On Blaming Black Leadership

This fine piece in In These Times  reminds us how instrumental Federal policies on homeownership and road construction were in killing Detroit, and gives the lie to those who want to blame the city’s bankruptcy on corrupt leadership-specifically, corrupt Black leadership.

Certainly there were, and are, Black leaders whose personal weaknesses interfere with the progress of the entities they seek to lead; but the pattern of blaming Black leaders comes from the same bag of racist tricks as the suggestion that the President isn’t really an American because he has black skin.

Detroit is not struggling because its leaders, or its people, are Black.  Its troubles lie at the door of white legislators who made abandoning cities a winning proposition for white families, and white regulators who contributed to the same flight, and white car company executives who decided they owed nothing back to the city of their birth.

To claim otherwise is simply to blame the victim.



What Detroit means

The first thing I thought about Detroit is that the state’s appointment of a receiver demonstrated the Republican governor’s profound indifference to the democratic process of a Democratic city, not to mention a white governor’s profound indifference to a black city.   This may be true, but it’s also true that Detroit’s finances are such a catastrophe that, like New York in the 1970s, it seems to need an outsider to get its house in order. It helps that the trustee is African-American, though not very much: even temporary government without the consent of the governed should cause us alarm.

The second thing I thought about Detroit is that selling off the collection of the Detroit Institute of Art, which the trustee estimates would be sufficient to retire all of the city’s debt, is the best of a number of bad options. Museums nationwide are hyperventilating at the prospect, but they also think it’s sensible to keep on hand huge numbers of items that no one ever sees.  I don’t quarrel with the need to have a deep collection for research purposes, but I also don’t see why it’s considered bad form verging on unethical to sell the parts of the collection you’re not using in public to sustain the parts of the collection you ARE using in public, and at the same time not coincidentally making the sold pieces available to the public, albeit in a different location.

If there had been a Great Fire of Detroit, and the whole city destroyed, no one would argue that recreating the city’s art collection should take priority over food and shelter for the city’s people.  The years of financial mismanagement have incinerated Detroit just as surely as a physical fire; why shouldn’t we pay more attention to basic needs than to cultural institutions?

And isn’t the whole function of assets to provide financial security when income doesn’t suffice? Again, I wonder about the racial composition of those who champion the inviolability of the collection as against the racial composition of those who think it might be necessary to dispose of it. The state’s Attorney General has opined that the city may not sell them because they’re held in trust for the citizens.  But “The United States shall guarantee to every State in this Union a Republican Form of Government,” and I don’t notice anyone’s raising a ruckus about the loss of that part of our patrimony.

The third thing I thought about Detroit is that the bondholders’ interests are being given absolute priority over the interests of current and former employees, whose pensions are at stake. This is the case in Illinois as well, where at least some portion of the pension “crisis” could be solved by refinancing the debt and stretching out repayment but where that solution is not even considered because the bondholders don’t like it. I understand the value of the municipal bond market to cities’ ability to expand infrastructure but municipal bond investors are investors and should be prepared to accept some pain when they toss their dollars into what’s obviously a money pit.

And the fourth thing I thought about Detroit is that it’s Americans’ closest analogue to what’s casually referred to as “the European debt crisis,”  throughout which salvaging the Euro has meant satisfying bondholders at the expense of people who’d like to work or collect their pensions.   Very few commentators seem aware that the real crisis is one of self-government (or its destruction), or that the Germans have managed to do through economics what they couldn’t do through war, that is, run Europe.  When externally-imposed austerity hit Greece, all I could remember was the bumper sticker from the era of the junta: “Greece: Democracy born 508 BC, died 1967 AD.”  Or, this time around, “reborn 1974, killed again 2011 or -12 A.D.”  As the saying goes, same s**t, different day.

Back to Detroit: if I were trustee, I’d sell off DIA’s assets in a heartbeat and use the proceeds to protect employee pensions. If there was anything left for the bondholders, fine; if not, too bad: it’s the pensioners who paid their share and are entitled to what they were promised. Even after years of trashing public employee unions (brought to you by the Heritage Foundation and other fronts for wealthy people who don’t like to pay taxes or see working people make reasonable money), there must be some court somewhere willing to recognize that the obligation of contracts shall not be impaired.

Of course, I would never be chosen trustee, but that’s not the point. The point is, my solution is what would happen if Detroit were still governed by its people. Detroit: Democracy died 2013 A.D.

Bandit cable

Thre cable TV service run by crimunals in Rio´s favelas was much cheaper than its legal successors.

Last month the Rio police, supported by marines in armoured cars and a cloud of TV cameras, stormed the Rocinha favela, unopposed by the drug traffickers. Behind the media theatre, the policy of reoccupation seems to be working. Police stations are followed by social services. Tourists and banks are venturing in. Shopkeepers don´t have to pay protection any more. The favela dwellers are delighted to be freed from the rule of mobsters, right?

Up to a point, Lord Copper. They now have to pay for their electricity instead of stealing it from the street lighting cables. Tough. They also - and here I have much more sympathy - have to pay a lot more for TV. As air reception is very poor on the steep hillsides, TV was supplied over an illegal cable network, the gatonet, controlled of course by the drug gangs. The going rate was 15-30 reais a month for up to 120 channels, including the free-to-air ones that carry telenovelas and football, and hacked paying film channels. I´m quite impressed by the bandits´ technical achievement here.

A gatonet office in Bangu favela

are now being offered the service by legal providers for twice the price: 40 to 80 reais. The minimum wage in Brazil is 543 reais a month, and many favelistas will be living off less. 10% of their income just for TV!

The gatonet was provided by murderous outlaw kleptocrats, but their legal Brazilian counterparts are in this area even worse for the poor. My (non-poor) daughter in Lille pays 30 euros a month (72 reais) for 20-megabit ADSL (the slow offer!), 100 free TV channels and many others at a reasonable a la carte charge, and unlimited phone calls in France.

It´s not I think an accident that there are no low-power repeaters on Rio´s many hills to provide decent air TV reception, or that the municipality has not simply taken over the seizedgatonet and run it as a very profitable public service. There are TV satellites over Brazil, but owned by Globo and Sky (from which we buy a poor-value package). The selection of free-to-air channels is very thin. In Europe the TV satellites are owned by Astra, a Luxembourg corporation independent of the TV networks it carries, including Sky´s encrypted ones and FTA ones from the BBC, ITV, and Germany. There must be a profit opportunity in Rocinha for pirate satellite TV using hacked second-hand Sky receivers.

Brazil has the typical second-world problem of governance. It seems to lack a professional higher civil service; ministers are free to staff their fiefs with party cronies, which helps explain the high level of corruption and the serial scandals in Brasilia. In state capitals, it doesn´t even become a scandal. A technocracy can be a force for competition if it´s given a mandate. The European Commission is unideologically power-hungry, so it´s super-statist in agriculture (inheriting French policy) and strongly pro-competition in electricity and telecoms (inheriting German policy).

Lacking technocrats, it would still be possible for Brazil´s vigorous democracy to provide checks on monopolists. But the Brazilian left is typically soggy on competition. Partly it´s ideology; if you demonise all capitalists, you lose the ability to discriminate between useful and exploitative ones, and this continues when you make your peace with them. Partly it´s the organisational base: for the PT, the unions, representing a labour elite, many working for public and parastatal organisations. Monopolists can offer safe jobs with good wages. (A necessary but not a sufficient condition; see Amazon´s sweatshop warehouses.)

It´s possible for a right-wing party to be pro-competition, if it has a liberal ideology (in the European free-market sense) and a base representing small business, like Thatcher´s Conservatives or the German Free Democrats. If the losing conservative candidate in the last Brazilian general election, Jose Serra, had such a vision, he certainly didn´t articulate it.

Which brings me to the Republicans, another party of businessmen. GOP policies clearly only reflect the interests of big monopolistic corporations, not small ones. On credit card fees, the GOP backs the extortionate fees of the Visa and Mastercard duopoly (>2% per sale against 0.5% in Europe) against the interests of retailers, garage owners and Joe the Plumber. It opposed public works in a recession, a lifeline to small construction companies; and Obama´s moves towards universal health care, an obvious interest of every American employer. How many minutes a week does a Danish employer spend worrying about the health insurance of her employees, and how many staff does she pay to handle it? Zero.

Thomas Frank, in his famous What´s the matter with Kansas?, noted the ¨false consciousness¨ of Republican American workers who vote their cultural biases against their material interests. Does not the same apply to Republican small businessmen?

The Public Be Damned: Using the Amtrak Script to Destroy the Post Office

If the conversation about the end of the U.S. Postal Service sounds familiar, it’s not just because we’ve heard variations of it since 1970, when the old Post Office Department became a separate business.  It’s also because the destruction of mail delivery closely parallels the wrecking of American  passenger rail.  Apparently the Congress has it in for quasi-public institutions with work forces composed disproportionately of African-Americans.

Passenger rail has always been a losing proposition; the money is in freight.  But until the late 20th Century, as the price of using public assets—tracks, switches, signals and the rest—freight railroad companies were required to carry passengers at a loss.  Then somehow this social compact broke down.  Both railroads and their regulators started talking as if railroading were an ordinary commercial enterprise instead of a public utility.  Ordinary for-profits aren’t expected to maintain business lines at a loss.  Indeed, to the extent they do so, they’re considered incompetent.  So the people making money from national railroad facilities were able to persuade Congress that they shouldn’t have to bother maintaining passenger service.  In other words, the railroads figured out how to shift their burden—what had been a simple cost of doing business—to the public.  Voila: Amtrak.

Independent passenger rail was bound to be a financial failure, and it was.  So year after year after year Congress has complained about Amtrak’s losses and tried to reduce them by shrinking the system until by now it’s small enough to drown in the proverbial bathtub.  Little-noticed along the way is the fact that many of the jobs being lost belong to black people.

The Brotherhood of Sleeping Car Porters was the first black-led union recognized by the AFL, and probably the most powerful union dominated by African-Americans in the United States.   Much of the foundation of the black middle class was laid on the decent wages and benefits and pensions fought for and won by that union.  So whatever hurts Amtrak—and these days, pretty much everything does—also hurts the African-American community.

Now connect the dots to the Postal Service.  Mail, like rail, is a public utility.   (If you doubt that, take a look at the Constitution, where the Post Office rates a specific mention.)  A group of companies—the mailing houses and catalog producers—get to use this public utility to make a private profit, and they’re doing very well by that arrangement.

Once again, though, the price they were supposed to be paying for this benefit was to subsidize service to individuals.  So once again, someone re-conceived this public utility as an independent corporation subject only to the iron law of profit and loss.  Now the profitable commercial service can  continue on its merry way while the money-losing public service is forced to resort to the kind of cuts which predict—if they don’t actually cause—an imminent visit to the scrapheap (or bathtub).

And once again, an outsized group of the fired employees are African-Americans, because the Post Office was an equal opportunity employer before the phrase had even been coined.  So right in the middle of the Great Recession another pillar of the black middle class is knocked down.

There is an alternative to the current flood of crocodile tears over the death of written communication.  We could return to the social compact that regarded mail service—and rail service, for that matter—as something to be paid for by the people who benefit from it most.  That doesn’t mean those of us who receive an occasional Saturday letter, or sometimes take the Metroliner—it means the freight shippers.  In the case of the Post Office, at least, the public has been subsidizing them instead of the other way around.  End that particular piece of corporate welfare and see how many post offices can suddenly re-open.

Perhaps it’s only a coincidence that these two agencies, staffed by black workers, have been asked to do the impossible and then punished for failing to manage it.  But coincidences of this kind—which permit imposition of exceptional harm on one group provided the primary purpose of the harm is making money—are precisely what is meant by the term “institutional racism.”

It isn’t too late to remember that rail and mail are public utilities and to govern them accordingly.  Otherwise, we’re just echoing the words of an earlier Gilded Age, spoken by a railway man as he was cancelling a mail train: “The public be damned!”

Dreaming of the State

This past Sunday, I flew home to Los Angeles from Thanksgiving with my relatives in Montreal (actually, it was a bat mitzvah since Canadian Thanksgiving occurred six weeks ago but you get the idea).  The Sunday after Thanksgiving is the busiest flying day of the year, with millions of passengers criss-crossing the country.  And I had to connect through O’Hare, the second busiest airport in the world.  I was dreading the experience, and half-expected to be stranded in Chicago on Sunday night.

And nothing happened.  The flight into Chicago was fine; the flight out of Chicago was fine.

And as far as I can tell, the same thing happened in thousands of flights all over the nation.  Flights were generally on-time arriving and departing, despite rainy and cloudy weather conditions.

Now, I don’t know how this occurred.  Airports run by state and local governments and regulated by the Federal Aviation Administration all coordinated tens of thousands, if not millions of different activities, events, and flights throughout the United States.

But…but…we all know that this just isn’t possible, because the government is invariably inefficient, incompetent, corrupt, slow, bureaucratic, and completely incapable of nimbly managing these millions of transactions and activities, unlike the private sector.  (That’s why it’s so great that the Republicans want to cut the FAA’s budget).  There is simply no way that any of this could have happened.  I really have no idea how I got home from Montreal.

So at this point I’m figuring that I must have dreamed up the whole thing.

“Infrastructure: The Play”

In an earlier post, I noted with approval the comments of Jonathan Chait, Keith Humphreys, and others who have been critical of Drew Westen’s claim that if President Obama had been more forceful in his use of narrative, he could have enacted a much greater proportion of the progressive agenda.  But I went on to note that Westen had made an important point nonetheless. Given the composition of the House and Senate, Mr. Obama may not have been able to achieve substantially better legislative outcomes in the short run, but he could and should have forced Republican obstructionists to pay a much steeper political price.  In this piece, I propose a bit of political theater that I hope the president will consider for that purpose.

Voluntary Taxation?

Taxation is one thing; voluntary contributions are something else. Is this so hard to understand?

Warren Buffett’s recent NY Times op-ed advocating higher taxes on the wealthy (“Stop Coddling the Super-Rich,” Aug. 15) provoked a response that was vacuous even by the Right’s recent standards.  As Jack LeMenanger of Winchester, MA, wrote in his letter to the editor, for example, “If Warren E. Buffett wants to pay more in taxes, no one is stopping him.”  Andrew Roth, VP of Government Affairs for the Club for Growth, agreed: “Nothing is stopping him from sending a larger check to the Internal Revenue Service as if higher tax rates applied to him.”  But unless these authors can point to an example of a successful society that relies on voluntary tax payments, their objection makes no sense.

Continue reading “Voluntary Taxation?”

Sunday pylon blogging

A gallery of designer pylons and a British government pylon competition.

In 2008 I urged the not-yet-elected Obama team to build their promised national electricity grid using decent designs for high-voltage pylons. Low-voltage lines can be buried fairly cheaply, but this solution is prohibitively costly for the high-voltage long-distance grid backbones.

The latest country to have joined this bandwagon of virtue is the UK, which last week announced a competition for new pylon designs. Steven Chu please copy.

What’s going on here? (Photo gallery at the end, below the jump.) Continue reading “Sunday pylon blogging”

Chris Christie: A Moron AND A Hypocrite!

The New York Times reports this morning:

The Christie administration, lenders and a new developer have reached a deal to revive the vast Xanadu entertainment and retail complex, which sits forlorn and unfinished along a stretch of New Jersey highway after having burned through two owners and $1.9 billion, people involved in the negotiations said Thursday.

 The plan: make it even bigger, give it a new name and slap a new skin on the much reviled exterior walls of the 2.4-million-square-foot complex.

The new developer, the Triple Five group, will invest more than $1 billion in the seven-year-old project. And Gov. Chris Christie has agreed to provide low-interest financing and to forgo most sales tax revenue for a period of time…

Hmmm…Chris Christie.  Where have I heard that name?  Oh yes, the guy who is supposedly the fiscally conservative Republican governor of New Jersey, the one who rejected billions of dollars in federal and external money for high-speed rail a few months ago:

If the tunnel—called the “Access to the Region’s Core,” or ARC project—doesn’t get built, New Jersey is almost certain to lose the federal money that had been committed to the project. The state will also have to pay back around $300 million that’s already been spent. Meanwhile, commuters and Amtrak riders will continue to suffer through long delays every morning as trains wait for their turn to pass through a century-old train tunnel under the Hudson. Property values near commuter rail won’t increase, as they did after the first commuter connection to midtown Manhattan opened in 1996. The people who were working on the project will, of course, lose their jobs. And the strain on the existing tunnel will continue to increase, until New Jersey is eventually forced to build a new tunnel, with or without the federal money and super-low interest rates that make the ARC project so attractive today.

You see?  If it’s a public good, then according to Christie it’s not “financially viable.”  But if it’s a particular boondoggle, then of course you can spend New Jersey taxpayer money to subsidize it.  That’s not just hypocritical: it’s economically insane.  It has the government picking winners and losers, while failing to provide the infrastructure to help the private sector generally.

You’d almost think that these guys don’t care about anything as long as they can oppose the President.

What Happened to Transit in the Stimulus?

Smart Growth America’s state policy director offers an explanation.

RBC is pleased to welcome Will Schroeer, state policy director of Smart Growth America, for some thoughts on the death of transit in the stimulus:

Along with many, I’ve been deeply disappointed in how the transportation portion of the stimulus changed from what came out of Oberstar’s House T&I into what came out of Obey’s House Approps last week, apparently with the blessing of the (then-) incoming Administration. The differences, and in particular the fact that transit got substantially cut, but roads did not, has been well-covered elsewhere. There are two stories out about why. Oberstar is on record as saying it was to make room for tax cuts. The other story is that Obama’s economics team looked at the data, and concluded that road spending provides a faster stimulus than does transit spending, and so cut the transit. (Note that the two stories aren’t mutually exclusive.)

Two aspects of this story stand out:

First, what data would one look at to make such a judgment? One place is US DOT, which tracks how long it takes federal money to be spent. In fact, road money moves out of FHWA faster than transit money moves out of FTA. But there’s no physical reason why that is so; it’s a purely political outcome of the last eight years, during which Bush sought to speed for road projects, and slow transit. I don’t know that those are the data the Obama crew are looking at, but there is a very clear concern in a number of programs about the ability of federal programs to move stimulus money, let alone states to actually spend it. Wouldn’t it be a shame if Bush-era disinterest in transit ends up knee-capping transit at the start of the Obama era?

Second, transit can often act as a faster stimulus than roads. Transit ridership around the country has continued to rise despite moderating gas prices, yet transit agencies from coast to coast are announcing doomsday budgets of service cuts and fare hikes. The most shovel-ready project in the country is simply stopping those cuts and hikes. The buses are on the street, the people trained. You don’t need to buy any right of way or gravel; all money goes straight to wages for transit workers, and/or the pocketbooks of commuters. It saves people (riders) money immediately, multiplying the effect in a way that construction will not do soon (if ever, but that’s a longer argument). In doing so, it helps workers in many industries, not just construction and engineering. Finally, it’s stupid to build transit lines (there’s still some money for new transit in the Obey bill) at the same time you are driving riders away by gutting their service & raising their fares.

So it’s especially troubling that while House Approps reduced most of the transit numbers from Oberstar’s proposal, it eliminated transit operating assistance altogether.