Showing posts with label income. Show all posts
Showing posts with label income. Show all posts

Sunday, August 1, 2021

Lost in the Turbulence

 

I want to address a cultural flaw that, in my opinion, underlies our human predicament.

We consume too much. The planet cannot provide everyone on this spinning sphere with the oversized appetites for things that we Americans and many other citizens of the developed world feed. We keep buying more: bigger homes, bigger vehicles, more recreational toys. People, even some environmentalists, believe we just need to replace fossil fuel energy with renewable sources, be it solar or wind. In this view, as long as the power is fossil-free we can continue to consume as we did before without guilt or serious impacts. But remember, those energy forms, too, require resources mined and manufactured, sometimes creating their own hazards in someone else’s backyard, far from our field of vision. This does not even factor in what it is like to do the necessary work along the supply chain to create, assemble or install that which we consume.

As consumers we have responsibilities that we too easily shrug off. That is not to say that the producers do not also have responsibilities for that which they produce. They should in fact take more responsibility, which I will get to shortly. As a longtime volunteer in community recycling programs, we are always gratified that people take the little bit of effort to recycle some of their discards rather than bury them in a landfill. That is a key decision point. Single-stream recycling makes this easy on the resident, as opposed to separating the glass from the metal and plastic and paper. But not sorting it also pushes that work on to someone else. And if you have ever visited a materials recovery facility (MRF), you might be repulsed at the prospect of working there 40 hours a week, at low wages and limited, if any benefits. It is bad enough as only a monthly volunteer at a source-separated site, given many residents’ reluctance to simply rinse an item before throwing it in the mix. Yuck!! ,

As consumers, not only do we need to consume less, but we need to push back on producers to reduce their impacts, both in the production of the product itself and the packaging that we are left to find a home for. Consumer goods should be designed and made to be either repairable for reuse or at least disassembled so that the materials can be easily added to the production supply chain. Better yet, make the producer take the product back at the end of its life and support the reclamation of the packaging they use. That will require that we salvage all that we can and get it into the hands of the nearest responsible manufacturer. Doing so will greatly reduce the amount of energy consumed, whether fossil or renewable based, as well as the demand for mining new materials and the production of additional potentially hazardous waste.

My colleague, Dr. Rex LaMore, proposed some years back, that builders and developers should be required to put money in an escrow account to cover future deconstruction of any building they construct when it reaches its useful end of life. Think of the total embodied energy and materials that went into building a Walmart, Kmart, or Sears store that finally closes shop. What does a community do with that building and the huge concrete or asphalt parking area?

To close this loop—“circular economy” is the new catchphrase--we need to use less. But when we buy we should buy more used and reconditioned products and those with recycled content. To keep the loop sustainable, items being recycled must be clean and sorted to minimize the contamination that hinders reutilization of salvaged materials. This is a responsibility for consumers, especially here in the developed world where we have the biggest ecological footprints. The outrageous and increasing income inequality on this finite and fragile planet demands our attention to this. July 29, 2021 is this year’s overshoot day – a day by which the human family has “exhausted nature’s budget for the year.”

Once upon a time there was a simple technology called a broom or a mop. It was a simple construction of renewable materials. We used these to clean our homes. The vacuum cleaner was invented for the new carpets with longer fibers for which a broom or mop was less effective. The vacuums needed electricity to work (while there were non-electric sweepers like those made by Bissel, once shag carpeting appeared even those were not effective). These vacuum machines are made up of all types of different materials– metal, various plastic resins, electronics, wire, etc.--and aren’t always easy to disassemble. They were probably produced half a world away before arriving at Target or Best Buy and making their way into our closets at home.

Vacuums are simple technologies; I’ve repaired a few myself (that’s how simple they are!). You can even buy new parts like the rubber belts that eventually wear out, if you keep the same machine for a decade or more. But how about that desktop printer? Sure, you have to buy ink cartridges. But once it starts acting up, you’re likely to buy a new one as almost no one repairs them, parts are not readily available, and new ones are relatively inexpensive, at least cheaper than many repairs. But even here we can lessen our footprint by refilling the ink jet cartridges rather than buying new ones.

But the larger systems push back against this. When something breaks our tendency is to just get a new one.  It is more “cost efficient” to just replace old with new. Sometimes the immediate cost is cheaper, but environmentally it’s not. It’s the same with accidents. When a car is “totaled” it simply means the financial cost to repair it is more than the resale value of the car. But the environmental cost of producing a new car, or a new roof, or a new anything is almost always higher, because the extra energy and mining and manufacturing of new materials, but it’s externalized. Even the insurance system reinforces this because they only look at out-of-pocket expenses, so why repair a few damaged parts when it costs as much to replace the whole dang thing? And we accept it, because we are hooked into thinking of “out-of-pocket” costs as the primary test. I suffer from it too, even as I decry its impact.

Another underlying force we should push back on is the distinction between “wants” and “needs.” The advertising industry works on sparking the “wants” and then pushing that to a “need” level. Perhaps if we asked ourselves a question like the following before we jump down the consumer rabbit hole we might pause: “If I don’t buy this item now, in ten years will I have felt my life was diminished?” If our lives are that connected with things as opposed to experiences and relationships, will we really find true fulfillment and meaning? If we look at our brethren in the developing world, what would we be willing to reduce so that they might have a little more security? Could we lower the thermostat one or two degrees in the winter and raise it one or two in the summer? Would we pay a little more to keep local responsible businesses thriving in our communities? Might we turn off lights when we aren’t using them? Will we pay a bit more to support responsible businesses, which endeavor to lighten their impacts and share with their workers and local communities?

As the world community comes together this November under the umbrella of the United Nations Climate Summit, we owe it to these neighbors who suffer as a result of our own energy and resource consumption to make some commitment to fairness and justice. Perhaps we can begin to look inside ourselves to see what we are called to do – to take care of each other and conserve what we have.

Wednesday, December 27, 2017

You Can Bank On It

It is pretty difficult to make a non-partisan argument around the recent tax code changes adopted by the Republican Party which owns the government from top to bottom. For it is entirely a partisan idea and decision. Not that the Democratic Party has been the beacon of progressive tax reform.

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Ron Formisano, a professor emeritus of history at the University of Kentucky indicts the entire 'political class' with our current dilemma. In his new, but seldom read book, American Oligarchy: The Permanent Political Class (University of Illinois Press, 2017), he unleashes the muckraking style of the last era of robber barons by famed journalists Ida Tarbell, Upton Sinclair, Lincoln Steffens, C. Wright Mills, etc. Through 210 pages of lucid prose supported by another 60 pages of detailed footnotes, Formisano lays bare the corruption endemic to the political class and how its capture of our American Society has established a fully formed oligarchy. For more on the 'capture'  component see also Sen. Sheldon Whitehouse's Captured I reviewed earlier this year.

Formisano doesn't just pick on the elected officials and the jurists but the corporate heads, higher education administrators, and even the heads of nonprofits. Of course the grease in the system is money and wealth. The increasing gap between the bottom and top has been expedited by the political class which has no real ongoing connection to the middle and lower classes. Even more telling for Formisano is the capture of the economy by the financial sector. This is a growing concern even for conservative institutions like the International Monetary Forum which noted in a recent report cited by Forisamo that "excessive financialization of the U.S. economy reduces GDP growth by 2% every year...a massive drag in the economy -- some $320 billion per year." (p.194)

And the gap between the rich and the rest of us grows as well as Bloomberg reported today "World's Wealthiest Became $1 Trillion Richer in 2017"





Page after page demonstrates how even persons entering government or nonprofits with good public intentions get absorbed into the political class. The sharing of board members, the lobbyist favors, inside relational contracting, shared vacations and junkets all corrupt any pretension of democratic principle. He notes that while both Trump and Sanders spoke to the idea of corruption of power,  Trump of course has blatantly turned over the executive branch to these same members of the oligarchy. While the book does read in the style of Tarbell, Steffens, Mills, Sinclair, and more recently recently deceased political scientist Chalmers Johnson, he does not offer us any roads out of this mess.



One direction from a recent book, which likewise probably has equally few readers, is offered by K. Sabeel Rahman. In his recent Democracy Against Domination, Rahman, a former Rhodes Scholar who studied economics, political theory and law at Harvard and Oxford  teaches law at Brooklyn Law School. Rahman's style is more turgid and aimed primarily  at other academics I suspect but his argument is fresh and worth pondering.

"This progressive economic vision suggests a radically different approach to financial regulation.  The book argues that our prevailing approach to TBTF [too big to fail] finance relies too heavily on a faith in insulated, neutral, top-down regulation by experts, despite the risks of industry lobbying or the complexities of trying to manage the modern financial system.  Instead, the book suggests that a better approach would place stricter, structural limits on TBTF financial firms, whether by “breaking up the banks” or by regulating finance as a kind of public utility.  Drawing on the latest thinking in economics and law, the book suggests how we need to revamp our financial stability regime."

He sees the failure of leaving the regulating the economy and the corporate sector to 'experts', for which I assume he would include himself, and calls for a much deeper and vibrant model of democracy. I believe his argument on this particular failure is well done - this attack on the "let the experts rule". He shows the underbelly of this flawed approach, but not as poignantly as Sen. Whitehouse did in his book. But his reasoned call for a deeper democracy to address the domination of the 'political class' as Forisamo names it is stronger than what  either Whitehouse or Forisamo offers.


Still I failed to see a systemic plan of specific options to address the flaws. Here's where I would point to the Austrian Economist Christian Felber's remedies he laid out in his 2016 Change Everything: Creating an Economy for the Common Good that I shared in 2016. While the piling  evidence makes crystal clear to anyone wanting to look at it that our economic system as run by the' 'plutocracy' Formisano shines his piercing light on is cascading us towards a twin abyss of increasing inequality and climate destabilization.

Sunrise Movement

While the path out of this is a bit murky, the recent tax law disaster is going 180 degrees in the wrong direction. One promising approach before us in 2018 is following the lead of the youth led Sunrise Movement. One of their suggested strategies is to approach candidates for office at all levels and ask them to pledge not to accept money from the oil, gas, and coal lobbies. I would add the financial industry.

It is our youth who will have to lead us out of this mess as they are the ones that will be forced to live with the worst of what we have sown.

Sunday, January 31, 2016

Putting a Lid On It

It is time for me to get off my duff. I have been sitting safely a bit too long, ensconced in my middle class security. A security a majority can't share. Time to push forward some radical possibilities. Here's one to start, some of which I've hinted around in the past.


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It's time to enact a maximum wage

More often our political forces focus on increasing the bare minimums, but the more conservative voices claim that giving the bottom a raise will cost us all more, prices will go up, yada, yada, yada. If that theory holds water, and I'm not suggesting it does, then capping the maximum income should reduce the costs to everyone, right?  There is enough for every one's needs, but not enough for every one's greed. And the data of increasing capture of wealth by the wealthiest is inscribed in the frequency of reference to the 1% and the 99%. 

We can't grow an economy based upon the consumption of more stuff on a finite planet with an increasing population and expect any outcome down the road beyond disaster. It just isn't possible, thermodynamics and the other laws of nature are against it.

I'm not suggesting that we shouldn't raise the floor too, either with a sizable minimum/living income adjustment or perhaps even as Finland is beginning to try - a basic guaranteed minimum income for everyone. But let me focus on a couple of strategies to set a maximum income. The foundation of my argument is that  Gandhian bumper sticker, "There's enough for every one's need, but not for any one's greed."

 So what might this look like. These figures are based on US economy.

The current median household annual income is approximately $50,000 (keeping these numbers rounded makes it a bit easier to calculate). One can surely also develop much more complex systems than the ones I am proposing The median is the point from which half the households make more, and half make less. I can't imagine that anyone currently at that midpoint $50,000 would find it a struggle to get by on 10 times that amount in a year. Just think of being lucky enough to make that much year after year!! So let's start the bidding at a maximum $500,000 annual income.

Another way to look at this is that the typical working life is about 50 years. So someone making $500,000 in one year would be about the same as a current minimum wage worker would make in 33 years.

$500,000 is about what the president makes in a year ($400,000 salary, + $50,000 living expenses, + $19,000 living expenses + travel + housing). So why not cap income there. Roosevelt and Congress increased the progressive rate on income over $200,000 (1945) to 94% against the cries of the conservatives of the time. Note that as a country we enjoyed our greatest sustained growth and simultaneous contraction of income inequality in the years between 1945 and the end of the Eisenhower administration when that top tax rate was reduced.

While number crunch-ers might make arguments for capping incomes at a different level or adjusting the top tax bracket a bit differently, perhaps the main impact would be how we as a society reconsider what wealth, prosperity and sharing mean.  The no-holds-barred approach to stuffing as much as one can in one's pocket, everyone else be damned, isn't a mores that has a happy ending for an increasing population on a finite planet. The average incomes of the 1 percent, let alone of the 0.1 percent, are significantly more than this threshold. A recent Economic Policy Institute report finds the average income of the 1 per-centers is $1.3 million and the minimum is $385,000.

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See the detailed state by state list here.



Now I can foretell some criticism from those who think it unfair to those who could make more. Heck, some of our celebrities make that much from one performance or one speaking engagement. How will they manage to get by if we cap their income? A further canard is the one about how the top performers, be they athletes, CEO's, actors, lawyers, physicians, non-profit directors, university administrators and football and basketball coaches will stop working or performing. Surely no one does any work in our time for any reason other than money, right? But this is one place where the market harms us by essentially creating an arms race. Just look at the salaries of collegiate football and basketball coaches over the past decade or two.

Well, another approach could be to tie-bar the maximum wage to the minimum wage. They could  be set as some magic ratio. For example the average Fortune 500 CEO is taking in about 204 times their median employee. Of those 500, 150 of those firms ratio is higher than that. That seems a little high to me. Take a look at the list of companies, some of which you no doubt use to see how they stack up here.

But we could decide to make it 10:1 or 50:1 for example. Or we could set a specific minimum wage and a specific maximum income. Robley George presents a variety of possible approaches including a annual citizen vote on setting maximum and minimum in his thoughtful book Socio-Economic Democracy.

Seriously, we need a discussion of what's enough, what is sufficient, and what's too much?

Even steadfast believers in the power of markets recognize that for markets to function well there needs to be access to relevant information so consumers can make judgments based upon the values they hold dear, e.g. quality, durability, integrity, fairness. While markets should surely not be making all the decisions we need to make in a human society, to be useful they need transparency. So we need full disclosure. The public good demands access to the information that impacts us and the natural world that sustains us.

New rules adopted by the Securities and Exchange Commission (SEC) last summer require public companies, beginning in 2017 to disclose the ratio of CEO pay to median worker pay.


Highlights of the New Rule

Pay Ratio Disclosure Requirement
As required by the Dodd-Frank Act, the rule would amend existing executive compensation disclosure rules to require companies to disclose:
  • The median of the annual total compensation of all its employees, except the CEO;
  • The annual total compensation of its CEO; and
  • The ratio of those two amounts. 
I suggest that this rule be applied to any enterprise, public or private, profit or not for profit, or governmental agencies that receive any contracts, tax credits, or other federal government assistance. 

While the rule would force this obligation on any sanctioned enterprise, it isn't necessary for any enterprise to wait to do this on their own. Organizations which operate in good faith should be proud to post this level of information on their website. This refreshing transparency would allow citizens to judge for themselves whether to purchase from, invest in, or donate to the enterprise. Transparency also has the extra advantage of tempering corruption. As the saying goes, sunshine is the best disinfectant. 

Let the sun shine!!