Political Prose

Here's a fascinating piece from 60 Minutes that links last year's disastrous surge in oil prices to rampant speculation made possible by deregulation — the very kind of deregulation that Enron, at its peak, lobbied aggressively for, and that other firms and investors took full advantage of, securing handsome profits before the bubble burst.

The deregulation that Enron successfully pushed for in electricity markets was painful enough in California, which suffered from price spikes and rolling blackouts in large part because of Enron's manipulation of the unregulated market. But the worldwide effect of deregulation on oil prices seems to dwarf that crisis. Until the second quarter of last year, global oil supplies were increasing and global demand was going down — but the price of oil still went way up, driven by investor demand.

Some of the  investors who sunk their money into oil futures may have took a hit once the market nosedived — 60 Minutes links the fall of Lehman Brothers and AIG, both heavily invested in oil markets, to that downturn — but the real losers were the mom-and-pop businesses and paycheck-to-paycheck families who got clobbered when gas went up to $4 a gallon. From truck drivers to gas station owners to 9-to-5 commuters, these folks didn't have the kinds of finances that could stay afloat amid such cataclysmic waves of market volatility. 

It's unclear whether investment houses such as Morgan Stanley, which own large chunks of the oil wholesale business and also were advising investors to put their money into commodities futures — thus driving up the price — were manipulating the market to their benefit in the same way that Enron was in California. But that's the thing about deregulation: No one has the authority to find out what's really going on.

It seems that last year's oil spike was yet another way that deregulation has contributed to our current economic malaise. Lax oversight encourages risky behavior, which is not necessarily bad: More risk means more reward on the way up, if also more remorse on the way down. But in the mortgage market, and in the electricity and oil markets, deregulation also opened possibilities and altered the incentives, so that more people got greedy and opted for less than ethical ways to make a buck. From unscrupulous lenders and borrowers to firms manipulating markets, everyone was cashing in when the government's back was turned.

NPR recently aired a segment on two bloggers from Gaza and Israel. The Israeli calls himself Hope Man, the Palestinian calls himself Peace Man, and together they write the blog Life must go on in Gaza and Sderot.

Hope Man, a.k.a. Eric Yellin, lives in Sderot, a city that has faced ongoing rocket attacks from Gaza. Peace Man, who writes anonymously out of fear for his safety, lives in Sajaiya, a densely populated Gazan neighborhood with militant activity. In spite of the opposition (and danger, in Peace Man's case) they face from their own communities, the two have, over time, become steadfast friends. Says Hope Man (from the transcript):

HOPE MAN: ... as soon as I started meeting people, it created a real connection and understanding that on the other side of the border, there are people exactly like us who are suffering. We are suffering, too, through this conflict. But the only way to end this was through some kind of connection and dialogue.

NPR: And is that, do you think, the experience of Peace Man in Gaza?

HOPE MAN: Well, absolutely. I think — Peace Man has told me this so many times that, first of all, for him it was the first time ever to meet Israelis. And for him, they were always the enemy, always the oppressor. It took a while to create trust even between the two of us. And I think that over time, we have really become friends. And I think there is full and complete trust. I'd trust him with my life, and I think vice versa.

The two bloggers say that the media coverage of the conflict is "extremely biased" on both sides. They call for an immediate end to the violence and a return to dialogue. Says Peace Man:

We have said from the beginning that violence will bring more violence. I hope the world will understand that’s there people want to live safe with dignity and peace. I hope I will have the chance to write you again.

Hope Man, who is involved with the grassroots peace group Other Voice, says dialogue could have brought about a workable solution to the crisis during the five previous months of ceasefire if leaders on both sides had made a real effort rather than just blaming one another. But if the politicians won't act, he says, he and other residents of Sderot and Gaza will.

What me and others are doing is continuing the dialog with friends in Gaza. We are working to widen and deepen this dialog with more people on both sides. The day after the war we want to start finding ways to work together and create a normality. We are only several kilometers apart and that will never change. It is extremely important to widen our dialog and create trust between those that are willing to talk. To share our stories, fears and hopes.
The day after the war we need a new beginning. Let's start planting seeds of humanity and trust now.  

It seems that Hope Man and Peace Man are following Gandhi's advice to "be the change you wish to see in the world." It's easy to be cynical and think that individuals are powerless to alter the decisions from up top. But in the long run, in the grand scheme, leaders react to the social forces surrounding them.  Every personal connection across borders makes war less likely. Every instance of Hope and Peace is another trumpet sounding against the walls that separate us.

You can't make this stuff up. Check out this Washington Post story about criticism of Obama's choice of Leon Panetta as CIA director:

Although several top CIA officials who have interacted with Obama since the election expressed admiration for his grasp of the issues, the transition process has clearly left a bad taste. One senior official said that "the process was completely opaque" and that the agency was neither consulted nor informed. The official was among several who discussed the subject on the condition of anonymity.

Yes, officials from the most secretive agency in government are complaining about the "opaqueness" of the process. That's like the arsonist who lectured kids about fire safety.

 

Now that Barack Obama has won the presidency, and the Democrats have broadened their majorities in Congress, the picture looks a little less bleak for the country's poor and near poor families.

In policies ranging from taxes to health care, from housing to job creation, Obamanomics will likely provide some welcome relief from the status quo of the last eight years, during which the ranks of low-income households grew. In 2000, 29.2 percent of the population, or 81 million Americans, lived on household incomes of less than twice the poverty line. In 2007, 30.5 percent of the country, or 91 million Americans, fell into this bottom category of poor and near poor households.

In our book The Missing Class, Katherine Newman and I looked at the situation of near poor families at the end of last decade and the beginning of this decade. Rates of poverty and near poverty were steadily falling from their peaks in the early 1990s. Americas economy was roaring. But as we described in our book, even in those boom years near poor families were struggling mightily to find quality health care, housing, and education for their children.

Now that another downturn is upon us, the economic fortunes of the less well-off look far worse. And having just approved a massive infusion of government money to prop up the country's floundering banks, the federal government — even with a progressive president at the helm — will find its options even more limited than is usually the case during recession times, as half-a-trillion-dollar budget deficits feed interest rate rises and worsen the market malaise.

Still, if government does not act during a crisis, things could get much worse, especially for lower-income communities typically hit hardest by mass layoffs and shrinking paychecks. The Obama administration will have to step in vigorously to jumpstart sectors of the economy and reform markets so that a quick and thorough recovery — one not just restricted to Wall Street — will take place. Here are some priorities that, regardless of the situation with the deficit, will need to take place:

A "Green Deal." This may seem counterintuitive: how can we afford the "luxury" of tree-hugging during a recession? But investing in green industry is one of today's best growth strategies, as we can see abroad in places like Germany, which has become the world leader in solar power thanks to government-established incentives for private business. Green technology is also one of the few sectors where we can envision a substantial expansion of well-paying jobs that employ our poor and near poor workers. (Here's a contrarian view, but note that U.S. government support was crucial for several important industries that became private-sector engines of growth, from the telegraph to computing.)

The Internet boom showed us that sensible government investment can pay off huge dividends in new technology that creates jobs; a New Deal-style approach to green technology could be even more successful, given that it is not as wholly dependent on highly educated knowledge workers. From erecting wind turbines to installing solar arrays to manufacturing hybrid cars to building natural gas pipelines and clean coal plants, the country's shift to renewable, more efficient, and "cleaner" energy will reach every community and employ all types of workers.

Truly viable forms of alternative energy that can replace fossil fuels will take time to develop, but that's all the more reason to begin investing now. Simpler projects such as insulating homes and switching to natural gas-powered buses could employ many right away, as has been the case in Germany and India. Likewise, Obama's separate plan for investment in traditional infrastructure would grow employment in the short term as well as greasing the wheels of commerce in the long term, given that businesses rely on a well-maintained network of roads, bridges, ports, and air and train links to keep costs down and goods moving.

Tax policy. Of course, Obama's positions on taxes drew the most fire on the campaign trail — though largely because of Republican distortions of the actual proposal. While the McCain-Palin mantra was "he'll raise your taxes," the Obama platform offers a wide range of tax cuts targeted at those in the middle and lower ends of the income ladder, including refundable credits for child care, household savings, and mortgage interest — all of which will be of great assistance to working families struggling to save, buy homes, and care for their kids. His Making Work Pay credit offers another refundable credit of up to $500 ($1,000 for married couples), which will help the vast majority of workers but disproportionately benefit lower-income ones. As for the earned-income tax credit, a targeted subsidy for low-wage work that's popular with both parties, Obama proposes a much-needed expansion for married couples and childless workers; as we mention in our book, this latter group is largely ignored by current policies. All these tax policies will mean that the working poor and near poor will see significantly larger refund checks come tax time.

According to Obama's plan, rich families that make more than $250,000 a year will see their income and capital gains taxes (among others) go up, but their tax rates will be no higher than they were during the Clinton administration — which Republicans may not have particularly liked, but was surely not a "socialist" regime in the European fashion. By increasing taxes for this small, well-off segment of the population, the federal government can afford larger tax relief for everyone else, and given the fact that consumer spending by these households drives much of this economy, that's not a difficult compromise to make.

Health care reform. Forty-six millions Americans make do without health insurance in this country. Six in ten of them live in households with annual incomes of less than $50,000. As proposed, the Obama plan would dramatically shrink the ranks of the uninsured, by preventing insurers from rejecting the ill, expanding the market through public insurance alternatives akin to Medicare, and imposing legal requirements that most corporations offer insurance to their workers — and that all children have it. While the Obama administration will likely delay many of these ambitious proposals due to the economic crisis, it can move immediately to shore up state Medicaid programs and expand public health insurance for children, programs that are targeted at poor and near poor families.

Less clear, though, is how Obama's policies will slow down the rapidly rising tide of health care costs in any substantial way, without mandates that all people buy insurance (as Hillary Clinton and John Edwards proposed) or allowing insurers to compete across state lines (as John McCain proposed). As we discuss in our book, the high cost of health care means that those who have insurance are often underinsured, with limits on coverage or large out-of-pocket medical expenses. They can't afford the kinds of Cadillac health insurance policies reserved for the rich. Obama's tax credits for health care will help, but the larger problem of out-of-control prices will likely remain unresolved under his current plan.

Educational reform. The federal government provides less than 10 percent of total spending on schools, so in some ways there's little that an Obama administration can do in this area, even though the sorry state of our country's public schools is a major handicap to our national competitiveness and, as a result, our economic fortunes. That said, Obama's plan to promote early childhood education through grants to states would be a welcome support for working families whose kids start way behind in the educational race because they can't afford preschool. His proposal for a $4,000 refundable tax credit for college costs, provided in exchange for community service, would also be a big help to many poor and near poor students, whose financial aid has eroded with the value of the Pell grant, which hasn't kept pace with soaring tuition costs.

Finally, Obama has talked about promoting so-called "career ladders," a kind of incentive structure that we describe at length in the book. In the case of schools, teachers will be able to advance quickly in their careers with the help of scholarships, pay raises, and other enticements given in exchange for teaching in high-need schools and boosting student performance. Building these kind of ladders to the top will help many poor and near poor workers too often stuck at the bottom.

In Congress, the best-laid plans of presidents often go awry, and there's no telling what kind of strange soup will emerge after 535 cooks have their way with the administration's ideas. And given the downward trajectory of the markets, President Obama will surely need to trim and prioritize the proposals of Candidate Obama. In fact, there is reason to believe that Obama administration will not pursue any significant health care reform during his first term, and won't even consider a tax increase on the wealthy as long as the economy is in a slump.

But some kind of government intervention in all of the areas described above will be needed — and soon. As any businessperson knows, you need to spend money to make money. When private business is hunkering down and unwilling to invest, government needs to step up. Focusing on these four areas would be the most judicious way to devote public resources to pull the American economy out of its hole, and to ensure that poor and near poor families — not to mention the middle class — come out of this downturn alright.

This post was cross-published on the Beacon Broadside blog.

My book, The Missing Class: Portraits of the Near Poor in America, has been released in paperback. You can find it at your bookstore, or order it on Amazon or Powells.com. (Use these links and a portion of the sale price goes to InTheFray.)

The stadium-sized acceptance speech that Barack Obama gave tonight has been compared to those of FDR and JFK, but the note he struck by the speech's end reminded me of a Republican: Ronald Reagan.

Obama's Denver speech was a mirror image of Reagan's acceptance speech in 1980, in which the California governor called for an end to big government:

As your nominee, I pledge to restore to the federal government the capacity to do the people's work without dominating their lives. I pledge to you a government that will not only work well, but wisely; its ability to act tempered by prudence and its willingness to do good balanced by the knowledge that government is never more dangerous than when our desire to have it help us blinds us to its great power to harm us.

Reagan was riding a wave of popular protest against government waste and excess. Obama spoke tonight at a time when a lack of good government — from a crippled FEMA to shoddy bridge maintenance to unaffordable health care to unscrupulous military subcontractors — is the problem. Big government "harms," Reagan said, and to that Obama answered tonight: So does an impotent government.

Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves — protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and new science and technology.

Our government should work for us, not against us. It should help us, not hurt us. It should ensure opportunity not just for those with the most money and influence, but for every American who's willing to work.

(In his defense of government, Obama also channeled Roosevelt's "rendezvous with destiny" acceptance speech: "Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.")

Reagan's 1980 acceptance speech chastised the Carter administration for breaking the compact between elected leaders and the people, by betraying the values of the American people:

"Trust me" government asks that we concentrate our hopes and dreams on one man; that we trust him to do what's best for us. My view of government places trust not in one person or one party, but in those values that transcend persons and parties. The trust is where it belongs — in the people. The responsibility to live up to that trust is where it belongs, in their elected leaders. That kind of relationship, between the people and their elected leaders, is a special kind of compact.

Obama, too, talked of the disconnect between Washington's leaders and the American people, but he gave this sentiment a more populist slant. His candidacy, he declared, was about people rising up on behalf of a new politics — not placing their trust in a leader, but bringing about change themselves:

But I stand before you tonight because all across America something is stirring. What the nay-sayers don't understand is that this election has never been about me. It's been about you.

For eighteen long months, you have stood up, one by one, and said enough to the politics of the past. You understand that in this election, the greatest risk we can take is to try the same old politics with the same old players and expect a different result. You have shown what history teaches us — that at defining moments like this one, the change we need doesn't come from Washington. Change comes to Washington. Change happens because the American people demand it — because they rise up and insist on new ideas and new leadership, a new politics for a new time.

Reagan spoke of an "American spirit" that transcends the differences that divide Americans, that rests in hard work and love of freedom:

Tonight, let us dedicate ourselves to renewing the American compact. I ask you not simply to "Trust me," but to trust your values — our values — and to hold me responsible for living up to them. I ask you to trust that American spirit which knows no ethnic, religious, social, political, regional, or economic boundaries; the spirit that burned with zeal in the hearts of millions of immigrants from every corner of the Earth who came here in search of freedom.

Some say that spirit no longer exists. But I have seen it — I have felt it — all across the land; in the big cities, the small towns and in rural America. The American spirit is still there, ready to blaze into life if you and I are willing to do what has to be done; the practical, down-to-earth things that will stimulate our economy, increase productivity and put America back to work. The time is now to resolve that the basis of a firm and principled foreign policy is one that takes the world as it is and seeks to change it by leadership and example; not by harangue, harassment or wishful thinking.

Obama invoked again this "American spirit," this unifying creed built on the backs of immigrants, but he emphasized its moral and spiritual dimension, in Americans' constant striving toward the immaterial, the "unseen":

Instead, it is that American spirit — that American promise — that pushes us forward even when the path is uncertain; that binds us together in spite of our differences; that makes us fix our eye not on what is seen, but what is unseen, that better place around the bend.

That promise is our greatest inheritance. It's a promise I make to my daughters when I tuck them in at night, and a promise that you make to yours — a promise that has led immigrants to cross oceans and pioneers to travel west; a promise that led workers to picket lines, and women to reach for the ballot.

Finally, Obama's speech, like Reagan's, was a direct appeal to national unity, attempting to bridge an intensely partisan political landscape. Reagan, who as president would draw fierce criticism for policies hostile to minorities, reached out explicitly to them in his acceptance speech — "When those in leadership give us tax increases and tell us we must also do with less, have they thought about those who have always had less — especially the minorities?" He broadly appealed to "Democrats, Independents, and Republicans" with an optimistic message that combined the moral tenets of American liberalism and conversatism: compassion and personal responsibility, "the shared values of family, work, neighborhood, peace and freedom" — while making the conservative case that American could be more compassionate if government was less powerful.

Together, let us make this a new beginning. Let us make a commitment to care for the needy; to teach our children the values and the virtues handed down to us by our families; to have the courage to defend those values and the willingness to sacrifice for them.

Let us pledge to restore, in our time, the American spirit of voluntary service, of cooperation, of private and community initiative; a spirit that flows like a deep and mighty river through the history of our nation.

Obama, too, sought to downplay political differences, while making overtures to a segment of the electorate skeptical of Democrats: national security voters. "Patriotism has no party," he said. "Democrats and Republicans and Independents" fighting abroad "have not served a Red America or a Blue America — they have served the United States of America."

In a nod to conservatives, he spoke of the importance of both "individual responsibility and mutual responsibility" — even as his political purpose was to emphasize the latter, casting the moral imperative of compassion in biblical language:

That's the promise of America — the idea that we are responsible for ourselves, but that we also rise or fall as one nation; the fundamental belief that I am my brother's keeper; I am my sister's keeper.

"I believe that this generation of Americans today has a rendezvous with destiny," Reagan said in his 1980 speech, an explicit reference to FDR's 1936 convention speech. Now Obama has taken the rhetoric of Reagan and used it in the service of a diametrical vision of compassionate government and shared prosperity.

Obama has himself talked about how Reagan "changed the trajectory" of America, and it seems that Obama desires to lead a similar transformation of the country's politics — though in the opposite ideological direction. The echoes of Reagan in his acceptance speech suggest that he already has this goal in mind.

So, if the 2004 election was a repeat of the Goldwater-LBJ election, perhaps 2008 will be a replaying of the 1980 election: an unpopular president succeeded by a charismatic leader, who brings a new consensus to national politics. We will have to wait three months to see whether Obama has his rendezvous with destiny.

Pringles are not potatoes. And now Hershey's Kissables are no longer "candy coated milk chocolate," but "chocolate candy."

From the Candy Blog [via Consumerist]:

The new version is called Chocolate Candy which is code for chocolate-flavored confection, or candy that contains chocolate but can’t be called chocolate because it has other stuff in it that’s not permitted by the FDA definitions (like more oil than actual chocolate).

That's not the only Hershey's chocolate whose chocolate has been diluted, apparently:

It strikes me as odd that Hershey’s new Pure Chocolate campaign comes on the heels of their attempts to dilute the definition of chocolate and have changed the formulation on many of their favorite candies (5th Avenue & Whatchamacallit) to include new coatings that are not pure chocolate any longer.  

What's next? Non-corn Corn Flakes? Non-wheat Wheat Thins? Non-cheese Cheese Whiz? (Okay, maybe you already have your doubts about that last one.)

Talk about a Hollywood ending in yesterday's team finals in men's gymnastics at the Beijing Olympics. You had a Chinese team avenging with extreme prejudice the drubbing it had received in the 2004 Athens Games. You had a Japanese team that faltered horrifically, only to pull the silver from the jaws of defeat. And you had an American team that, with the loss of two star gymnasts to injuries, was counted out of medal contention by many observers, only to snag the bronze. (Here's the video of the finals, and here are some pics.)

This U.S. team truly showed America as its best: diverse, full of spirit and camaraderie, underdogs dreaming big. Kevin Tan, the son of Chinese-born immigrants, now representing America at Beijing. Joe Hagerty, whose father Mike was watching from the stands at Beijing in halo, still recovering from a serious car accident. Raj Bhavsar, an alternate in 2004 and again this Olympics, only to step in after Paul Hamm's injury to become one of the team's most consistent performers.

And Alexander Artemev, the son of an Russian gold medalist, who was originally selected as an alternate because he was thought to be too erratic to depend on. Artemev had a chance to redeem himself with the team's very last performance of the day, and he did so with a jaw-dropping turn on the pommel house, successfully fending off a last-minute challenge from Germany for the bronze.

If this American team has embodied the spirit of the Games, Spain's basketball team has shown its opposite. In this full-page, pre-Olympics ad in the country's largest newspaper, the men's team is shown making slit-eyed gestures on a basketball court emblazoned with a Chinese dragon.

 

 

Political strategists think alike, and their Machiavellian mindset leads them without fail to the low road of branding their opponent as unpatriotic, un-American, and vaguely French. That's the takeaway from leaked emails by Mark Penn, former top strategist of the Clinton campaign, who it turns out suggested an uber-patriotic approach to Clinton that the McCain camp has taken up, with gusto, in the last several weeks of the presidential campaign.

The New York Times has an excerpt from a soon-to-be-published article in The Atlantic, which includes hundreds of leaked emails from the Clinton campaign. Here is one choice bit of Penn advice:

All of these articles about his boyhood in Indonesia and his life in Hawaii are geared towards showing his background is diverse, multicultural and putting that in a new light.

Save it for 2050. … Every speech should contain the line you were born in the middle of America American to the middle class in the middle of the last century. And talk about the basic bargain as about the deeply American values you grew up with, learned as a child and that drive you today. Values of fairness, compassion, responsibility, giving back …

Let’s explicitly own "American" in our programs, the speeches and the values. He doesn’t. Make this a new American Century, the American Strategic Energy Fund. Let’s use our logo to make some flags we can give out. Let’s add flag symbols to the backgrounds.

McCain's campaign seems to be following this script line by line. His campaign has adopted a new slogan, "Country First," and his campaign ads and statements in recent weeks — especially since Obama's Berlin speech — have highlighted Obama's celebrity appeal to foreigners, and accused the Illinois senator of being unpatriotic.

Things get complicated by the race issue. For example, in an ABC News interview after Obama's Berlin speech, one McCain supporter made a point of mentioning how McCain was "all-American" and "one of us." Those could be references to Obama's lack of patriotism — or they could be code words for race. 

Intentionally or not, McCain's current line of attack strikes both of these lightning rods. His strategists, like Penn, know that "international" and "American" are mutually exclusive terms in this country's politics — even if trends of globalization mean that, in the "real world," American and global interests look increasingly alike.

A reader E. commented on my post, "The politics of Pringles," asking whether the claims in it were true. I wasn't sure if E. was talking about the post itself or another reader comment, which claimed that the food we eat is made from petroleum. In any case, here are the facts on both claims:

Are Pringles potato chips, or some potato-like substance in a can?

The latter. Their potato content is less than 50 percent, and Procter & Gamble, the maker of Pringles, has itself argued in a British court that the Pringle cannot be considered a "potato crisp" (the British term for "potato chip"). For corroboration, see the links in my previous post, or this BBC article. 

Now, there is a silly Internet rumor floating around that Pringles are made from leftover McDonald's French fries, which is untrue, as this post at urbanlegends.about.com makes clear. That said, there is also a lot of funny business that goes into making McDonald's French fries taste so good, as you can read here.

Is our food made from petroleum?

It depends on what you mean by "made from."

Today's industrial farms grow crops like corn and wheat using chemical fertilizers and pesticides, both of which are derived from petroleum. Fossil fuels are also needed to plow and irrigate the fields and ship the harvest to market. (See this New York Times article about how rising fuel costs are hurting American farmers.)

So, our food is made using lots and lots of petroleum. Even in organic industrial agriculture, the fossil-fuel tab is considerable: Michael Pollan says that the 80 calories of energy in a single, one-pound box of lettuce requires the burning of 4,600 calories of fossil fuels to produce and ship.

Is petroleum actually in our food?

If you are like most Americans and eat food with artificial dyes in it, then yes.

Synthetic food dyes are "derived primarily from petroleum and coal sources," according to the Food and Drug Administration. In fact, this U.S. News article points out that the fears about the ill effects that petroleum- and coal-based artificial dyes may have on children are prompting companies to switch to natural, carmine-based dyes. The problem is, carmine is made from ground-up insects. Carmine also happens to be an allergen.

And so it goes.