Friday, September 3, 2010

Robert Reich today published in the New York Times what I feel is by far the best thing yet penned about our present economic situation.He calls it "How to End the Great Recession," and in it details how far the American worker has fallen from the heady days of the 1950s, '60s, '70s, and '80s.

I am going to quote two of his paragraphs here, the first and fourth in the article.

“This promises to be the worst Labor Day in the memory of most Americans. Organized labor is down to about 7 percent of the private work force. Members of non-organized labor — most of the rest of us — are unemployed, underemployed or underwater. The Labor Department reported on Friday that just 67,000 new private-sector jobs were created in August, while at least 125,000 are needed to keep up with the growth of the potential work force.”

That's the first paragraph. Here's the fourth:

“This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.”

Reich goes on to detail his theory for why all of this has happened. It's a fairly simple explanation, given the complexities of trying to solve the problem, but it is perhaps best explicated in the 9th, 10th, and 11th paragraphs of his piece, as follow:

“Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.

"It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

“The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.”

Reich, of course, also casts blame on the credit and mortgage companies, which enabled middle-class earners (no longer earning enough to live at the level to which they had become accustomed) to take equity out of their homes, or out of thin air, the weight of which non-existent equity eventually toppled AIG, Countrywide, etc., and plunged us into our present doldrums.(As I write this, hurricane Earl lurks somewhere nearby, just offshore of Cape Cod, his intensity somewhat lessened, yet still considerable.)

Reich, quite correctly, correlates our present danger to one that lurked in 1928. Of course, then we understood less, and could do less in advance to stave off the crash. That said, it is my belief that the solutions that will get us out of our present jam will of necessity echo those arrived at by Eleanor and Franklin Roosevelt and their colleagues in the early '30s, whose purposes (several) were to put men and women back to work, to get money moving through the economy again, and to jumpstart the economy by encouraging new industry, public works projects, and a re-distribution of wealth, not in a totalitarian or heavy-handed way, but in a way which (by necessity) put money back in the hands of the consumer, money to be spent, money to be made.

Reich also harks back to the post-WWII-years, in which the G.I. Bill played such a large role in the lives of young Americans returning from war. And he has several interesting proposals.

One is to increase the income tax-rate on the very wealthy, and to eliminate the income tax on the first $20,000.00 earned by any individual.He also proposes that public universities and colleges be free, with those graduating paying 10% of whatever they earn/annum for the first ten years after graduating.

Clearly these ideas need fine-tuning, but they are on the right track. A vast priming of the American labor pump must be had, and soon, if we are to haul ourselves out of this slump, and it's going to require that we revisit the ideas of the 1930s, when Americans pulled together, when the CCC and the WPA (among others) provided jobs and wages for some of those who were out of work, and when it was recognized that good work was a basic need for all.

As Reich writes in the 15th, 16th, and 17th paragraphs of his piece,

“In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

“In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.”

We need similar, in my estimation, and soon. But we also need a change of attitude - how can any of this happen if we are not as a nation willing to accept that motto of the Musketeers: All for one, and one for all.

As I drove home today, back from the harbor where I had reinforced the mooring lines of my small boat, in anticipation of the high winds to come tonight, I was astonished to find a gathering of fifteen or so large trucks, all clearly equipped to work on electrical and phone lines, pulled over on the wide shoulder of a secondary highway. They were a crew, it turned out, of thirty or more men from Michigan, called in by FEMA or MEMA (our emergency agency here in Massachusetts) to help with the possible mayhem resulting from a direct hit by Hurricane Earl (I address him by his full name, as all storms must be accorded respect, lest they strike vindictively).

Of course, these guys are being paid and taken care of, and may have had little choice in coming here, yet I was moved by their presence, in my hometown, and I told them so. We need all the help we can get at the moment, until Hurricane Earl moves off. And then we all will still need all the help we can get. Them and us. They and we.

And I hope I have a chance, soon, to go and help someone in a similar way. Of course, the chances are all around us. We have but to remember that old saw about our neighbor, take it to heart, and the recession will recede, sure enough. I just hope that this is a nation that remembers how to do that. It's been a long time since the period 1932 to1945, a long time since 1932, which I would argue was the last time that we as a nation felt what it was like to pull together, and, gradually, win together.

Friday, December 11, 2009

What I'd like to see is a massive national information project with regard to Afghanistan. That old, complex country is on the fast track to becoming our next Vietnam, and we, as a nation, tend to know almost nothing about the place. Which is folly.

Many things crippled our involvement in Vietnam, but chief among these was our general ignorance of the country and its people. A great example of what we were up against might have been drawn from the French defeat at Dien Bien Phu in 1954.

The French thought that their isolated base could not be defeated because the only way the North Vietnamese could transport food and arms so far from Hanoi was by foot on mountain paths.

However, a soldier wheeling a bicycle over mountain paths can carry three times as much as one without a bike. The French failed to note an increase in the production of bikes, and the shortage of bikes in Hanoi, and so the North Vietnamese evicted the French from Dien Bien Phu. It was, as Bernard Fall put it, "Hell in a Small Place" for the French.

We, in our turn, failed to note this. We also failed to note that Japan had lost in Vietnam before the French. We failed to note that only a minority of the country favored Catholicism when we installed our Catholic puppet Diem. Most telling, however, was that we failed to note that Ho Chi Minh had tried to enlist our help after WWII, and been rebuffed. He was, if nothing else, a real pragmatist, and a Vietnamese patriot with whom we could have worked, had we had the foresight to do so. And then of course we failed to note Tet.

There is now a wealth of good books on the subject. Among the best is Neil Sheehan's A Bright Shining Lie, which enumerates so many of the mistakes we made in our efforts in Vietnam.

My fear is that we, in our national ignorance of Afghanistan, are headed for the same kind of mistake there.

And so what I call for is a national mobilization of understanding. Whatever we do in Afghanistan, let's know the county as well as we can. Let's study it hard, in every classroom, every boardroom, every lunchroom. Let's not send any more of our boys and girls over there without a very sound and deep national understanding of the place and its culture.
I haven't written here for some time. Much has occurred in the interim. Why there is a statement that couldn't possibly be more understated.

For instance, Obama has decided to send 30,000 more troops to Afghanistan. Global warming is, according to the kooks, just an invention of a few bad apple science guys at the University of East Anglia. H1N1 has swept the globe and may again before it vanishes. Martha Coakley has won the Democratic primary for Ted Kennedy's seat in Massachusetts. And we have had another kid.

What has struck me most about the situation I find myself in presently, with two children under three years of age, is that I am often at one playground or another, thrown together with other parents of young children, and we manage, without coaxing or uneasiness, to converse and share our experiences.

This is an odd feeling for me, because as a writer I spend so much of my time alone, isolated from other adults. Yes, I am with my children and family, but often I am not in meaningful conversation with other adults for days at a time. But playgrounds, and having kids, changes all of that. The fears and reserve that I feel in many other situations fall away at the playground.

Oh, look at that guy, I think. He's probably a grouch and a kook. But wait. He's pushing his kid on the swing, and look, his kid seems to like him all right. And kids know what they're doing when it comes to character judgement. So I think I'll say hello. And, by George, a conversation ensues about the efficacy of pychological treatment of war traumatized veterans.

Why doesn't that happen more? What is the problem with adults generally and our society, generally, that we are so shut down to dialogue and shooting the breeze? What are our fears - that others will judge us, or that others don't like us, might resent us, etc.? I am not sure. But I am sure that if we all took our kids over to Afghanistan to meet the Afghani kids on the Afghani playgrounds, there would be no problem figuring out how to converse, and without violence.

Maybe that's a crackpot notion, but I will stand by it. Think of our world from the perspective of our children, what they like, what's good for them, how we would like others to approach them, and the world we would like to build for them, and many of the complications that we adults place on the world fall away. Things get clear. Conversations become easy to have.

So, I say head to the playground immediately and don't leave until it's really time to go.

Thursday, January 22, 2009

[Daniel Robb, Dec.2, 2008] An Open Letter to the Big Three

After listening to the CEOs of the “Big Three” (Ford, Chrysler and GM) testify last month before the Banking, Housing, and Urban Affairs Committee of the U.S. Senate, I was struck by what Jon Tester, D-Montana, said. He said (and I paraphrase) that in his experience (as a farmer in Montana) light trucks get about the same dad-gum mileage as they did thirty years ago. His tone was one of incredulity.

My experience of trucks, as a self-employed carpenter in Massachusetts, has been similar. I typically haul (in my 1994 Toyota Tacoma ½ ton 4x4 pickup) about 300 pounds of tools to jobsites all over the state. Covering these tools is a cap which weighs about 250 pounds. The truck, which has no amenities other than windows, gets about 24 miles per gallon on the highway (in two-wheel drive) if I drive the speed limit.

This vehicle does a satisfactory job for me, except that it gets pretty lousy fuel mileage. Sadly, it gets better mileage that any other small (4 cylinder) 4x4 available to me.

Now, I know a few things: 1. My first car was a 1981 (German) VW Rabbit diesel that got 50 miles to the gallon on the highway; 2. Japanese (Toyota and Isuzu) small diesel pickups were imported to this country in the 1980s – a friend had a great Toyota 4x4 diesel truck then that got 32 mpg; 3. This country figured out during World War II how to build a Liberty Ship per day and how (with the help of our allies) to defeat Germany and Japan.

If in 1981 I could buy a German car that got 50 miles to the gallon, and if in the U.S. today I can buy a German car that gets 50 mpg with low emissions, and if in the U.S. it is possible to buy a Japanese Prius hybrid that gets 55 miles to the gallon in warm weather, why then can’t I buy a decent American-made pickup that will haul my tools across the state and get thirty-five miles to the gallon, or a car that will get 50 mpg? What happened to us?

I have to believe that between the 1. Shallow requirements of U.S. auto-fashion (fashion is a huge part of the auto-industry, in terms of how Americans want to dress themselves, in SUVs, or overlarge pickups, or whatever’s the rage); 2. The encouragements of oil-industry lobbyists; and, 3. Industrial hubris, the Big Three have somehow neglected to make the truck (or car) I want to buy. And that is a problem, because I am the guy they want to sell a truck to – the small potatoes yeoman farmer/builder/citizen.

Four years ago I bought a Toyota (used) because of Toyota’s reputation for reliability and longevity. In 60,000 miles (from 160,000 to 220,000 miles) I have had a thermostat (a thirty dollar part) fail on me. That’s it. Other than typical maintenance (new belts, brake pads, and oil changes), I haven’t had a single repair.

So where’s my incentive to buy an American truck that won’t outperform my Toyota? Should I do it out of patriotism? Perhaps. But I thought we were supposed to award outstanding performance, not mediocre performance, so I’m not sure that would be patriotic, really.

What I’d like the Big Three to do is this: Build me a truck that makes sense. A truck that a barely-making-it-small-family-farmer or carpenter can feel good about. Advertise it truthfully as tough-as-nails, long-lasting, easy-to-fix – a truck that our yeoman farmer forbearers would have driven. And while you’re at it, advertise real simple value as cool, rather than the macho crap you use to sell trucks now. Build my truck with a light turbo-diesel or hybrid drivetrain, 4x4 wheel drive, and let me get thirty-five miles to the gallon on the highway. All I want is an honest to goodness truck. I know that a country that can build a Liberty Ship in a day can get there.

Nothing will help America (or her security) more that to allow guys like me to get out from under the fist of big oil. In fact, I think you can do better than 35 mpg in the truck I want. I think you can get me 40 mpg. But I’d settle for 35. In two years, because my Toyota will have close to 250,000 miles on the clock then, and it might really be time for a new vehicle.
What Conservative Means in America, 2008 (This was penned early in the Autumn of 2008).
As a Democrat, I’d like to (and I am going to) take back some of the definition of conservative that’s been lifted (by light fingers) from me in recent times.
First, consider that the Dems. are absolutely the more Constitutionally conservative party, in terms of their desire to preserve any of our Constitutional rights which you care to name. I may have to admit that the second Amendment has been more fiercely fought for by the Republicans of late; however, it is clear to me that if one of these Bill of Rights is abridged, all are more susceptible, and I am personally a strong supporter of the second Amendment.
It is also clear that the remaining nine of the first ten Amendments have been far more zealously championed by the Democrats of late, particularly in light of the wrongs committed against the fourth and sixth Amendments by the Patriot Act, and by policy set forth by the G.W. Bush administration at Guantanamo Bay, at Abu Gharaib, and in the prosecution of the War In Iraq, in which lawful international treaties have been ignored, the writ of habeas corpus has been cast aside, and the practice of extraordinary rendition has left our standing among our international peers in tatters.
The Dems. are also clearly the more conservative party when it comes to national security, in particular with regard to conserving those natural resources which contribute to our national security. We believe in saving energy, in using our own renewable sources, and in so doing being stronger as a nation, less reliant on foreign oil, and so more secure within our borders. This is a fundamentally conservative policy.
It can also be argued that the Dems. are clearly more behaviorally conservative, in that we have a deep respect for the ways and beliefs of others, and want to live under a government that does not intrude into the living rooms or bedrooms of its citizenry. We believe that a man or woman’s home is his or her castle, looking for precedent in this to the magna carta, and we want to defend that right of the home, secure from the unlawful intrusions of big government.
We also believe in conserving the educational and intellectual resources of our nation, in that we believe it is good conservative policy to educate every American as well as possible, in order that the nation may be as great as possible, because (and precisely because) a highly-educated populace will keep and defend the Constitutional values which make this nation great, and will, individually, need little long-term help from the nation as self-reliant adults. An uneducated populace, on the other hand, is more likely to allow its rights to be abridged, will gradually lose control of its own destiny, and will be more easily manipulated by those who stand to make a profit on its back.
Don’t let the current "conservatives" fool you. What they’d like to do is: spend your money (by giving tax breaks to the very wealthy, but not to you); limit your freedom; limit your educational possibilities; limit your Constitutional rights; expand their own ability to take (by force) the resources of others when that can turn them a profit; and force all Americans to conform to a narrow version of what constitutes a good life.
However, I have hereby rendered the above paragraph moot, because, as I said before, I am taking back the name conservative for use by the Democrats, or by anyone who feels that their particular policy is conservative, in that it conserves something important, and isn’t a spend-thrift when it comes to our rights, our money, our security, or our natural resources.
In this, I would like to encourage us all to cast aside some of the truly tired labels that have been the flails of the past many decades of partisan politics in this nation, and to consider that it’s high time to redefine some of these words, or to cast them out completely. Might it be possible for a conservative to wish not to spend our natural resources profligately, not to threaten our Constitutional rights with flawed legislation borne of fear, not to bankrupt our government with ill-advised war, not to break our military with same, not to divide our country with partisan rhetoric, not to threaten our international standing by practicing torture? Could we, as a nation, decide that we all would like to conserve the nation, our rights, our freedoms, our high standards of education, our morality? Perhaps, deep down, we’re all conservatives.

Wednesday, September 24, 2008

Sloop - what an old boat has to do with economic policy

With regard to the Economy, and its current state:

I recently published a book about the restoration of an old sailboat built by the Herreshoff Manufacturing Company in Bristol, Rhode Island, in 1938. (The book (Sloop) was brought out in June, 2008 by Simon and Schuster).

I bring this up because one of the policies, written in stone, that John B. Herreshoff and his brother Nat (Nathanael G.) Herreshoff followed as businessmen was: Never buy anything that couldn't be purchased with cash on hand. They didn't extend themselves to creditors, ever, and so their company lasted and flourished as long as they did, and longer.

They contracted with millionaires like J.P. Morgan, and with the U.S. Navy, and with normal people too, and they didn't ever go out on a limb. They played hardball in the major leagues, as it were, and they always played within themselves, understood their limits, and insisted on fiscal discipline. And they are in the Hall of Fame, when it comes to building boats.

This sort of reasoned behavior was common practice at one time - never to over-extend oneself. Perhaps it was common practice because those who practiced it had not yet forgotten the actual feeling (first had when they were children) of being too far out on a literal tree limb. It is a bad feeling, when one climbs a tree with too much enthusiasm, and finds oneself swaying on a too-thin limb. A feeling one hopes is not punctuated by a crack! and a thump!

I make light, yet I knew a man who grew up in a rural community in Scotland, and fell out of a tree as a boy. He broke his arm badly, a compound fracture, and because his family lived so far from medical facilities, he lost the arm. It had to be amputated. This was very sad for him, yet he grew up to be a great strong man, with a wonderful family, a professor of geology. It turned out that he missed his arm, but that he forged on.

In these shaky economic times, I wonder why it is that the Fed. (and Mr. Bush, and Mr. Paulson, and Mr. Bernanke) feel it is such a priority to encourage the continued behavior of going too far out on a limb. Americans, it seems to me, have become too used to being able to borrow money at unrealistic interest rates in order to have things (like new cars and gazebos) which, sadly, many can't really afford.

Rather than shoring up investment banks that have failed through poor practice, and encouraging our fellow Americans to live beyond their means, we ought to be encouraging people to think differently about how to live. This may cause the economy to contract in the short term, and cause some businesses that can't survive without government subsidies to disappear. But this is what adults would do.

Aren't we supposed to be about encouraging people to live within their means, and encouraging businesses that improve people's lives in tangible ways, and so are in demand and sustainable by a real economy? In the beginnings of this nation, people, by and large, produced useful products, and food, and were paid for that.

Now, one (as a broker) can trade bundles of high interest loan futures, back and forth, and make a pile of cash, at least until someone (an investor, perhaps) says, "Hey, wait a minute, I want to know what's in this bundle that I've bought, and which has been bought and sold many times before."

When it's found out that the commodity in question is not corn or whale oil or lumber or stone, but just a concept of something with no inherent value, that this is the kind of commodity upon which we've built our economic temple, then we're in real trouble. We're not way out on a real limb. We're too far out on the limb of a tree that doesn't even exist.

My actual old boat still sails, well-built in a time when that was more prevalent in this country, and we've got to get back to that. And away from thinking that a new car, or a new anything, is going to be what makes us happy. We've got to start living like adults. Like mature, weathered, mortal, sagacious adults, who understand that happiness comes from noticing the riches already inherent in our surroundings, in the beauty of things as we find them, rather than in the shine of a new car's paint.

If we can transform our notion of richness, and of wealth, and begin again to include community, personal discovery, family, friends, and experience in that equation, rather than what predominates at the top of the consciousness of this nation - aquisition of new stuff - then we've got a chance to turn this thing around.

Thursday, September 11, 2008

A moment of silence in memory.