Category: Economics

Bernie’s petition

At a time of massive wealth inequality, when 99% of all new income generated in this country goes to the top 1%, and when over half of the American people have less than $10,000 in savings, the last thing we should do is cut Social Security.

When the average Social Security benefit is $1,328 a month, and more than one-third of our senior citizens rely on Social Security for virtually all of their income, our job is to expand benefits, not cut them.

Despite what some of my Republican colleagues have said, Social Security is not going broke. It has a $2.8 trillion surplus and can pay every benefit owed to every eligible American for the next 18 years.

The best way to make Social Security solvent for the next 50 years is to scrap the cap on taxable earnings. Join me and my friends at Social Security Works in calling on Congress to scrap the cap and expand, not cut Social Security!

Today, a Wall Street CEO who makes $18 million a year pays the same into Social Security as someone earning $118,500. That’s absurd. If we simply applied the payroll tax on income above $250,000, not only could we extend Social Security’s solvency until 2065, we could also increase benefits to meet the elderly’s higher living expenses.

Despite the logic behind that, some Republicans want to raise the Social Security retirement age to 69 and reduce benefits. I wonder what world these people are living in. To take benefits away from seniors now is simply a continuation of the war being waged by the Republican Party against the elderly, against the children, against the sick and against the poor, in order to benefit millionaires and billionaires…

Stand with me today and call on Congress to scrap the cap and use the increased revenues to expand, not cut Social Security. If we stand together and fight back, we can win this battle.

Sincerely,

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U.S. Senator Bernie Sanders

Click on the link in the post. Join the fight.

Asia’s Multilateralism


That’s Bob Shiller’s book on Irrational Exuberance on the shelf

The International Monetary Fund and the World Bank are poised to hold their annual meetings, but the big news in global economic governance will not be made in Washington DC in the coming days. Indeed, that news was made last month, when the United Kingdom, Germany, France, and Italy joined more than 30 other countries as founding members of the Asian Infrastructure Investment Bank (AIIB). The $50 billion AIIB, launched by China, will help meet Asia’s enormous infrastructure needs, which are well beyond the capacity of today’s institutional arrangements to finance.

One would have thought that the AIIB’s launch, and the decision of so many governments to support it, would be a cause for universal celebration. And for the IMF, the World Bank, and many others, it was. But, puzzlingly, wealthy European countries’ decision to join provoked the ire of American officials. Indeed, one unnamed American source accused the UK of “constant accommodation” of China. Covertly, the United States put pressure on countries around the world to stay away.

In fact, America’s opposition to the AIIB is inconsistent with its stated economic priorities in Asia. Sadly, it seems to be another case of America’s insecurity about its global influence trumping its idealistic rhetoric – this time possibly undermining an important opportunity to strengthen Asia’s developing economies.

China itself is a testament to the extent to which infrastructure investment can contribute to development. Last month, I visited formerly remote areas of the country that are now prosperous as a result of the connectivity – and thus the freer flow of people, goods, and ideas – that such investments have delivered.

The AIIB would bring similar benefits to other parts of Asia, which deepens the irony of US opposition. President Barack Obama’s administration is championing the virtues of trade; but, in developing countries, lack of infrastructure is a far more serious barrier to trade than tariffs.

A generally wholistic understanding of the workings of the global economy is just one of the reasons Joe Stiglitz was honored with the Nobel Prize in economics. It ain’t a bad start.

RTFA and understand why modern economists think our government’s hypocrisy ain’t new – just backwards for a couple new reasons.

Republican supply-side economics bring doom and gloom to Kansas

Every year, right after the April 15 tax deadline, the U.S. Census releases its data on the prior year’s state tax collections. It is a fascinating document, filled with great data points for tax and policy wonks. It reveals a good deal about the state of local economies, economic trends and results of specific policies. In broad terms, the financial fortunes of the states are improving.

State government tax revenue increased 2.2 percent…according to the U.S. Census Bureau’s 2014 Annual Survey of State Government Tax Collections.

General sales and gross receipts taxes drove most of the revenue growth…

Let’s focus on Kansas, because of all the states its tax data reflects conscious policy choices as opposed to larger economic forces, such as falling oil prices.

Under the leadership of Republican Governor Sam Brownback, the state radically cut income taxes on corporations and individuals. Going on the assumption that this would generate a burst of economic growth and higher tax revenue, no alternative sources of revenue were put into place. Similarly, the state failed to lower spending.

Alas, reality trumps theory. As we have seen almost every time this thesis has been put into practice, it fails. The tax cuts don’t magically kick the economy into higher gear and the government ends up short of money…

Continue reading

Germany says “We don’t need no stinking Fossil Fuel!”

Sitting in a control center that helps ensure uninterrupted power for 82 million Germans, Gunter Scheibner is proving that renewable energy from the sun and wind can be just as reliable as fossil fuels.

Scheibner, in charge of keeping flows stable over 6,200 miles (9,976 kilometers) of transmission lines in eastern Germany, must keep power from solar and wind in harmony whether it’s sunny or overcast, windy or still. In doing so, he’s overcoming the great challenge for renewable energy: how to keep supplies steady when the weather doesn’t cooperate.

The system Scheibner manages has been so successful that Germany experiences just 15 minutes a year of outages, compared with 68 minutes in France and more than four hours in Poland. The model in Germany, the biggest economy in the world to rely so heavily on renewables, is being copied from California to China as wind and solar displace traditional fuels such as nuclear and coal…

Back in the GOUSA…The Edison Electric Institute, an industry group based in Washington, and incumbent producers claim that variable flows from renewables will destabilize the power grid.

Germany’s decade-long 120 billion-euro ($127.1 billion) investment binge to shift toward low-polluting energy forms is proving critics wrong. The country has raised its share of renewable power for electricity to about 28 percent, more than any source including lignite. In Scheibner’s region, it’s more than 40 percent…

Researchers studying the grid say that a much higher concentration of renewables — 50 percent or more — is possible. That will come at a cost. Germany needs to invest 6.1 billion euros a year in its grid by the end of this decade to cope with additional wind and solar farms, the German Institute for Economic Research in Berlin estimated.

“There’s a myth among opponents of renewable energy that you need 100 percent backup spinning all the time, and it’s utter nonsense,” said Michael Liebreich, founder of Bloomberg New Energy Finance. “Any grid needs flexibility. You can have a nuclear plant shut down by jellyfish or a coal plant closed because of a freeze and you can’t shovel in supplies fast enough.”

I hope you don’t mind me skipping the coal-centric whining in the middle. Watch the latest commercials from the Koch Brothers if you think you’re missing anything. They’re the core of patriotism and apple pie – so they say.

Reliable estimates on the cost of a more flexible grid are hard to come by. The U.S. grid could absorb as much as 80 percent of its supplies from renewables by 2050 while keeping investment in transmission within the historical range of $2 billion to $9 billion a year, a 2012 study led by the National Renewable Energy Laboratory showed.

In the U.K., the Imperial College Centre for Energy Policy & Technology suggested in 2006 that consumer power prices would rise 1 percent to fund the costs of adapting grids to intermittent power flows.

We face the same fight here in New Mexico as Arizona citizens. Power companies want folks installing solar panels on their homes to subsidize the cost of maintaining decrepit transmission systems. Meanwhile, our PNM plans on exporting their own solar-generated power over new transmission lines sited to deliver more electricity to California.

The Koch Brothers and our public utilities together generate enough bullshit to fertilize crops for half the world.

Uncle Sugar’s try to stop China-sponsored AIIB was a fiasco and a failure


Click to enlarge — No one from the GOUSA in this photo

The Obama administration’s vain attempt to prevent allies from joining China’s Asian Infrastructure Investment Bank is feeding a growing perception that U.S. influence in Asia is declining and America is losing its 70-year grip on global economic institutions…

The administration’s campaign against China’s new investment bank stands in contrast to its push for greater regional leadership to battle Islamic extremists, remedy climate change and address other global issues. And while administration officials argue that domestic economic realities limit America’s ability to police the world, they’re trying to resist the reality of China’s growing economic clout, said a U.S. official who requested anonymity to speak frankly.

The U.S. “knows only too well that China is rising and that it wants to reshape the global order, and it is trying to prevent this from happening.” said Tom Miller, senior Asia analyst at Gavekal Dragonomics…

That’s leaving the U.S. increasingly isolated.

Although the administration has refused to join the $100 billion AIIB and urged others to follow suit, allies such as Australia, the U.K., South Korea, Germany and France are among the more than 40 countries that have joined the new bank, which will fund infrastructure in Asia and be fully established by year’s end…

The most damaging part of this at the moment is the reaction of the allies; it’s a real snubbing,” said Mathew Burrows, a former U.S. intelligence analyst who’s now director of the Strategic Foresight Initiative at the Atlantic Council, a Washington policy group. “I think we fumbled badly, but I’m not convinced that there was any way to get the Chinese to back down on this institution.”

RTFA for lots more fact and forecasting – though it tag ends with shortsighted foolishness from a White House flunky.

The body of the article takes you all the way back to the end of World war 2 and US assumption of the mantle of Imperial Superpower. For all the factors involved in the end of the Cold War – our military-industrial complex presumed nothing else in the world was changing. And that was a critical financial mistake. For the fact remains that bodies like the IMF so long dominated by American political capital can’t even get minimal reforms past Congressional reactionaries – with or without Obama’s leadership. And probably would have been too late, anyway.

The rest of the world has already noted the change even if our tame media won’t say so without permission.

Has motorization in the US peaked?

The answer to the question posed in the headline is “yes,” US motorization has indeed peaked. And so has the percentage of US economic productivity that ends up in our gas tanks. So we have that going for us.

Those who long for the days of bell bottoms, massive Afros and dominance of the Philadelphia Flyers may think of the mid-’70s as a good time, but when it came to how much of our dollars were being spent on gas, times were tough. According to the most recent version of a report from the University of Michigan Transportation Research Institute (UMTRI), the distance driven per dollar of gross domestic product (GDP) peaked in 1977 and has dropped 22 percent since then. Fuel use per GDP dollar hit its high in 1972…and has plunged 46 percent since then.

Keep in mind that the average fuel economy for new light-duty vehicles has doubled to from the early 1970s to its current rate of about 25 miles per gallon, according to the Environmental Protection Agency. Still, consistent with a previous version of the UMTRI reports, which said driving mileage per person maxed out around 2004, we are indeed driving less, thanks to factors such as electronic commerce and more data services.

Takes a while for good news to get around. I recall discussions like this in the 1960’s and folks said it would never come to pass. But, for all the reasons listed – and more – folks are driving less, diminishing importance of automobiles.

New Mexico’s declining middle class


Click to access interactive/larger map

Stateline, a project of the Pew Charitable Trusts, put together a neat (albeit sobering) infographic this week analyzing how much the middle class is shrinking in each state.

The news isn’t good for anyone, as all 50 states saw a drop in middle class households since the turn of the millennium. But it’s especially bad for the Land of Enchantment.

New Mexico’s middle class saw a drop of nearly 5 percent between 2000 and 2013, or more specifically from 48 percent to 43.2 percent of the state’s households.

That’s comparable to states like Nevada, Georgia, North Carolina, North Dakota and Ohio. Only Wisconsin, according to the chart, had a higher middle class drop during the same time period, totaling 6 percent…

Each of New Mexico’s neighboring states’ share of middle class sit between 45 percent and 52 percent of all households—which are all higher that New Mexico.

Each of our peers at the bottom – like New Mexico – has a Republican governor.

France uses new law allowing it to ban half the cars in Paris

Paris smog
Click to enlarge

Tomorrow will be an odd day in Paris. The government has triggered a pollution control law which allows it to ban half the private cars in the greater Paris area.

Cars with registrations ending in odd numbers will be allowed to drive today. If the air pollution alert continues, it will be the turn of the even-numbered cars on Tuesday.

Over 1,000 police officers will be mobilised to hand €22 on-the-spot fines to offenders. The law, first triggered last year, allows the government to limit traffic if micro-particles in the atmosphere rise above 50 microgrammes a cubic metre.

The use of the law has provoked a spat in recent days between two of France’s best-known female Socialist politicians.

The mayor of Paris, Anne Hidalgo, asked for the restrictions to be imposed last Friday. The environment ministers, Ségolène Royal, complained that a ban on even-numbered cars without advance warning would be a “punitive” attack on suburban commuters.

The two women have a long-standing quarrel, believed to be private in origin. President François Hollande intervened. He ruled in favour of Ms Hidalgo and against his former romantic partner, Ms Royal.

You won’t see much about this in the mainstream media in the US, of course. In the eyes of the American Establishment the only only air pollution in the world that’s dangerous is in Beijing.

In truth, there are long-standing reasons for much of the air pollution in the world – including geography and topography. Which everyone living in Albuquerque or Denver well knows. Correcting the political economy at the root of most air pollution takes time measured in decades, no magic bullets. Beijing’s problem is almost identical to the cause of London’s famous smog – not the fog – and will take longer to clear than current solutions aimed at transport and electric power generation.

Half of Beijing’s smog comes from coal-fired home fires used for heating and cooking. That will take a network of natural gas pipelines to resolve. Right down to the last mile, the last block, house-by-house.

And in related news? In Los Angeles, exposure to both nitrogen dioxide and small particulates has dropped dramatically since the late 1990s.

Children living in five notoriously smoggy parts of greater Los Angeles showed improved lung growth of about 10% between the ages of 11 and 15, compared with children at the same age 20 years ago.

It’s a never-ending fight, folks. Albuquerque’s determination that MTBE added to winter gasoline also increased deadly smog led to the removal of what was a common additive. And more whining.

Overpumping groundwater creating a crisis in California

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A simple instrument with a weight and a pulley confirmed what hydrologist Michelle Sneed had suspected after seeing more and more dirt vanish from the base of her equipment each time she returned to her research site last summer. The tawny San Joaquin Valley earth was sinking a half-inch each month.

The reason was no mystery. “There are wells up and down this road,” Sneed said, nodding toward a two-lane byway that cut across the flat agricultural landscape.

Parts of the San Joaquin Valley are deflating like a tire with a slow leak as growers pull more and more water from the ground. The land subsidence is cracking irrigation canals, buckling roads and permanently depleting storage space in the vast aquifer that underlies California’s heartland.

The overpumping has escalated during the past drought-plagued decade, driving groundwater levels to historic lows in some places. But in a large swath of the valley, growers have been sucking more water from its sands and clays than nature or man puts back for going on a century.

They are eroding their buffer against future droughts and hastening the day, experts warn, when they will be forced to let more than a million acres of cropland turn to dust because they have exhausted their supplies of readily available groundwater…

The Central Valley aquifer extends for about 400 miles under the Sacramento and San Joaquin valleys. The subterranean water, some of which seeped into the ground 10,000 to 20,000 years ago, is California’s biggest reservoir. Yet it has been largely unregulated and unmonitored. Most of the more than 100,000 wells that pierce the valley floor are unmetered and landowners have taken what they wanted.

Scientists estimate that since the first wells were drilled by settlers more than a century ago, pumping has depleted Central Valley groundwater reserves by 125 million acre-feet. That is about 4 1/2 times the capacity of Lake Mead, the biggest surface reservoir in the country. About 20 million acre-feet of that loss occurred in the last decade.

Until last year, California didn’t have a statewide groundwater law, making it an outlier in the West. The legislation, intended to end unsustainable groundwater use, won’t do that any time soon. Agricultural interests opposed the regulations, which call for the creation of local groundwater agencies that have more than two decades to fully comply.

In the meantime, it’s easier for growers to keep pumping than rein in their use. “Telling people they have to stop irrigating is a huge economic thing,” said Charles Burt, chairman of the Irrigation Training and Research Center at Cal Poly San Luis Obispo. “Guys are going to get their guns out…

Read the article for measured, sensible solutions – which, of course, don’t mean a damned thing in American politics. And it will be politics that resolves whatever is implemented in California. Short-term politics, short-term economics, short-term profits – which have always been the bane of Agriculture, whether it’s in the American West growing alfalfa or palm-nuts in Indonesia.

You don’t have to be a cynic to expect that verifiable science means nothing to producers who worry most of all about commodity prices and hedge funds.