy issue from what I believe has to be the dominant political theme underlying everything -- the economy, healthcare, you name it. And that is restoring a sense that we're growing the economy from the bottom up and not the top down. That's the overarching philosophical change that we've got to have.

(Parenthetically, let's all hope and pray to the God(ess)(e)(s) Of Our Choice that Obama, Volcker, Summers, et al., aren't just inflating the next bubble, which will be green (after the dot com bubble, and the housing derivatives monster crash bubble that just burst). Because, to my simple mind, it looks like economies that are based on financial manipulation, as opposed to actually making things that people need, generate bubbles (via) because that's the only way for Big Money to make money**).

That aside, it all sounds great. Even, dare I say, FDR-like (as opposed to Milo Minderbinder-like). Here's why I'm skeptical, and liberals and progressives should be, too:

Who does Obama listen to? I find his invocation of Larry Summers and Warren Buffet frightening rather than re-assuring. The Sage of Omaha, for example, controls Moody's, the rating service whose faked over-valuations of toxic assets were a key cog in the financial machine that created today's financial debacle. And Larry Summers is who he is. I mean, really -- do you think Obama's going to be influenced more by an article in the Times Magazine, or by Summers and Buffet?

What about Obama's base? As I've consistently pointed out, one lesson we need to take from the Bush years is the idea of a President's base as a policy driver. One reason -- besides Versailles -- that Bush was able to do so much damage with impunity is that he had the Christianist base that would never, never desert him. We don't know that the Obama movement will become a permanently institutionalized presence, but the possibility is certainly real, and the base seems to be motivated by Obama the charismatic individual, rather than by policy concerns. So, when I hear Obama say the economy needs to grow from "the bottom up and not the top down" I think two things: First, that doesn't seem to be how Obama plans to govern; the vision is to come from the top. And if Conway's Law applies to governmental energy projects as well as corporate software projects, then Obama's economy won't grow from the bottom up at all (which, come to think of it, would be just fine with Volcker and Summers). Second, that isn't what Obama's base is demanding. If you really, really want to help the people at the bottom and help the economy, then you need to be advocating for policies like HOLC and single payer. But the Obama Movement never demanded those policies (or anything else, for that matter). Hillary's base, drinking in policy detail at her Town Halls, did -- and were thrown under the bus during the primaries. So if Obama's base isn't demanding policies that work bottom up, why should we believe that Obama will push for them?

What about Obama's priorities? The "boat" with "leaks" metaphor is brilliant, but note the policy outcome: "[O]nce we [who?] get it into port." Well. Leave aside the results of the Bush + Reid + Pelosi + Obama + Paulson bailout, which at best show the boat no nearer port and still leaking, while the first class passengers cheerfully shove everyone else out of the lifeboats; what does this metaphor say about Obama's priorities as shown by the legislative record? Like the rest of the Village, Obama's putting the top (Big Money) ahead of the bottom (everyone else) -- even when, as with HOLC, policies that help the bottom stabilize the top as well. It's all well and good for Obama to muse now about "overarching philosophical change", but the time to do more than talk was at the maximum point of leverage, which was before the bailout was passed. And when we lookd under Harry Reid's Christmas tree of a bill, we found the wooden arrows, instead of anything that helped us.

So, I'm pleased that Obama reads something more than evangelical mini-sermons from My Utmost For His Highest.

But the skeptic, or cynic, or realist in me says that an excellent reading list doth not a President make. I like concrete policies and I don't trust visions unless I see the policies that give the visions life; hope, but verify.

One way to look at the above interview -- and to start thinking systematically about how to hold Obama accountable -- would be to look for the commonalities and continuities between Bush and Obama, rather than the differences. That is, after all, what the Village is looking for, since it supported both candidates. You might then look at Bush and Obama as two iterations of the same package: Leader 0.9 and Leader 1.1***, say. And where Leader 0.9 was buggy and had, to be kind, usability issues, finally crashing disastrously, Leader 1.1 has a much spiffier interface and more robust engineering, while potentially including every working feature of Leader 0.9.

Let's start with Obama's over-riding pre-occupation in the interview above: Energy. Well, that was Bush's over-riding pre-occupation, too. Bush's plan ("When in doubt, use brute force") was to seize Iraq's oil; Obama, the upgrade, is at least thinking of an approach that's less crude (while being careful to keep at least one war going, in Afghanistan). A second goal Bush had, as the culmination of thirty years of Conservative striving, was to replace Constitutional government with authoritarian rule. This goal, with the connivance of both parties and the entire Village, he achieved. Whether Obama will rationalize and consolidate Bush's authoritarian gains, or roll them back, remains to be seen; on the one hand, we have words: The Charlie Savage's Globe Q&A, speeches from nominees, and so forth. On the other, we have actions: Obama's legislative record (FISA), and the deep unwillingness, shared by the entire Village under the soothing label of post-partisanship, to restore the rule of law by holding lawbreakers accountable. And third, Bush used shock doctrine tactics to achieve his goals, from the Patriot Act, through AUMF, through the Bush + Reid + Pelosi + Obama + Paulson bailout. And, as this interview shows -- "lurch from crisis to trance" -- Obama is fully aware of these tactics (second usage example). How Obama uses those tactics is an open question, but based on his actions during the bailout, I'm not sanguine.

So, in summary I'm suggesting that now is exactly the time for liberals and progressives to exercise their critical thinking skills and be Shrill. Only in that way can Obama's words are transformed into actions that comport with our values and interests. Two potential critical tools:

1. Recognizing and calling out continuities between Bush (Leader 0.9) and Obama (Leader 1.1). We may feel -- deeply hope -- that there is no continuity; but feelings aren't facts (and in any case, unity guarantees continuity).

2. Saying what's left unsaid: For example, to bring matters round to food again, saying (a) that agricultural subsidies for corn are a key driver in our bad, not to say evil, food policies, and that (b) Obama is silent on the issue.

And to close the circle with food: Sign this petition. It would be great to see Obama doing some simple, concrete things to support food that is good, clean, and fair. He could plant an organic garden at the White House. He could support Community Gardens in Washington, DC, and elsewhere. He could even have a Slow Food Convivium as a state dinner. Why not? These are all simple and small actions Obama could take immediately, on the ground -- and not at 30,000 feet -- that would powerfully symbolize a complete break with the Bush era.****

Hope but verify. And verify Obama's performance against our interests and values. Don't believe the hype.

* * *

Enough of this length discourse on method for now. This wasn't an easy post to write, and I probably need to revise it, but no time now.

NOTE * Here again, Obama's vote for FISA [cough] reform is troubling; all the reading at Harvard Law and the University of Chicago culminated in a vote to gut the rule of law for large corporations and trash the Fourth Amendment. Words do matter, but the legislative record matters more. In fact, there seems to be a little cottage industry devoted to studying Obama's reading and making hopeful predictions.

NOTE ** Perhaps we can translate the post's anodyne "even if you know there's a bubble, it might be smart to go along" to "it's all about the fees".

NOTE *** I bumped Obama's Leader Version number from 1.0 to 1.1 because he was severely tested in the primaries, where he lost the popular vote among Democrats despite overwhelming advantages, both financially and in the press.

NOTE **** Also, the optics would be fantastic. Smiling kids, gardens, vegetables from their garden to the White House table; hard to better that, and it would be a narrative that cycles through the seasons, too.

CONCERN TROLL PROPHYLACTIC No, I don't hate Obama. The interview is impressive; we're looking at verbal and intellectual skills here (assuming the interview wasn't rewritten, of course). So I can see why the creative class is willing to cast their critical thinking skills aside, just when they're most needed. My, or rather the problem -- leaving aside the primaries, for which I wish I had a bill of indictment (literally so, in the case of the TX caucuses) -- is that when the package is unwrapped, you get a legislative record that includes FISA and the bailout, and does not include HOLC or single payer, and therefore doesn't match either my interests or my values, or those like me. Fine words butter no parsnips.

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a little night musing's picture
Submitted by a little night ... on

[...] assuming, obviously, that we have done enough to just stabilize the immediate economic situation. In conversations with folks like Warren Buffet, Larry Summers, and the other people that I've been spending time with on this, I described it as we've got a boat with a lot of leaks and we need to get it into port. That's what the financial rescue package is about. But once we get it into port, once the credit markets are functioning effectively, then it's time for us to go back to the fundamentals of this economy.

Uhhhh, is it just me, or does he sound as if his plans to stabilize the economy don't include a stimulus package (infrastructure investment and local government bailout, food stamps, ...) of the sort these fine people have been pushing?

I mean, I hope that's not what he's suggesting here, but it sure sounds as if he's counting on the bailout and the Fed's rescue of the financial markets to get "the credit markets [...] functioning effectively" before he'll even think about pumping up the demand side, and man, that is not good.

I hope I'm reading this wrong.

amberglow's picture
Submitted by amberglow on

be more targeted to us rather than big business in some small cheap ways, but part of an overall stimulus overwhelmingly about funding business --it's supposed to be ready for him to sign immediately in Jan, they say--

Obama, Democrats plan $500B economic package

Congressional Democrats and President-elect Barack Obama are laying the groundwork for quick enactment in January of a giant, two-year economic rescue package that will total about a half-trillion dollars.

His economic team in place, Obama has tasked his aides with assembling an ambitious measure to not only swiftly pump money into the battered economy, but also create 2.5 million new jobs, send a tax cut to the poor and middle class, and make massive government investments in energy-saving and other technologies designed to pay for themselves in the long run. ...

but it's tiny compared to the "bailout" trillions and only small things directly for us--that won't make the GOP kill it.

green energy and all his energy policies (which include big ag subsidies for ethanol and other things) will all be about giving big big money to companies--"massive government investments in energy-saving and other technologies"--just like they've done before.

also, "private-public partnerships", which mean contracting and subcontracting and privatizing --taking government out of the picture even more--just like with Dubya.

His infrastructure stuff will all do the same--watch and see.

a little night musing's picture
Submitted by a little night ... on

Oh yeah, I know what let's do! Let's take what didn't work before and do it again!
< grrrrr >

Here is what Krugman (remember him, Obama? He won that Swedish prize?) had to say in his recent NY Review of Books article on that subject:

Even if the rescue of the financial system starts to bring credit markets back to life, we'll still face a global slump that's gathering momentum. What should be done about that? The answer, almost surely, is good old Keynesian fiscal stimulus.

Now, the United States tried a fiscal stimulus in early 2008; both the Bush administration and congressional Democrats touted it as a plan to "jump-start" the economy. The actual results were, however, disappointing, for two reasons. First, the stimulus was too small, accounting for only about 1 percent of GDP. The next one should be much bigger, say, as much as 4 percent of GDP. Second, most of the money in the first package took the form of tax rebates, many of which were saved rather than spent. The next plan should focus on sustaining and expanding government spending—sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure.

The usual objection to public spending as a form of economic stimulus is that it takes too long to get going—that by the time the boost to demand arrives, the slump is over. That doesn't seem to be a major worry now, however: it's very hard to see any quick economic recovery, unless some unexpected new bubble arises to replace the housing bubble. (A headline in the satirical newspaper The Onion captured the problem perfectly: "Recession-Plagued Nation Demands New Bubble to Invest In.") As long as public spending is pushed along with reasonable speed, it should arrive in plenty of time to help—and it has two great advantages over tax breaks. On one side, the money would actually be spent; on the other, something of value (e.g., bridges that don't fall down) would be created.

Some readers may object that providing a fiscal stimulus through public works spending is what Japan did in the 1990s—and it is. Even in Japan, however, public spending probably prevented a weak economy from plunging into an actual depression. There are, moreover, reasons to believe that stimulus through public spending would work better in the United States, if done promptly, than it did in Japan. For one thing, we aren't yet stuck in the trap of deflationary expectations that Japan fell into after years of insufficiently forceful policies. And Japan waited far too long to recapitalize its banking system, a mistake we hopefully won't repeat.

The point in all of this is to approach the current crisis in the spirit that we'll do whatever it takes to turn things around; if what has been done so far isn't enough, do more and do something different, until credit starts to flow and the real economy starts to recover.

And once the recovery effort is well underway, it will be time to turn to prophylactic measures: reforming the system so that the crisis doesn't happen again.

And I could go find similar themes from Roubini, Galbraith, Stiglitz, ...

Submitted by lambert on

it's not tax cuts for the rich. That's the Conservative nostrum, not tax cuts as such.

And I'm not clear how the stimulus proposals in Obama's quote and from Krugman differ? (Amberglow's called shot having been noted).

a little night musing's picture
Submitted by a little night ... on

The point is that the tax cuts weren't spent, for the most part (and that is where the need is) and still would probably not be, given the current stag-deflationary situation (as Roubini explains in the quoted material in my previous comment). Most people will want to hold onto their dollars, or maybe use them to pay down debt. And let's face it, the poor will not get much money from tax cuts (why Roubini suggests food stamps, which are spent locally) and the total amount from the tax cuts will still be too small as a percent of GDP to make a significant difference even if they were spent.

The Dems proposal doesn't seem to include the bailout of local governments that I've seen called an important part of any stimulus plan as well (I know Nouriel Roubini has written about this and I think Krugman as well.) But I may have missed it.

There' are more differences, but perhaps amberglow can chime in? I have to get offline, but I'll try to get back to this theme if I can.

a little night musing's picture
Submitted by a little night ... on

here:

The key to Keynes’s contribution was his realization that liquidity preference — the desire of individuals to hold liquid monetary assets — can lead to situations in which effective demand isn’t enough to employ all the economy’s resources.

And he's pointing out that this is the situation in which we find ourselves.

The demand has to come from the public sector.

Also Roubini:

First, if aggregate demand falls sharply below aggregate supply then price deflation sets in (and indeed there is already massive price deflation in the US in the sectors – housing, autos/motor vehicles and consumer durables – where the excess inventory of unsold goods is huge). The fall in prices and the excess inventory of unsold goods forces firms to cut back production and employment; the ensuing fall in incomes leads to further fall in demand and induce another vicious cycle of falling prices and falling production/employment/income and demand.

Second, when there is deflation there is no incentive to consume/spend today as prices will be lower tomorrow: buying goods today is like catching a falling knife and there is an incentive to postpone spending (consumption and investment spending) until the future: why to buy a home or a car today if its price will fall another 15% and purchasing today would imply having one’s equity in a home or a car fully wiped out in a matter of months? Better to postpone spending. But this postponing of spending exacerbates the vicious cycle of falling demand and supply/employment/income and prices.

Third, when there is deflation real interest rate are high and rising in spite of the fact that nominal policy rates are zero. If the policy rate is zero and there is a 2% deflation the real short term policy rate is actually a positive 2% that further depresses consumption and investment; and real long-term market rates are even higher with deflation – as discussed in detail below – as market rates at which firms and households borrow are much higher than short term policy rates.

Fourth, deflation also leads to the nightmare of debt deflation, a situation well analyzed by Fisher during the Great Depression. If debt liabilities are in nominal terms (D) and at a fixed long term interest rate (i) a reduction in the price level (P) increases the real value of such nominal liabilities (D/P goes up); so debtors that are already distressed in a recession and deflation become even more distressed as the real burden of their liabilities (D/P) sharply rises."

[...]

Thus, dealing with this deadly combination of deflation, liquidity traps, debt deflation and defaults that I termed as global stag-deflation may be the biggest challenge that U.S. and global policy makers may have to face in 2009. It will not be easy to prevent this toxic vicious circle unless the process of recapitalizing financial institutions via temporary partial nationalization of them is accelerated and performed in a consistent and credible way; unless such actions are combined with massive fiscal stimulus to prop up aggregate demand while private demand is in free fall; unless the debt burden of insolvent households is sharply reduced via outright large debt reduction (not cosmetic and ineffective “loan modifications”); and unless even more unorthodox and radical monetary policy actions are undertaken to prevent pervasive deflation from setting in.

[my emphasis]

Roubini has been clear about what this stimulus entails:

We need to do it because demand and spending and housing are literally collapsing. That will get a boost from public-sector spending: [spending on] infrastructure, unemployment benefits, state and local government aid, more food stamps.

Here he is talking about the short-term, before January, at which point he calls for even more bold action.

(Note in that article he praises Obama's choices of Summers and Geithner. Well, they're people he has worked with.)

a little night musing's picture
Submitted by a little night ... on

Pushing up aggregate demand is part and parcel of getting the leaky ship into shore, and only the Federal Government has (or can borrow or print) enough money to do it in large enough quantities to turn this thing around.

a little night musing's picture
Submitted by a little night ... on

That Krugman quote on Keynes was mustered to counter a criticism of the part of Obama's plan which offers tax incentives for job creation:

The key to Keynes’s contribution was his realization that liquidity preference — the desire of individuals to hold liquid monetary assets — can lead to situations in which effective demand isn’t enough to employ all the economy’s resources. When you don’t understand that principle, you end up writing stuff like this:

Obama’s “rescue plan for the middle class” includes a tax credit for businesses “for each new employee they hire” in America over the next two years. The assumption is that businesses will create jobs that would not have been created without the subsidy. If so, the subsidy will suffuse the economy with inefficiencies — labor costs not justified by value added.

That is, if the private sector wouldn’t have created a job on its own, that job shouldn’t have been created — whereas the real choice is between having workers doing something and being uselessly, destructively unemployed.

I'm concerned also about massive job loss in our cities if the stimulus does not include money for local governments - in fact it's already under discussion here in NYC (and as a City employee, however indirectly, I'm scared stiff on a personal level for myself and many people I work with). The Dem plan seems way too cautious (at a time when important economists, including Krugman, are saying nothing less than bold action will do, and we can scale the govt spending back later if necessary but too little too soon will fail to rescue the economy) and things like the proposed tax cuts are just something that would be, maybe, politically popular, but would go nowhere much toward solving the problem and might, in fact, exacerbate it.

What happened to Bill Clinton's line (referring to Obama pushing the bailout) about Obama asking the smart people "what's the right thing to do, not the popular thing but the right thing? And I'll go and sell it."

(Well, I didn't really believe that when Bill said it the first time, but if there ever was a time for it to be true it's now!)

And with that... I really must go.

amberglow's picture
Submitted by amberglow on

as the job-creation things (which they're actually not -- not in any meaningful or big enough numbers).

Roubini and so many others (but not Krugman as much) still are leaving out the jobs situation--how being worried about your job makes people not spend, no matter what. And that the jobs problems are not even new at all and have been ignored for ages or made millions of times worse with all the "free trade" things, and outsourcing and offshoring, etc -- and are connected to everything else--from consumer spending to housing to trade to energy to wall st, etc--and our overwhelming and soon-to-grow military spending -- and total distrust that the very same people in govt--including Obama--who have been throwing trillions at the rich while refusing to help massive employers like the car companies--will really do anything real on that for us, etc...

And way too many "hopers" think that the "investment" in infrastructure will be the government directly hiring people to work, like FDR did. it's not--at al--in any way.

Valerie Jarrett, and Obama himself, and Summers in a giant way, and many many others all have a history of giving tons of public money to private companies--"public" housing especially for Jarrett and Obama.

herb the verb's picture
Submitted by herb the verb on

There are more jobs in energy, infrastructure, etc. than I think you realize, and in fact are two of the only 6 ways we create real wealth in this country. Also, as my own datapoint, running a small (expanding) business working in both those fields, and having hired additional people who were laid off from other jobs, I can say as well as they can, every little bit and even a little bit helps. Little bits may be the only thing which DO help. Regarding outsourcing, neither infrastructure, nor "green" energy are "out-sourced" to any degree, and energy in general is one of the few markets which (although recovering from its own speculative bubble last summer) is still expanding. Real demand, for a real good/service.

I get a little upset when people say "green is the next bubble", as if that were something bad. If it is a bubble, then I say GOOD, we need it to be a bubble so we don't destroy the planet's climate for human habitation or for the millions of species that would become extinct as a result. Unfortunately, most people I know have floated from one bubble economy job/career to the next: programmer, carpenter, real estate agent, etc. is not an uncommon trajectory. Floating from one bubble to the next has kept many people from sinking!

In the meta department, Lance Mannion Fire passed on an interesting article by an unnamed "small businessperson":

" If you have read or in my case skimmed “An Inquiriy into the Nature and Causes of the Wealth of Nations”; Adam Smith 1776, (7 Books in all) you discern the sentient fact that the wealth of a people can only be generated in 6 ways : Mineral, Energy Production, Agriculture, Population to produce, Land and Abundant natural resources, Means to Transport.

Anything else is just shuffling money around the economy that was already generated by the 6 primary sources.

It is obvious the “GreedCats” have never read “The Wealth of Nations”.

The GreedCats supplanted the notion of “wealth” with “piling up of money”. This was the first great bait and switch which sold off the Quality of America."

amberglow's picture
Submitted by amberglow on

involved in "green energy" are all more cheaply done anywhere else but here--wind turbines, solar panels, parts, etc.

plus, you really think there'll be any kind of restriction or condition or mandate to manufacture here? We reward companies when they move jobs overseas -- with subsidies. And it's not like these "energy" subsidies will be big enough --or even intended-- to regrow our manufacturing base when for decades now we've purposely done the opposite.

And without simultaneous massive massive investment (trillions at the minimum) in --and upgrading of-- the existing and inadequate energy-delivery and storage networks and infrastructure now steadily deteriorating all over, vital parts of the whole system are being neglected.

And Obama's an ethanol/"clean coal"/nuke/"natural" gas person anyway, so who do you think the real money will go to?

herb the verb's picture
Submitted by herb the verb on

""green energy" are all more cheaply done anywhere else but here--wind turbines,...."

Wind turbines are NOT more cheaply built "anywhere but here". Please get your facts straight with a simple Google search. In the last three years production facilities for turbines and turbine parts have been built in Pipestone, MN, Sioux Falls, SD, Souix Falls, IA, Tehachapi, California, etc., etc., etc.. The ONLY reason turbines are being imported is to meet the overwhelming demand, with turbines on 2-3 year backorder.

I don't know where Obama will put money, I don't think it will be up to him anyway, this is a national issue with a bipartisan base. Even John McCain was for wind, solar and renewable energy. With ethanol suffering the body blow it did this summer, the capital equipment "green" energy alternatives like wind and solar are more economically attractive anyway.

Don't get me started on "Clean Coal". That is bullshit but we will be using either coal or natural gas no matter how you look at it. Don't like it? Sell all your appliances.

Submitted by lambert on

You are certainly not the only one Obama sent round the twist on that one.

amberglow's picture
Submitted by amberglow on

--says this, about big projects govts want to do in NY and NJ-- NYT -- Looking for Obama to Return the Good Will -- "... Such projects could spur the economy by providing jobs: 35,000 for every $1 billion spent on infrastructure, according to New Jersey officials. ...."

but infrastructure projects are not part of this stimulus in Jan.

and giving public money to private companies for all sorts of reasons -- something we've been doing all over for quite a long time now -- hasn't helped us with jobs so far, has it? States and cities and DC all give tax breaks and subsidies all the time, and still jobs go away.

a little night musing's picture
Submitted by a little night ... on

Long overdue, surprised not to see it on that list (but it must be in their minds, no?)

< I hope hopefully hoping >

pie's picture
Submitted by pie on

Coal-fired electric plants will kill them.

herb the verb's picture
Submitted by herb the verb on

in fact it disproves it, see the link below where China has to impose protective tariffs to get it's own wind turbine industry moving.

China is exponentially growning it's economy and energy usage, China has the largest population in the world. If China DOESN'T lead in producing wind turbines there is SOMETHING WRONG IN CHINA.

"On April 23, 2008 the Ministry of Finance announced two changes to import tariff regulations with respect to the wind power industry, further spurring development of Chinese wind power equipment manufacturing. The first change, effective January 1, 2008, implemented a tariff and VAT rebate program for imports of parts and raw materials used in the manufacture of wind turbines. This change was significant because a large percentage of parts and raw materials used in the manufacture of wind turbines still must be sourced from outside of China."

pie's picture
Submitted by pie on

in the form of wind power seems to definitely be an up-and-coming industry. My daughter, whose firm facilitates the National Wind Coordinating Collaborative, is attending a conference in Cleveland next week and that will be the topic of discussion.

Ohio is one of the states that is trying to attract businesses to build those beautiful windmills. Iowa's been on it for a longer time.

pie's picture
Submitted by pie on

Yes! So was/is hydroelectric power, 'cept there aren't a bunch of Niagara Falls around.

But wind?

There's wind/hot air everywhere!!!

;)

I'll try to get my daughter to write about this. She's the expert.

Submitted by ohio on

real solutions and real productivity.* A bubble may start from there---or more, the promise of those things---but then rapidly expands into one big casino. What happens is that a lot of money goes to chasing bets instead of being invested in solutions that may actually work. Not only is it a waste of a lot of effort, but it isn't sustainable. And often good ideas or more difficult and harder-to-sell solutions wither and die because they can't find enough green to continue.

As far as people living from bubble to bubble---how about those people who don't? The ones who end up unskilled labor (regardless of their skills) scraping what they can from the very bottom? There are a lot of them. Yes, yes, the poor are always with us, but people with resources will always do better in tough times---between bubbles---than people who haven't any. And how can this chasing jobs or the smart bet be a way to build a sustainable economy and sustained environmental effort?

These are not 2-4 year bubble kinds of problems. A sustained solution requires a sustainable effort. I don't think the roulette wheel of our investment system in a bubble can solve this since bubbles are by their nature ephemeral. That's the problem with bubbles. And one result is that they benefit a very small group (the same group that always benefits from economic upheaval), while they hurt many now and many more who are part of future generations. In desperation to regain wealth lost in the last two bubble bursts, I can see a lot of people gambling on "green" solutions, only to find the last of their retirement money pissed away.

Developing solutions that match local conditions and the decentralization of energy production strikes me as the first place to start revamping energy production and delivery. But once we have people going crazy in the investment side of this effort, we lose focus on the need and the costs of any proposed solutions. Bubbles are not about care and wisdom; they're about panic and thievery.

I'd like to see those involved in these new efforts eat their own dogfood by remembering that sustained and sustainable across the board are part of our need for a solution.

*Money managers have to justify their fees by getting the massive returns as they did during other bubbles, so I see another bubble as almost inevitable. In all likelihood, the market turmoil will revolve around energy, but it could be food. Lambert's initial post points out that the two are braided together, along with, I'd add, access to and control of potable water. A sudden rush of cash into the "alt energy" sector may be a boon to some manufacturers or installers, though it will more likely benefit the same people who always benefit as well as "green" swindlers. The question is will the rest of us benefit from solutions to our energy problems by this influx of investment capital? That depends on the self-discipline of the people who are doing the actual work in the industry and those folks are usually passed by in favor of the T. Boone Pickenses of the world.

And hey, in that list of six, where do Art, Communications, and Entertainment fit? I'm not being a big butthead (well, no more than usual), just curious what you think.

Submitted by lambert on

I've been through two bubbles already. And I guess I'm not sufficiently evolved, or opportunistic, to hop from tech to real estate, say. Nor were a lot of people. And I'm betting that at least a substantial portion of the techs who were weren't really good techs, either -- working on the old-fashioned assumption that a job is a calling.

herb the verb's picture
Submitted by herb the verb on

When I say people worked from bubble to bubble, I meant on the lowest rungs, not the most skilled. The bubble-trickle-down if you prefer.

Submitted by ohio on

But jumping to jobs that are sustainable (I don't mean in the "green" industry because most of that is greenwashing), pay good wages, offer good benefits (or enough wages to pay for good benefits), and so on. I'm not talking about people who jump because they want to to try something else, but people who have to jump because their jobs have gone away or can't sustain them and anyone else they have to support.

A comparison of job changes with wages/salaries, geographic info, and age would be nifty, and I would bet (when I gamble, I say so, unlike most money managers) that the data would show a decline in key economic factors for us regular folk at every job change correlated to age and job classification.

Without the data, I can only go by the snatches I've read and heard. I mean, real wages have dropped while cost have risen for us regular folks. So I'd suggest that while a slice of the poulation gets full advantage of the great bubbling, most of us don't. And those on the bottom, regardless of their skill-level, may have a great roller coaster ride of boom and bust, see a lot more of the (and deeper) busts. Not only do they make less money, they have less access to credit in the form of those lovely little plastic cards of which I have a wallet full.

Do Americans use credit to augemtn these lost wages--basically, to support the McMansions and buy flatscreens and Wii consoles? Sure. Do they use credit cards or HELOCs to buy food and pay their mortgages? I'd love to see the numbers on this, but I bet the percentage is a lot higher than I think. I agree with some of the data and analysis I've seen---the only way to survive the present (and position yourself to take advantage of the next bubble) is to mortgage the future and this is a very economically dangerous state of affairs.

(I have a whole thing about changing the way those of us in the U.S. live, fitting along the lines of the change of our diets as above, but I will refrain for now. These kinds of changes are the very things We the People can do to bring our financial wolves and our elected officials to heel---refusing to buy for the sake of buying, refusing to invest for the sake of investing, refusing to eat for the sake of eating. But it isn't enough just to say, "no," to everything; you have to have something to say yes to and that's the more challenging part. Plus, there's a massive class difference in all of this that trips me up and I'm having a hard time dealing with it.)

The anticipated green bubble could have great results, but if we again bankrupt regular folks searching to generate wealth to pay their bills, send their kids to college, save for retirement, pay medical expenses, through risky investment, we have traded one unsustainable system (energy) with another (economic imbalance). Watching hard currency disappear into China could give rise to more trade wars. Hells bells, our catastrophe in Iraq is a trade war marketed as super hero bullshit.

Which leads to my final bit of cynicism---if the wolves are licking their chops over a green bubble, be very wary.

Sorry for the length, herbie. Obviously, this is interesting to me and I should take up lambert's gauntlet to expand. And please don't read my cautions as dire predictions about your industry. I am just hesitant to embrace one thing as the solution for all problems---was it Krugman who cautioned against looking for a Hero?

herb the verb's picture
Submitted by herb the verb on

this topic is post worthy.

When is a boom a bubble? Are they synonyms? Is a bubble a metastisized boom? Is the bubble/bust economy a new phenomenon (as a by-product of short-attention span modernity)?

As for energy, and specifically "green" energy, I'm not protecting my industry when I say that energy, along with (and as you wonderfully put "braided with") agriculture is the single most important crisis facing us today. Global climate change will ruin your whole day, it is an inescapable reality, and we need to invest (rather than infest) every effort we can muster to mitigate the damage already done and the damage to come. Saying something like "green is a bubble" to me shows how head in the sand we are. The question is not "are we going to invest enough" the question is, "if we invest everything we have, will it be enough?". Yes, sharks and blood-suckers (T. *cough* Boone *cough* Pickens *cough*) will flow in the current with their own agenda, when haven't they? We can't let them or the existence of them, prevent us from acting.

But all that aside, the only hard currency being made right now is in the energy sector, and effort follows "incentive"; in this instance to (mostly) good effect.

Submitted by ohio on

Heh.

Invest not infest. That is it right there.

I don't think the bubble thing is at all a new phenomenon---1892 saw a massive, tragic bust from speculation in just about everything you could think of (real estate was a biggie) resulting in what some historians say was the worst depression in our history, with unemployment at about 30% (no hard numbers because they didn't track them). Another financial disaster was repeated in around 1906-1907 and another around 1914-1916, later eased through war spending in 1917 and a drop in labor because we sent so many men to die in horrible ways in the trenches of WW I.

Flipside, the migrating unemployed did find work in public/private infrastructure projects like building railroads (the ultimate public/private enterprise ever) and in agriculture as they followed the harvest south to north. Railroad owners were shipping raw materials east and finished good west, and putting up nominal attempts to stop immigrant labor riding the rails (and getting killed in the process) while benefitting from the sale of that labor for very little money.

So one has to wonder if the exploitation of the poor after these collapses is kinda the point---or maybe for the Rockefellers and JP Morgans of the world, it's a fringe benefit. Labor is the one area it's hard to grind down once laborers organize themselves. You can't lower costs and pick up dividends and bonuses if the people who work for you won't give up what they've fought for.

More to the point: who benefits from the latest bust? Who benefits from these bailouts (this is a very loaded term since lots of industries, including, say, Hollywood, have been getting government money for decades)? Shorter ohio: Who wins? And who loses?

A whole nother post, eh? If you hear a soft popping sound from the Pacific Northwest, that will be my head exploding.

amberglow's picture
Submitted by amberglow on

--has Obama ever spoken directly of caring about things like food stamps or public services being helped or shored up, or giving state and local governments direct money for govt-run programs?

that's how both Obama and Jarrett operated in Chicago--public money to private companies-- and what they wholeheartedly endorse now too -- for everything.

Grim proving ground for Obama's housing policy

...Grove Parc has become a symbol for some in Chicago of the broader failures of giving public subsidies to private companies to build and manage affordable housing - an approach strongly backed by Obama as the best replacement for public housing.

As a state senator, the presumptive Democratic presidential nominee coauthored an Illinois law creating a new pool of tax credits for developers. As a US senator, he pressed for increased federal subsidies. And as a presidential candidate, he has campaigned on a promise to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year.
...
Grove Parc and several other prominent failures were developed and managed by Obama's close friends and political supporters. Those people profited from the subsidies even as many of Obama's constituents suffered. Tenants lost their homes; surrounding neighborhoods were blighted.
...
Obama's campaign, in a written response to Globe questions, affirmed the candidate's support of public-private partnerships as an alternative to public housing, saying that Obama has "consistently fought to make livable, affordable housing in mixed-income neighborhoods available to all."
...
Valerie Jarrett, a senior adviser to Obama's presidential campaign and a member of his finance committee. Jarrett is the chief executive of Habitat Co., which managed Grove Parc Plaza from 2001 until this winter and co-managed an even larger subsidized complex in Chicago that was seized by the federal government in 2006, after city inspectors found widespread problems. ...

She did, however, defend Obama's position that public-private partnerships are superior to public housing.

"Government is just not as good at owning and managing as the private sector because the incentives are not there," said Jarrett, whose company manages more than 23,000 apartments. "I would argue that someone living in a poor neighborhood that isn't 100 percent public housing is by definition better off." ...

Many cities, including Boston, mostly used that money to rehabilitate their projects, maintaining public control.
Chicago chose a more dramatic approach. Under Mayor Richard M. Daley, who was elected in 1989, the city launched a massive plan to let private companies tear down the projects and build mixed-income communities on the same land.

The city also hired private companies to manage the remaining public housing. And it subsidized private companies to create and manage new affordable housing, some of which was used to accommodate tenants displaced from public housing.

Chicago's plans drew critics from the start. They asked why the government should pay developers to perform a basic public service - one successfully performed by governments in other cities. ...

amberglow's picture
Submitted by amberglow on

also from there--

"... "That's an example of a smart policy," the paper quoted Obama as saying. "The developers were thinking in market terms and operating under the rules of the marketplace; but at the same time, we had government supporting and subsidizing those efforts." ..."

and this: "... "I will restore the federal government's commitment to low-income housing," Obama wrote last September in a letter to the Granite State Organizing Project, an umbrella group for several dozen New Hampshire religious, community, and political organizations. He added, "Our nation's low-income families are facing an affordable housing crisis, and it is our responsibility to ensure this crisis does not get worse by ineffective replacement of existing public-housing units."
..."

he means private companies using public funds but doesn't say so outright to those groups--and note the "ineffective" part. It's saying govt is ineffective.

one more section --

"... Even as Lawndale Restoration and Rezmar's buildings were foreclosed upon, and Grove Parc and other subsidized developments fell deeper into disrepair, Obama has remained a steadfast supporter of subsidizing private development.

And although he has distanced himself from Rezko, Obama has remained close to others in the development community. Jarrett participates in the campaign's senior staff meetings. And Obama chose another close friend, Martin Nesbitt, as his campaign treasurer. Nesbitt is chairman of the Chicago Housing Authority, one of the key overseers of the shift toward private management and development.

"Throughout his career in public service, Barack Obama has advocated for the development of mixed-income housing and public-private partnerships to create affordable housing as an alternative to publicly subsidized, concentrated, low-income housing," the Obama campaign said in a statement provided to the Globe. ..."

Submitted by lambert on

IIRC, Blair was big on public-private partnerships. It's all about the fees, baby!

So this is another litmus test, watching for public-private partnerships.

amberglow's picture
Submitted by amberglow on

plus, his money is ALL from the private sector--and many of the industries either have already been fed our money (hedge funds, wall st, etc), and/or have a history of supporting his rise and getting public money in IL for ages, and in Congress too.

don't ever forget he voted for the Cheney Energy Bill too --

The Best Energy Bill Corporations Could Buy: Summary of Industry Giveaways in the 2005 Energy Bill

Submitted by hipparchia on

damn straight! a most excellent post. thank you for writing it.

obama has frequently harped on how we were all so much skinnier back in the 80s than we are today, but fails to note that the mid-80s [reagan the magnificent was president!] were when high-fructose corn syrup began replacing sugar in our diets. correlation is not causation, i realize that, but converting all the cokes to fuel to run cars wouldn't be a bad idea.

and wasn't that also the time when corporations started making us work longer hours, for less money, and with fewer benefits and less vacation? so, not enough money to buy healthy food and not enough time for ourselves for exercise and other healthful pursuits. but obama is on the people have to take more responsibility for their health bandwagon. gah.

all along, i've heard about obama's intellectual capacity, his caring about real people, and his willingness to listen to those whose ideas are different from his. in reality, i haven't seen much evidence of any of these. and i have been looking.

some other food for thought...

approximately 60% of our corn production goes to feeding livestock -- the pigs and chickens and cows [and farmed fish] that we eat. i forget what % of soybeans goes to the same purpose, but it's non-negligible, iirc.

if we go back to sustainable agriculture, corn production will drop to about 1/3, maybe 1/4, of present levels, and soybeans will drop to about 1/2, maybe 1/3, of present levels, although we could expand this somewhat by increasing the number of acres farmed.

i'm not as conversant with requirements for growing the other crops that we farm massively, and depend on massively [oats, rice, wheat, etc], but they all use petro-inputs too.

i'd like to see us return to sustainable [or near-sustainable] farming, but it's definitely another shock-doctrine opportunity. cuba has done it, but only because they were forced to, and absent some truly intelligent policy-making in the near future, i don't see us doing this until forced to.

crunching some numbers from the cia world factbook for cuba and the u.s. --

- cuba has ~370 people per square kilometer of arable land; we have ~180 people/sq km arable land

- cuba has ~1600 people/sq km permanent cropland; we have ~16,000 people/sq km permanent cropland.

some of things we'll have to do include eating a lot less meat [we'll have to eat the corn ourselves, instead of feeding it to cows], and we're paying farmers to set aside some of their land for conservation purposes right now, but we'll probably have to put all that land back into production.

also, people aren't going to want to give up eating meat or drinking milk, nor are they going to want to pay the unsubsidized prices for either of these. i expect to see a lot of ag policy wonks embracing the idea of opening up more federal land to cattle grazing [among other measures].unfortunately, the fact that obama is more willing to listen to the likes of larry summers than to keynesians doesn't bode well for the likelihood of his listening to the likes of the sierra club [grassfed buffalo is quite tasty, actually].

pie's picture
Submitted by pie on

the teevee ads (At least two that I've seen) softening the negatives of high fructose corn syrup that have been shown recently?!

Grrrrrrrrrrrrrr.

Submitted by hipparchia on

gave away the tv about 10 years ago. but i do know that i prefer coke with sugar to coke with corn syrup.

of course, big sugar has a whole 'nother set of horrendous problems.
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sigh...

zuzu's picture
Submitted by zuzu on

partly responsible for the explosion in our healthcare costs because they're contributing to type 2 diabetes, stroke and heart disease, obesity, all the things that are driving our huge explosion in healthcare costs.

Actually, what's driving our huge explosion in healthcare costs are the insurance companies. Yet Obama's healthcare plans and healthcare people all seem to want to keep those insurance companies in the loop.

Much easier to just make individuals' health a moral issue than face the structural problems of agriculture and the food and beverage lobby and the health-insurance industry. After all, Obama's thin, so he must be healthy, and therefore moral, right?