Economics

Newsom’s lousy economics

David Talbot
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0

EDITORIAL Every major newspaper in California should have plastered the May 2010 report from the UC Berkeley Center for Labor Research across the front page. The headline: “Governor’s budget will destroy 331,000 jobs.”

It’s a stunning analysis. Ken Jacobs, who heads the center, and two associates used a sophisticated computer program to track exactly how the cuts would play out in the current California economy. If the governor’s proposals are adopted, the job losses would greatly exceed any new job creation, causing the unemployment rate in the state to rise by 1.8 percent.

On the other hand, the study shows, raising taxes on rich people and oil companies would save 244,000 jobs.

So if, as nearly every politician of every party in the state insists, the biggest policy goal in California today is job creation, Gov. Arnold Schwarzenegger is going about it entirely the wrong way.

The good news is that the Democrats in the state Legislature are finally talking seriously about an alternative budget plan that includes about $5 billion in new revenue. The plans by the Assembly and Senate leadership aren’t perfect and will still require significant cuts to cover the budget gap. But after years of cuts-only budgets and a pervasive fear of tax increases in Sacramento, the Democratic proposals are encouraging. (Jerry Brown, the Democratic candidate for governor, shouldn’t worry about associating himself with the plans: two-thirds of Californians favor increased taxes on wealthy people to pay for better public education, according to the most recent Public Policy Institute of California poll.)

So at the very least, the state Capitol — a place not known as a bastion of progressive thought — is going to have an intelligent debate over how to address the budget deficit without further damaging the economy. Yet in San Francisco, Mayor Gavin Newsom continues to cling to a no-new-taxes budget that will devastate community services — and add to the city’s unemployment rate.

That’s just disgraceful.

Every city-employee union has stepped up to the plate and offered concessions. City workers are taking furloughs (actually, pay cuts) and layoffs. They’re giving back scheduled raises. They’re making a good faith effort to be part of the solution — in fact, labor is now pushing for an increase in the hotel tax to help cover the costs of public services.

Newsom isn’t asking any of the wealthy businesses or individuals in town to give anything.

That’s not just bad politics, it’s bad economics.

The Berkeley study acknowledges that raising taxes on the rich and big corporations has an economic impact — an oil severance tax, for example, would raise $1.4 billion a year for the state, reduce economic output by $128 million, and lead to the loss of 400 jobs. A 1.5 percent increase in the top income tax rate for individuals who earn more than $250,000 would bring the state $2.1 billion, and lead to the loss of 13,000 jobs.

But on balance, both of those are a good deal for the state — because cutting that $3.5 billion from the budget would cost the state far, far more than 13,400 jobs. That’s because when you eliminate public sector jobs, particularly lower-paid jobs, there’s a direct, immediate impact on consumer spending. Although a rich person may spend slightly less if he or she has to pay slightly higher taxes, a middle-income worker who gets laid off stops spending much of anything — and the local merchants who relied on that person’s spending see the impact.

In fact, the Berkeley study points out, more than half the jobs that would be lost under Schwarzenegger’s plan would be in the private sector. The same goes for San Francisco: saving jobs requires new revenue solutions. And if Newsom’s budget doesn’t address that, the San Francisco supervisors must.

Newsom’s lousy economics

David Talbot
-
0
Newsom’s lousy economics

EDITORIAL Every major newspaper in California should have plastered the May 2010 report from the UC Berkeley Center for Labor Research across the front page. The headline: “Governor’s budget will destroy 331,000 jobs.”

It’s a stunning analysis. Ken Jacobs, who heads the center, and two associates used a sophisticated computer program to track exactly how the cuts would play out in the current California economy. If the governor’s proposals are adopted, the job losses would greatly exceed any new job creation, causing the unemployment rate in the state to rise by 1.8 percent.

On the other hand, the study shows, raising taxes on rich people and oil companies would save 244,000 jobs.

So if, as nearly every politician of every party in the state insists, the biggest policy goal in California today is job creation, Gov. Arnold Schwarzenegger is going about it entirely the wrong way.

The good news is that the Democrats in the state Legislature are finally talking seriously about an alternative budget plan that includes about $5 billion in new revenue. The plans by the Assembly and Senate leadership aren’t perfect and will still require significant cuts to cover the budget gap. But after years of cuts-only budgets and a pervasive fear of tax increases in Sacramento, the Democratic proposals are encouraging. (Jerry Brown, the Democratic candidate for governor, shouldn’t worry about associating himself with the plans: two-thirds of Californians favor increased taxes on wealthy people to pay for better public education, according to the most recent Public Policy Institute of California poll.)

So at the very least, the state Capitol — a place not known as a bastion of progressive thought — is going to have an intelligent debate over how to address the budget deficit without further damaging the economy. Yet in San Francisco, Mayor Gavin Newsom continues to cling to a no-new-taxes budget that will devastate community services — and add to the city’s unemployment rate.

That’s just disgraceful.

Every city-employee union has stepped up to the plate and offered concessions. City workers are taking furloughs (actually, pay cuts) and layoffs. They’re giving back scheduled raises. They’re making a good faith effort to be part of the solution — in fact, labor is now pushing for an increase in the hotel tax to help cover the costs of public services.

Newsom isn’t asking any of the wealthy businesses or individuals in town to give anything.

That’s not just bad politics, it’s bad economics.

The Berkeley study acknowledges that raising taxes on the rich and big corporations has an economic impact — an oil severance tax, for example, would raise $1.4 billion a year for the state, reduce economic output by $128 million, and lead to the loss of 400 jobs. A 1.5 percent increase in the top income tax rate for individuals who earn more than $250,000 would bring the state $2.1 billion, and lead to the loss of 13,000 jobs.

But on balance, both of those are a good deal for the state — because cutting that $3.5 billion from the budget would cost the state far, far more than 13,400 jobs. That’s because when you eliminate public sector jobs, particularly lower-paid jobs, there’s a direct, immediate impact on consumer spending. Although a rich person may spend slightly less if he or she has to pay slightly higher taxes, a middle-income worker who gets laid off stops spending much of anything — and the local merchants who relied on that person’s spending see the impact.

In fact, the Berkeley study points out, more than half the jobs that would be lost under Schwarzenegger’s plan would be in the private sector. The same goes for San Francisco: saving jobs requires new revenue solutions. And if Newsom’s budget doesn’t address that, the San Francisco supervisors must.

 

Moyers: Plutocracy and democracy can’t co-exist

Sasha Cuttler
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0
Moyers: Plutocracy and democracy can’t co-exist

The great public-interest journalist Bill Moyers, 75, ended his long-running Journal program on Friday with a warning: Plutocracy and democracy don’t mix. And these days, it appears that the former has all but destroyed the latter, turning American democracy into a cruel and deceptive farce. The fact that many readers will need to scramble to their dictionaries or computers to look up “plutocracy” is a good sign of how unaware the average citizen is of what ails this country and keeps them down. So let me save y’all the trouble, it means rule by the rich, and it’s what we now have in this country.

I got a lot of criticism last week when I raised the issue of how Meg Whitman, Goldman Sachs, and the other scions of our plutocracy have fatally undermined our democratic values, which used to involve taxing the rich adequately enough to fund our infrastructure, alleviate poverty, and protect the planet. So rather than repeating that point, I thought I’d just let Moyers carry the argument, as he did so effectively on his final Journal broadcast, calling for a kind of public-interest journalism, biased in favor of the people and the planet, that I firmly believe in. He’ll be missed, and we would all be wise to heed his words and his warning.

Moyers said: 

You’ve no doubt figured out my bias by now. I’ve hardly kept it a secret. In this regard, I take my cue from the late Edward R. Murrow, the Moses of broadcast news.

Ed Murrow told his generation of journalists bias is okay as long as you don’t try to hide it. So here, one more time, is mine: plutocracy and democracy don’t mix. Plutocracy, the rule of the rich, political power controlled by the wealthy.

Plutocracy is not an American word but it’s become an American phenomenon. Back in the fall of 2005, the Wall Street giant Citigroup even coined a variation on it, plutonomy, an economic system where the privileged few make sure the rich get richer with government on their side. By the next spring, Citigroup decided the time had come to publicly “bang the drum on plutonomy.”

And bang they did, with an “equity strategy” for their investors, entitled, “Revisiting Plutonomy: The Rich Getting Richer.” Here are some excerpts:

“Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper…[and] take an increasing share of income and wealth over the last 20 years…”

“…the top 10%, particularly the top 1% of the US– the plutonomists in our parlance– have benefited disproportionately from the recent productivity surge in the US…[and] from globalization and the productivity boom, at the relative expense of labor.”

“…[and they] are likely to get even wealthier in the coming years. [Because] the dynamics of plutonomy are still intact.”

And so they were, before the great collapse of 2008. And so they are, today, after the fall. While millions of people have lost their jobs, their homes, and their savings, the plutonomists are doing just fine. In some cases, even better, thanks to our bailout of the big banks which meant record profits and record bonuses for Wall Street.

Now why is this? Because over the past 30 years the plutocrats, or plutonomists — choose your poison — have used their vastly increased wealth to capture the flag and assure the government does their bidding. Remember that Citigroup reference to “market-friendly governments” on their side? It hasn’t mattered which party has been in power — government has done Wall Street’s bidding.

Don’t blame the lobbyists, by the way; they are simply the mules of politics, delivering the drug of choice to a political class addicted to cash — what polite circles call “campaign contributions” and Tony Soprano would call “protection.”

This marriage of money and politics has produced an America of gross inequality at the top and low social mobility at the bottom, with little but anxiety and dread in between, as middle class Americans feel the ground falling out from under their feet. According to a study from the Pew Research Center last month, nine out of ten Americans give our national economy a negative rating. Eight out of ten report difficulty finding jobs in their communities, and seven out of ten say they experienced job-related or financial problems over the past year.

So it is that like those populists of that earlier era, millions of Americans have awakened to a sobering reality: they live in a plutocracy, where they are disposable. Then, the remedy was a popular insurgency that ignited the spark of democracy.

Now we have come to another parting of the ways, and once again the fate and character of our country are up for grabs.

So along with Jim Hightower and Iowa’s concerned citizens, and many of you, I am biased: democracy only works when we claim it as our own.

Whitman and Goldman should be rich fodder for Democrats

Sasha Cuttler
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12
Whitman and Goldman should be rich fodder for Democrats

Democrats are now benefiting from the confluence of the public’s outrage over reckless self-dealing on Wall Street, debate over a Democratic bill to regulate such casino-style financial practices, and prosecution of Goldman Sachs for profiting from an economic collapse it helped cause. But the bigger question is whether top Democrats are willing to make the sustained case that it’s the rich who have screwed over the vast majority of Americans, and it’s time to recover that plundered wealth to deal with pressing problems like poverty, global warming, and infrastructure needs.

Central to that question is Meg Whitman, the Republican gubernatorial candidate who should be a poster child for a campaign against the predatory rich, whose increasing wealth has come at the expense of the working class and public institutions. As the Sacramento Bee reports today, Whitman is a former Goldman Sachs board member who profited from insider trading deals that are now illegal. And now she’s using her ridiculously over-inflated net worth to try to buy the governor’s office with unprecedented spending, something that should profoundly offend our basic democratic values.

Presumptive Democratic gubernatorial nominee Jerry Brown and some union officials have tried to highlight Whitman’s extensive Wall Street connections, but Brown has been way too tepid. Maybe that’s because he has his own Goldman Sachs ties, as the Los Angeles Times reported this week, although they pale in comparison to Whitman’s, which continue to this day and help pay for her takeover of California airways with her deceptive yet poll-tested propaganda.

As we wrote in our endorsement of Brown this week, it’s frustrating that Brown has been so unwilling to go after the rich, whether it be raising income taxes on millionaires (who have weathered the Great Recession far better than working stiffs) or letting commercial property be assessed at fair market value (since Prop. 13 passed, corporations that used to pay about two-thirds of the property taxes in California now pay about one-third, with individual property owners now paying two-thirds).

This is fertile ground for some long-overdue class warfare on behalf of the vast majority of people whose livelihoods have been threatened by the greedy, self-dealing rich. Anger at Wall Street for destroying the economy and then being bailed out by the federal government cuts across traditional ideological lines. It is felt by progressives, by conservative members of the Tea Party movement, and even by many political moderates.

At this point, few people trust the Democratic Party to lead the way toward a real accounting for the financial collapse, a recovery of the money from those who profited from the disaster, and an application of that money toward the most pressing public problems.

That’s a shame, but it’s also a real opportunity for a Democrat-led populist movement that unites disaffected factions on the left and right. After all, the problem only lies with about the richest 5 percent of Americans, those who have used elaborate financial ruses and tax shelters to hoard the wealth this country needs, even as the rest of us have lost financial ground. If there is any real democracy left in this country, it shouldn’t be that difficult for 95 percent of Americans to act in their own best interests.

After all, just this afternoon, even the most stubborn Republican leaders relented on allowing debate on the Democrats’ financial regulatory legislation, bowing to the very political pressures that I’m talking about. But if the Democrats want to try to regain their status as the party of the people, and begin to finally deal with this country’s long-neglected needs, they’ll need to see this as just the first small step down a path they should have taken decades ago.

In the company of bees

Jesse Hawthorne Ficks
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0
In the company of bees

Sarah@sfbg.com

GREEN ISSUE On a rainy afternoon in April, I’m standing on an abandoned military base on Alameda Island counting bees on a wild rosemary bush. In the three minutes I’ve been standing here, I’ve spotted five large, furry bumblebees, flitting from flower to flower, performing the function that keeps the whole ecosystem buzzing.

But the honeybees I often see here are absent. I’m not surprised. As I learned from Bernd Heinrich’s Bumblebee Economics (Harvard University Press, 1979) bumblebees are tundra-adapted insects that are better able to forage at low temperatures than sun-loving Italian honeybees.

I’ve been obsessed with bees for years. My sister says it began when I got stung on the bum as a toddler. My daughter says it started the day we rescued a swarm of half-drowned honeybees that had gotten stranded in high winds on a beach in Santa Cruz. All I know is that my bee obsession really bloomed when we lived on a lavender farm on the north coast of California and I found bumblebees asleep on the lavender, at night.

A beekeeper on the farm explained that, unlike honeybees, bumblebees don’t form permanent colonies. Instead, they nest in empty mouse holes and form small social groups that die out each fall. The bees sleeping on the flowers were probably male, he added; they tend to be lazier, while the females do most of the work.

He told me that only the young pregnant bumblebee queens hibernate in the fall, emerging alone the next spring to start new colonies. There are more than 4,000 species of native bees in North America. Some are the size of ants; others are territorial and drive other bees off the flowers they guard. Most are solitary, nonaggressive loners, and some aren’t that busy at all.

Curious, I bought a book about beekeeping from a clerk who told me his father once kept bees in Oakland. “Urban honey is the best,” he said, explaining that urban gardens often contain unusual and diverse collections of plants. “City bees have far more exotic choices of nectar.”

Fast-forward to the present and it seems that the general public also has taken a much more active interest in bees, particularly since 2006 when colony collapse disorder decimated honeybee populations, triggering warnings of a coming agricultural crisis and potential devastation to the ecosystem.

Scientists estimate that bees pollinate nearly three-fourths of the world’s flowering plants. These plants provide food and shelter for many species of animals. A 2008 survey by the U.S. Department of Agriculture shows that 36 percent of the 2.4 million hives in the U.S. have been lost to colony collapse disorder, which translates into billions of honeybees.

Some species of bumblebees also are vanishing. Robbin Thorp, professor emeritus of entomology at UC Davis, blames their disappearance on commercially reared bumblebees that are imported to pollinate hothouse tomatoes and then escape into the wild, where they leave pathogens on flowers (see “Buzz Kill,” 01/27/10).

But amid such big news, I’m still keeping a diary of notes on bees and focusing on my own backyard on Alameda Island, wondering how I can attract more bees. Xerces Society for Invertebrate Conservation heeded Thorp’s thesis and petitioned to stop the cross-country movement of bumblebees, but the Portland, Ore.,-based group has also produced handy pocket guides to help people like me identify bumblebees in the field.

So far I haven’t spotted the missing Western bumblebee, Bombus occidentalis. But I did see a bumblebee queen spiraling through a Potrero Hill garden on a mild day in early January. Reached by phone, Heinrich, professor emeritus of the biology department of the University of Vermont, told me that the queen would retreat into her underground hole when the weather got cold and wet again, which it soon did.

When he was writing Bumblebee Economics, which explores biological energy costs and payoffs using bumblebees as the model, Heinrich studied Bombus terricola, the yellow-banded bumble bee that was plentiful around Maine bogs in the 1970s.

“I could see dozens all at once. But since then, for years I didn’t see any at all, and since then I’ve only seen a few,” Heinrich said “Nobody figured out what happened.”

Gordon Frankie, professor and research entomologist at UC Berkeley, told me he’s happy to see the increased interest in urban bees. “People have begun to recognize that bees have a major role to play in agriculture,” Frankie said, as he and Rollin Coville, who has a doctorate in entomology from UC Berkeley and a passion for photographing insects, showed me around the experimental urban bee garden they created in 2003 at the edge of a field in downtown Berkeley.

“Bees love blues, purples, pinks, and yellows,” Frankie said, explaining that bees can see ultraviolet hues but not red flowers as we observe bees busily foraging on a blue lilac bush.

He also said bees love hanging out in open meadows where the sun shines and where they can see the flowers. “In the forest is no damn good if you’re a bee,” he said.

In July 2009, Frankie, Coville, and Thorp published an article in California Agriculture that outlined the results of bee surveys in gardens in Berkeley, La Canada Flintridge, Sacramento, San Luis Obispo, Santa Barbara, Santa Cruz, and Ukiah.

“Evidence is mounting that pollinators of crop and wild land plants are declining worldwide,” they wrote. “Results indicate that many types of residential gardens provide floral and nesting resources for the reproduction and survival of bees, especially a diversity of native bees. Habitat gardening for bees — using targeted ornamental plants — can predictably increase bee diversity and abundance and provide clear pollinator benefits.”

Frankie and Coville also helped produce a 2010 native bee calendar that features Coville’s photographs of bumble, squash, mason, carpenter, leafcutter, mining, wool carder, cuckoo, and ultragreen sweat bees, plus tips on how to attract these pin-ups by planting a variety of bee-friendly plants, avoiding pesticides, and refraining from over-mulching.

Researchers have observed almost 50 species of native bees at UC Berkeley’s bee garden, out of 85 species recorded citywide. UC Berkeley’s urban bee gardens’ Web site, (www.nature.Berkeley.edu/urbanbeegardens) notes that bees have preferences for gardens as well as flowers.

“Gardens with 10 or more species of attractive plants attracted the largest number of bees,” the Web site states, cautioning people against hanging around plants too long. “If an observer spends too long in one place hovering over the same patch of flowers, the bees will gradually begin to move on to other flowers where they won’t be bothered. To facilitate counts, it is sometimes a good idea to create little paths through the garden so that all patches are accessible to the observer.”

Here in California, high real estate prices have led to the increased paving over of bee habitat. And bees have come under additional stress in the wake of a 2006 E. coli outbreak that sickened more than 200 individuals and resulted in at least three deaths on the Central Coast. Growers have since been pressured to eliminate hedgerows, wetlands, habitat, and wildlife around farms.

But as a February 2010 Nature Conservancy report on food safety and ecological health notes, “certain on-farm food safety requirements may do little to protect human health and might in fact damage the natural resources on which agriculture and all life depend.”

These concerns have a direct, if hidden, impact on Bay Area residents, whose food supply comes almost exclusively from outside urban limits. Take San Francisco, where crop production consists of $1 million worth of orchids, flower cuttings, and sprouts on two acres of land, according to a 2008 Department of Public Health report.

Missing from that equation is the honey that local bees produced. As San Francisco beekeeper Robert MacKimmie recently noted, mites hit his hives hard in 2009. “And the summer and fall were pretty brutal since we were in the third year of drought,” MacKimmie said.

He hopes El Nino-related rains will be good for this year’s bees: more water means more flowers for bees, which rely on nectar and pollen to sustain themselves and their developing brood.

MacKimmie doesn’t have a garden and uses other people’s yards to keep his bees. “The honey serves as rent,” he said, noting that he only places two hives in each yard to disperse the bees in more equitably and sustainably. He points to the work of Gretchen LeBuhn, a San Francisco State University professor who started the Great Sunflower Project in 2008, as a fairly easy way to gather information about bee populations.

Reached by e-mail, LeBuhn said her project has more than 80,000 people signed up to plant sunflowers this year. “Participants create habitat by planting sunflowers and then contribute data to our project by taking 15 minutes to count the number of bees visiting their sunflower,” she wrote.

“The Great Sunflower Project empowers people from preschoolers to scientists to do something about this global crisis by identifying at risk pollinator communities,” LeBuhn said. “By volunteering to collect data as a group, these citizen scientists provided huge leverage on a minimal investment in science and created the first detailed international survey of pollinator health and its implications for food production.

“Getting this kind of critical scientific data at thousands of locations using traditional scientific methods would cost so much money that it is untenable,” she added.

LeBuhn encourages people to submit their bee count data at www.greatsunflower.org, which recommends growing bee balm, cosmos, rosemary, tickseed, purple coneflowers, and sunflowers. Unfortunately her data shows that “at least 20 percent of the gardens are getting very poor pollinator service.”

The public is encouraged to visit the UC Berkeley bee garden in May when public tours begin. But you might want to brush up on your Latin, the language experts speak when they hang out with the bees.

Coville saw a mason bee land on a lavender-flowered sage and said, “I think I just saw an Osmia on a Salvia mellifera!”

Frankie smiled at me and said, “It’s bee talk.”

No time for a trade war

David Talbot
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1
No time for a trade war

By Joseph E. Stiglitz

Here is our monthly installment of Joseph E. Stiglitz’s Unconventional Economic Wisdom column from the Project Syndicate news series. Stiglitz is University Professor at Columbia University, the winner of the 2001 Nobel Prize in economics and has a recently published book, Freefall .

NEW YORK – The battle with the United States over China’s exchange rate continues. When the Great Recession began, many worried that protectionism would rear its ugly head. True, G-20 leaders promised that they had learned the lessons of the Great Depression. But 17 of the G-20’s members introduced protectionist measures just months after the first summit in November 2008. The “Buy America” provision in the United States’ stimulus bill got the most attention. Still, protectionism was contained, partly due to the World Trade Organization.

Continuing economic weakness in the advanced economies risks a new round of protectionism. In America, for example, more than one in six workers who would like a full-time job can’t find one.

These were among the risks associated with America’s insufficient stimulus, which was designed to placate members of Congress as much as it was to revive the economy. With soaring deficits, a second stimulus appears unlikely, and, with monetary policy at its limits and inflation hawks being barely kept at bay, there is little hope of help from that department, either. So protectionism is taking pride of place.

The US Treasury has been charged by Congress to assess whether China is a “currency manipulator.” Although President Obama has now delayed for some months when Treasury Secretary Timothy Geithner must issue his report, the very concept of “currency manipulation” itself is flawed: all governments take actions that directly or indirectly affect the exchange rate. Reckless budget deficits can lead to a weak currency; so can low interest rates. Until the recent crisis in Greece, the US benefited from a weak dollar/euro exchange rate. Should Europeans have accused the US of “manipulating” the exchange rate to expand exports at its expense?

Although US politicians focus on the bilateral trade deficit with China – which is persistently large – what matters is the multilateral balance. When demands for China to adjust its exchange rate began during George W. Bush’s administration, its multilateral trade surplus was small. More recently, however, China has been running a large multilateral surplus as well.

Saudi Arabia also has a bilateral and multilateral surplus: Americans want its oil, and Saudis want fewer US products. Even in absolute value, Saudi Arabia’s multilateral merchandise surplus of $212 billion in 2008 dwarfs China’s $175 billion surplus; as a percentage of GDP, Saudi Arabia’s current-account surplus, at 11.5% of GDP, is more than twice that of China. Saudi Arabia’s surplus would be far higher were it not for US armaments exports.

In a global economy with deficient aggregate demand, current-account surpluses are a problem. But China’s current-account surplus is actually less than the combined figure for Japan and Germany; as a percentage of GDP, it is 5%, compared to Germany’s 5.2%.

Many factors other than exchange rates affect a country’s trade balance.  A key determinant is national savings. America’s multilateral trade deficit will not be significantly narrowed until America saves significantly more; while the Great Recession induced higher household savings (which were near zero), this has been more than offset by the increased government deficits.

Adjustment in the exchange rate is likely simply to shift to where America buys its textiles and apparel – from Bangladesh or Sri Lanka, rather than China. Meanwhile, an increase in the exchange rate is likely to contribute to inequality in China, as its poor farmers face increasing competition from America’s highly subsidized farms. This is the real trade distortion in the global economy – one in which millions of poor people in developing countries are hurt as America helps some of the world’s richest farmers.

During the 1997-1998 Asian financial crisis, the renminbi’s stability played an important role in stabilizing the region. So, too, the renminbi’s stability has helped the region maintain strong growth, from which the world as a whole benefits.

Some argue that China needs to adjust its exchange rate to prevent inflation or bubbles. Inflation remains contained, but, more to the point, China’s government has an arsenal of other weapons (from taxes on capital inflows and capital-gains taxes to a variety of monetary instruments) at its disposal.

But exchange rates do affect the pattern of growth, and it is in China’s own interest to restructure and move away from high dependence on export-led growth. China recognizes that its currency needs to appreciate over the long run, and politicizing the speed at which it does so has been counterproductive. (Since it began revaluing its exchange rate in July 2005, the adjustment has been half or more of what most experts think is required.) Moreover, starting a bilateral confrontation is unwise.

Since China’s multilateral surplus is the economic issue and many countries are concerned about it, the US should seek a multilateral, rules-based solution. Imposing unilateral duties after unilaterally labeling China a “currency manipulator” would undermine the multilateral system, with little payoff. China might respond by imposing duties on those American products effectively directly or indirectly subsidized by America’s massive bailouts of its banks and car companies.

No one wins from a trade war. So America should be wary of igniting one in the midst of an uncertain global recovery – as popular as it might be with politicians whose constituents are justly concerned about high unemployment, and as easy as it is to look for blame elsewhere. Unfortunately, this global crisis was made in America, and America must look inward, not only to revive its economy, but also to prevent a recurrence.

Joseph E. Stiglitz is a professor of economics at Columbia University and winner of the 2001 Nobel Memorial Prize in Economics. His most recent book, Freefall: Free Markets and the Sinking of the World Economy, is now available in French, German, and Japanese, and will be shortly available in Spanish, Italian, and Chinese.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org

Is BARFing good for your pet?

Jesse Hawthorne Ficks
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1
Is BARFing good for your pet?

tredmond@sfbg.com

It’s called the BARF diet — and it’s the hottest thing in San Francisco pet stores these days. No, it’s not food that makes your pet throw up; BARF stands for biologically appropriate raw food. And its advocates are passionate about its advantages over old-fashioned commercial pet food.

“Dogs and cats in the wild would eat raw meat,” said Susan Yannes, who co-owns Pawtrero pet store and bathhouse on Mississippi Street. “They didn’t have doggie barbecues.”

The idea is to mimic as closely as possible what your pets would have eaten way back when — in the natural state, before they became so close to humans that they started eating the same sort of processed food (some would say processed crap) many of us eat.

And the trend is growing — fast. Matt Koss, who owns Primal Pet Foods, a supplier of frozen raw animal feed, reports 20 percent annual growth. He cites a massive pet food recall in 2007 as a spur to his business, adding that “there’s more and more consumer awareness about pet food.” Primal Pet supplies food to 2,000 pet stores nationwide, 15 in San Francisco.

But the BARF diet also has its critics — and not just in the multibillion dollar pet food industry.

 

A BETTER DOG IN JUST WEEKS

Yannes got into the raw food business when one of her dogs developed skin problems. “We were feeding him standard dry dog food, and the vet said it was fine,” she said. “His coat had all these bumps, so they gave him allergy medicine.”

Instead, she tried shifting the dog to an all-natural diet — “and a week later, he was fine.”

That’s a common story among some pet owners, who say that raw meat, combined with raw bones and some specially prepared grain and vegetable matter, makes dogs and cats healthier and happier. “Business is growing,” Yannes said. “People who try this don’t go back.”

The argument is similar to what you hear from people who have given up processed human food in favor of fresh fruits and vegetables and organic, free-range meat. It’s more natural; all that processing (and even heat) destroys essential nutrients.

A summary published on Pawblog that Yannes passed on to me sums it up: “When switching your pet to a raw food diet, there are many differences you will notice in a few weeks, including improved breath and white teeth, better digestion resulting in much smaller and firmer stools, less itching, scratching, and allergies, increased energy, healthy skin, and a shiner coat.”

The reason? “Dogs and cats stomachs are designed to digest raw meat and soft bones, utilizing the very strong concentrations of hydrochloric acid as well as the short length of their gastrointestinal tract. Any bacteria are taken care of with this acid.”

But some vets — including those that support and practice non-Western medicine — are more cautious.

“A raw diet is fine,” said Dr. Randy Bowman, a vet at Pets Unlimited. “Dogs were meant to eat raw food in the wild. But we’ve come far beyond that. Their gastrointestinal system has evolved, and they don’t need it.”

Adds Dr. Jeffrey Bryan, a veterinary oncologist who teaches at the University of Washington: “I think highly processed foods are problematic, but I wish we had more scientific evidence on the value of the raw diet.”

 

NOT FOR ALL

I think it’s safe to say that the raw food diet isn’t for everyone. For one thing, it’s more expensive — but if it winds up keeping our dog out of the vet’s office, it will more than pay for itself over time. More important, it requires a fair amount of work — and a lot of attention.

Raw meat has to be handled carefully. All the preparation surfaces have to be washed, and the pets’ dishes need to be washed with soap and water after every meal. That’s because raw meat — even organic, free-range stuff — contains bacteria that can carry diseases to pets and humans.

And according to Bowman, even the best grade of meat can carry diseases: “Even human-grade meat that’s processed and shipped distances carries bacteria, and it’s not meant for raw consumption.” Bowman suggests that pet owners at least sear the meat first, since the bacteria tend to be on the surface.

Dr. Rebecca Remillard, a veterinarian and pet nutritionist, is one of the harshest critics of the raw diet. “This is not a safe practice,” she writes on her Web site. “Dogs fed raw meat or eggs may develop mild to severe gastrointestinal disease from consuming products contaminated” with disease-causing bacteria.

Koss says that’s just misinformation. “Bacteria and pathogens are a concern in the entire food industry,” he said. “But if the food is handled properly, there is no danger at all to pets.”

Susan Lauten, who has a master’s degree in animal nutrition and a doctorate in biomedical science, runs a veterinary consulting business in Knoxville, Tenn. She agrees that, for the most part, healthy dogs and cats can safely eat raw food. But she’s less enthusiastic about comparisons to the diet these creatures ate in the wild.

“In the wild, dogs didn’t live very long,” she told me. “And one reason was that they got sick from eating contaminated meat.”

Lauten has a different concern about the raw diet. Animals that eat raw meat can release salmonella and other dangerous pathogens in their stool. “You don’t want that around if you have kids or immune-compromised people,” she said. “You can clean up after your dog, but you might not get everything.”

And she raised another issue: economics. “Do you tell people that they can’t have a cat unless they can afford the most expensive kind of food?”

Dr. Hannah Good, who practices holistic veterinary medicine in Santa Cruz, argues that “there’s a lot that can be accomplished by going in a different direction than kibble.” She noted that “a lot of diets are 100 percent garbage.”

But she also said that high-grade kibble diets are balanced to include all the nutrients an animal needs.

And what do the vets feed their pets? Good said her dog “eats whatever I eat”; she prepares a version of her own meals for her canine companion. Lauten’s dog has inflammatory bowel disease “and does very well on a commercial veterinary diet.”

Bryan, who thinks what a dog eats is an important factor in its health, doesn’t do the BARF thing either: “I give my dog Science Diet.”

Editorial: CCA: Get it done by the deadline

David Talbot
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1

If the mayor and his handpicked PUC director, Ed Harrington, and his handpicked commissioners dawdle and delay, they’ll be giving a corrupt private utility exactly what it wants

EDITORIAL San Francisco has been talking about creating a community-choice aggregation system to sell cleaner electricity for five years now. There have been hearings, studies, debates, discussions, and negotiations. And now it’s coming down to the wire: to avoid the prospect of a Pacific Gas and Electric Company initiative on the June ballot that cuts the city’s effort off at the knees, San Francisco officials need to get CCA up and running before June 8.

But the mayor and the Public Utilities Commission don’t seem to have any sense of urgency. And the slow pace of negotiations with the contractor that would handle the electricity purchases is playing right into PG&E’s hands. If the mayor and his handpicked PUC director, Ed Harrington, and his handpicked commissioners dawdle and delay, they’ll be giving the corrupt private utility exactly what it wants.

It’s particularly frustrating since Marin County – which, unlike San Francisco, has no federal mandate for public power – is far ahead of this city, has a CCA program ready to go, and most likely won’t be affected by the PG&E initiative. What on earth is wrong with San Francisco?
CCA would allow the city to create the equivalent of an electricity buyer’s co-op, so that San Francisco could purchase electricity in bulk from providers that offer a more renewable mix. PG&E gets only a tiny portion of its power from renewables. With the advantage of wholesale purchases and no corporate profit, the city ought to be able to offer lower rates.

The contractor that won the bid to put the co-op together, Power Choice LLC, is run by people with substantial experience in the electricity business. The city’s been in talks with Power Choice about a contract since Feb. 9 – but progress is slow.

Harrington told us that he expects to have “a contract as soon as we can get a contract” but there’s no deadline. That’s crazy – there’s a very real deadline looming, a time bomb planted by PG&E, and the city needs to take it seriously. PG&E has used vast sums of corporate money to place a measure on the June ballot that would make it almost impossible to create new public-power entities; Proposition 16 would mandate a two-thirds local vote for any public agency that wants to sell retail electricity. And the company is spending $35 million on a campaign to get it passed.

That election is barely two months away – and if Prop. 16 passes before San Francisco has a signed contract and a CCA program under way, five years of work, led by Sup. Ross Mirkarimi and the Local Agency Formation Commission, could be for nothing. The best chance the city has to fight global warming, promote renewable energy, take control of its own energy future, and offer more stable, cheaper rates to customers could be gone, forever.

What’s the hang-up? Nobody’s talking, since the negotiations are still ongoing, but from what we hear, Harrington, Newsom, and the PUC members are worried about “risk” – that is, the risk that the San Francisco CCA might have to raise rates above what PG&E is currently charging to make the numbers pencil out. (Part of the risk: PG&E will have 60 days to try to convince customers to "opt out" of the CCA and stay with the private utility. If a critical mass of residents and businesses doesn’t stick with the CCA program, the economics could be dicey.)

But the risk discussions are missing a critical point: PG&E’s rates are going to go up, dramatically, over the next few years. The company already has an application for a stiff rate hike this year, and it’s inconceivable that the utility’s prices will do anything but continue to climb. So meeting the current rates is a moot point. And as Harrington acknowledged, renewable power rates are "much, much more stable than natural gas, oil, those kinds of things."

Besides, the real risk is that San Francisco will continue to violate the Raker Act and allow PG&E’s illegal monopoly to continue unabated. The PUC needs to get moving, now. Harrington should set a deadline, well in advance of the June election, and direct his staff to make every possible effort to get the program going by then. Newsom should publicly announce his support for the project and demand that the PUC finish its work in time to beat PG&E’s anti-public-power measure (unless he wants to run for lieutenant governor as the mayor who went back on his own positions and allowed PG&E to control the city).

Because right now, the only thing that has to happen for PG&E to win is nothing. *

CCA: Get it done by the deadline

David Talbot
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1
CCA: Get it done by the deadline

EDITORIAL San Francisco has been talking about creating a community-choice aggregation system to sell cleaner electricity for five years now. There have been hearings, studies, debates, discussions, and negotiations. And now it’s coming down to the wire: to avoid the prospect of a Pacific Gas and Electric Company initiative on the June ballot that cuts the city’s effort off at the knees, San Francisco officials need to get CCA up and running before June 8.

But the mayor and the Public Utilities Commission don’t seem to have any sense of urgency. And the slow pace of negotiations with the contractor that would handle the electricity purchases is playing right into PG&E’s hands. If the mayor and his handpicked PUC director, Ed Harrington, and his handpicked commissioners dawdle and delay, they’ll be giving the corrupt private utility exactly what it wants.

It’s particularly frustrating since Marin County — which, unlike San Francisco, has no federal mandate for public power — is far ahead of this city, has a CCA program ready to go, and most likely won’t be affected by the PG&E initiative. What on earth is wrong with San Francisco?
CCA would allow the city to create the equivalent of an electricity buyer’s co-op, so that San Francisco could purchase electricity in bulk from providers that offer a more renewable mix. PG&E gets only a tiny portion of its power from renewables. With the advantage of wholesale purchases and no corporate profit, the city ought to be able to offer lower rates.

The contractor that won the bid to put the co-op together, Power Choice LLC, is run by people with substantial experience in the electricity business. The city’s been in talks with Power Choice about a contract since Feb. 9 — but progress is slow.

Harrington told us that he expects to have "a contract as soon as we can get a contract," but there’s no deadline. That’s crazy — there’s a very real deadline looming, a time bomb planted by PG&E, and the city needs to take it seriously. PG&E has used vast sums of corporate money to place a measure on the June ballot that would make it almost impossible to create new public-power entities; Proposition 16 would mandate a two-thirds local vote for any public agency that wants to sell retail electricity. And the company is spending $35 million on a campaign to get it passed.

That election is barely two months away — and if Prop. 16 passes before San Francisco has a signed contract and a CCA program under way, five years of work, led by Sup. Ross Mirkarimi and the Local Agency Formation Commission, could be for nothing. The best chance the city has to fight global warming, promote renewable energy, take control of its own energy future, and offer more stable, cheaper rates to customers could be gone, forever.

What’s the hang-up? Nobody’s talking, since the negotiations are still ongoing, but from what we hear, Harrington, Newsom, and the PUC members are worried about "risk" — that is, the risk that the San Francisco CCA might have to raise rates above what PG&E is currently charging to make the numbers pencil out. (Part of the risk: PG&E will have 60 days to try to convince customers to "opt out" of the CCA and stay with the private utility. If a critical mass of residents and businesses doesn’t stick with the CCA program, the economics could be dicey.)

But the risk discussions are missing a critical point: PG&E’s rates are going to go up, dramatically, over the next few years. The company already has an application for a stiff rate hike this year, and it’s inconceivable that the utility’s prices will do anything but continue to climb. So meeting the current rates is a moot point. And as Harrington acknowledged, renewable power rates are "much, much more stable than natural gas, oil, those kinds of things."

Besides, the real risk is that San Francisco will continue to violate the Raker Act and allow PG&E’s illegal monopoly to continue unabated. The PUC needs to get moving, now. Harrington should set a deadline, well in advance of the June election, and direct his staff to make every possible effort to get the program going by then. Newsom should publicly announce his support for the project and demand that the PUC finish its work in time to beat PG&E’s anti-public-power measure (unless he wants to run for lieutenant governor as the mayor who went back on his own positions and allowed PG&E to control the city).

Because right now, the only thing that has to happen for PG&E to win is nothing. *

Work it!

Jesse Hawthorne Ficks
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2
Work it!

arts@safbg.com

LIT/VISUAL ART Yvan Rodic has to be one of the luckiest souls on the planet. He’d have to be to make my cynical ass fall in love with him. His new book Facehunter (Prestel, 320 pages, $24.95), a pastiche of photo book, style manual, travelogue and (hallelujah!) manifesto, has just the right combination of couture and subversion to earn a place on every cigarette- burned coffee table in the world.

"Globalization is a myth," he declares in his introduction. "The belief that international brands and pop culture are making the world a standardized society populated by clones is an old-skool science-fiction vision of the future, not the reality of the 21st century."

If anyone would know it is Rodic, who has traveled in nearly 30 countries, taking pictures of real people looking real fly for his blog, which eventually landed him as a contributor to Tokion, GQ, and Modette, which in turn got him a book deal with Prestel. Told you he was lucky. But luck, in this case, is only preparation meeting opportunity, because Rodic has an eye and a philosophy that is long overdue in the worlds of art, fashion and photography.

"Judging from the people I’ve met on my travels, it’s obvious that instead of talking about globalization, we should talk of ‘creole-ization,’" he says. Rodic calls this phenomenon of customizing identity from fragments of culture from different parts of world "New Creole Culture." I can think of another name for it …

Whether standing in front of the lush foliage of Turku or the stark grayness of a Manhattan winter, the clothes and the everyday people in Facehunter are beautiful. The mostly 20-something Nordic models within Rodic’s pictures are to be expected. He calls his peers "the iPod generation," and credits them for taking "this chameleon-like approach to fashion, exploring the many facets of their personalities with radically different looks, or customizing their individual styles with elements from different eras and cultures." John Galliano, Prince, Vivienne Westwood, Afrika Bambaataa, and myself cuff you on the ear for that one, young’un.

The real surprises in Facehunter come from Rodic’s more atypical models: the stout, the squat, the over 30. In these photos, I find the folks who really knew how to "work it" in the parlance of prêt-à-porter rabble-rousers. They bring a radical cohesion to the book’s overall aesthetic. People from cities as disparate as Sao Paulo, Singapore, and Warsaw have a shared sense of what is fashionable, transcending economics, geography, race, and gender — an encouraging sign if there ever was one.

There are no labels mentioned in Facehunter, no designers, allowing the clothes to speak for themselves, and even better, allowing you to bite that style without it coming back to bite you in the ass. Rodic posits that the rise of the "New Creole Culture" encourages this.

"Trends are dead, baby!" my new favorite shutterbug announces. "Nietzsche’s exhortation ‘Become what you are’ is now a reality." I couldn’t have said it better myself.

Stiglitz: The Dangers of Deficit Reduction

David Talbot
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0

By Joseph E. Stiglitz

Here is our monthly installment of Joseph E. Stiglitz’s Unconventional Economic Wisdom column from the Project Syndicate news series. Stiglitz is University Professor at Columbia University and the winner of the 2001 Nobel Prize in economics. His forthcoming book Freefall will be published this winter.

NEW YORK – A wave of fiscal austerity is rushing over Europe and America. The magnitude of budget deficits – like the magnitude of the downturn – has taken many by surprise. But despite protests by the yesterday’s proponents of deregulation, who would like the government to remain passive, most economists believe that government spending has made a difference, helping to avert another Great Depression.

Most economists also agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial sector hawks who are raising alarms about government spending. After all, even deficit hawks acknowledge that we should be focusing not on today’s deficit, but on the long-term national debt. Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long-term deficits. Banks’ short-sightedness helped create the crisis; we cannot let government short-sightedness – prodded by the financial sector – prolong it.

Faster growth and returns on public investment yield higher tax revenues, and a 5 to 6% return is more than enough to offset temporary increases in the national debt. A social cost-benefit analysis (taking into account impacts other than on the budget) makes such expenditures, even when debt-financed, even more attractive.

Finally, most economists agree that, apart from these considerations, the appropriate size of a deficit depends in part on the state of the economy. A weaker economy calls for a larger deficit, and the appropriate size of the deficit in the face of a recession depends on the precise circumstances.

It is here that economists disagree. Forecasting is always difficult, but especially so in troubled times. What has happened is (fortunately) not an everyday occurrence; it would be foolish to look at past recoveries to predict this one.

In America, for instance, bad debt and foreclosures are at levels not seen for three-quarters of a century; the decline in credit in 2009 was the largest since 1942. Comparisons to the Great Depression are also deceptive, because the economy today is so different in so many ways. And nearly all so-called experts have proven highly fallible – witness the United States Federal Reserve’s dismal forecasting record before the crisis.

Yet, even with large deficits, economic growth in the US and Europe is anemic, and forecasts of private-sector growth suggest that in the absence of continued government support, there is risk of continued stagnation – of growth too weak to return unemployment to normal levels anytime soon.

The risks are asymmetric: if these forecasts are wrong, and there is a more robust recovery, then, of course, expenditures can be cut back and/or taxes increased. But if these forecasts are right, then a premature “exit” from deficit spending risks pushing the economy back into recession. This is one of the lessons we should have learned from America’s experience in the Great Depression; it is also one of the lessons to emerge from Japan’s experience in the late 1990’s.

These points are particularly germane for the hardest-hit economies. The United Kingdom, for example, has had a harder time than other countries for an obvious reason: it had a real-estate bubble (though of less consequence than in Spain), and finance, which was at the epicenter of the crisis, played a more important role in its economy than it does in other countries.

The UK’s weaker performance is not the result of worse policies; indeed, compared to the US, its bank bailouts and labor-market policies were, in many ways, far better. It avoided the massive waste of human resources associated with high unemployment in America, where almost one out of five people who would like a full-time job cannot find one.

As the global economy returns to growth, governments should, of course, have plans on the drawing board to raise taxes and cut expenditures. The right balance will inevitably be a subject of dispute. Principles like “it is better to tax bad things than good things” might suggest imposing environmental taxes.

The financial sector has imposed huge externalities on the rest of society. America’s financial industry polluted the world with toxic mortgages, and, in line with the well established “polluter pays” principle, taxes should be imposed on it. Besides, well-designed taxes on the financial sector might help alleviate problems caused by excessive leverage and banks that are too big to fail. Taxes on speculative activity might encourage banks to focus greater attention on performing their key societal role of providing credit.

Over the longer term, most economists agree that governments, especially in advanced industrial countries with aging populations, should be concerned about the sustainability of their policies. But we must be wary of deficit fetishism. Deficits to finance wars or give-aways to the financial sector (as happened on a massive scale in the US) lead to liabilities without corresponding assets, imposing a burden on future generations. But high-return public investments that more than pay for themselves can actually improve the well-being of future generations, and it would be doubly foolish to burden them with debts from unproductive spending and then cut back on productive investments.

These are questions for a later day – at least in many countries, prospects of a robust recovery are, at best, a year or two away. For now, the economics is clear: reducing government spending is a risk not worth taking. 

Joseph E. Stiglitz is University Professor at Columbia University and recipient of the 2001 Nobel Prize in Economics. His most recent book Freefall: Free Markets and the Sinking of the Global Economy is available in French (Le Triomphe De La Cupidité, Liens Qui Liberent) and will be available shortly in Japanese, Spanish, German, and Italian.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org

Uproot: Little City Gardens gots to get paid

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1
Uproot: Little City Gardens gots to get paid

By Robyn Johnson

In a manifesto of sorts released by Civil Eats, Brooke Budner of Little City Gardens, co-owned by Caitlyn Galloway, lays out the farm’s intention to create San Francisco’s first for-profit urban micro-farm in that generates a viable income for farmers, thus paving the way for more potential urban farmers follow suit:
       
“Our approach to growing the urban agriculture movement is based upon the premise that urban food production will not reach its full potential unless there are avenues in the local market economy for growers to make a living through the sales of their produce. Currently, San Francisco’s urban agriculture is largely anchored in the realms of education and non-profit work. While a substantial amount of food can be grown […] the quantity pales in comparison to what could be grown if farmers could earn a living wage through the cultivation and sales of food in the city.“

She admits that the concrete details outside of their business plan are a little vague and that a time of trial and error lies ahead. But the energy behind their can-do-ness and optimism is infectious, and especially invigorating in these crisitunity-loaded times. With others exploring creative economics—take Mission Street Food’s radical new model relying upon 100 investors or even People’s Grocery alliance with for-profit grocery store in West Oakland—perhaps it’s time to be a little open to out-of-the-box possibilities.

Their fundraising campaign (they’ve been unable to apply for loans as an experimental business) has already met and exceeding its target by at least two months in advance. So clearly, the community has got their back.

What do you think? Can Little City Gardens foster a sustainable market for urban farms to thrive in San Francisco?

This kiss’ progress

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0
This kiss’ progress

arts@sfbg.com

MUSIC Tino Sehgal doesn’t like objects. But it’s not just the thing-ness of things he shuns; it’s also the traces of things. In addition to refusing any recordings of his work, Tino (his last name is too “thingy” even for me) also refuses to deal with artist statements or written contracts, or anything, really, that might leave a material residue. (Digital photos? Sorry, they can be disseminated and printed.)

Tino is formally trained in dance and economics (not visual art). One starts to wonder if he doesn’t share the same eccentric anxieties and crackpot economic theories Ezra Pound did about usury. Pound loathed interest precisely because it left a trace; it created a thing (money) out of a non-thing (borrowed time) and refused to disappear. And this usurpation competed with the clean, rigid images and lines of Pound’s Vorticist vision and poetics of precision.

Despite Pound’s and Tino’s shared aversion for extraneous excess, there is one fundamental difference: if the Vorticist and Imagist movements attempted to “capture movement in an image,” then Tino’s work is attempting to release movement beyond the image — and into the realm of lived experience. But before I delve into the ontology of materialism, let me walk you through his current show at the Guggenheim Museum. (Those who plan to see the work in person should stop reading now.)

With a steady flow of people ahead and behind, you pass through the revolving doors at the Guggenheim’s entrance and are spit into the atrium of the Frank Lloyd Wright-designed rotunda — a naturally bright, open chamber that resembles an indoor shopping mall with circulating escalators, or the inside of an enormous Energy Dome (that Devo hat) flipped upside down and bleached white. Either way, when you look up, you feel vertigo. When you look back down, you see Tino’s first piece, Kiss (2004), and you start to feel dizzy again, but erotically so.

Kiss is two young things caught in a slow, exaggerated embrace of seamless looped sequences blending makeouts and dry humps all at about the speed of 2 frames per second. The couple is entirely absorbed into each other as they transition from standing to lying down and back again. And you become entirely absorbed in their absorption. It’s like watching a soft-core in slo-mo. You start to get aroused, but then a grandmother chides her grandson in that grating “New Yawk” accent, and your gaze breaks. You roll your head slowly, exhaling, then head for the ramp nearby.

After the first bend an elated, eager child steps in front of you and offers his hand. “Hi. This is a piece by Tino Sehgal, would you like to follow me?” “Sure,” you say. Then the precocious or extremely caffeinated kid asks you what your understanding of “progress” is, and you respond a bit sarcastically, “It’s a word.” But the kid doesn’t give a shit what you think or say; he’s just cataloging your responses in order to hand them off to the next interlocutor — a teenager with an opinion.

“You think “progress” is a word?” asks the confident teen, who anticipates your answer with a reply before you’re able to split your lips. You argue back and forth about the merits and semiotics of progress, and whether or not it’s even a real thing. The philosophical banter is fun for a moment but then you realize the jerk is basically repeating everything you say but with a contradictory spin. So you quicken your pace and by the next bend in the road the succeeding generation’s representative inserts an anecdotal non sequitur in stride.

“So the other day I lied about something really petty … You ever do that? Lie about stupid things?” Or “After I graduated law school, I realized I didn’t want to be a lawyer and am now doing voluntary work….” Or some other minor/major consciousness shift where one becomes concerned and aware of one’s life and its recursive trajectory. This is where the conversations actually start to “progress” and you find yourself engaging with a stranger who otherwise feels like an old friend — albeit a needy, unstable one.

At this point there are maybe two revolutions left in the rotunda. Your adult friend gets siphoned off somewhere into the building’s innards, and a weathered, smiling face greets you in relief. The two of you walk slowly as the senior agent massages a memory and focuses on the importance of restoring phenomenology. Your attention oscillates between boredom and intrigue as you offer “ums” and “uh-huhs” and the occasional “wow, really?” Then you reach the end, and Wisdom vanishes.

You start to wonder about the disingenuous aspects of Tino’s pieces — how some of the conversations felt artificial and scripted, not genuine and spontaneous — and if the experience was real. Like really real. As real as the people or walls you bumped into along the way, and as real as the vertigo-induced anxiety now screaming through your body as you look over the hip-high ledge and down the spiraling corridor at Kiss below. Kiss is now in its dry-humping stage and looks 100 percent flat, like a 2-D painting — a painting depicting a deformed centaur’s suicide: three legs, two heads, and one arm sprawled in an outline. But then it moves. Slightly.

“When you look at a painting,” Tino tells me in an interview back on ground level, “you know that you might like it or you might not like it, but you don’t have a similarity to it. With my work, the medium of the work is the same as you. And as a visitor, one has all the resources there as well.”

The interactions, Tino assures me, “are not scripted. They might repeat something sometimes, but that’s not what they’re supposed to do. They get information about you, and then they react to you. It’s a loose structure.” The only restrictions the conversationalists have: “They can’t talk about art, and they can’t talk about the piece itself.”

It’s this last part, the refusing to talk about itself — refusing, for instance, to call itself “This Is Progress” — that makes Tino’s work surpass a role as just the latest “Death of Art” incarnation in the Fountain and Brillo Box evolutionary chain. And because Sehgal’s work desperately needs you — an audience member, a participant — to exist, a sustainable and open relationship develops and lasts even after the museum’s doors close.

CCA Wattis Institute is currently hosting Tino’s first U.S. solo exhibition, a constantly evolving work incorporating pause, through April 24. It’s on a much smaller scale than the Guggenheim’s Sehgal show, but well worth the visit.

TINO SEHGAL

Through March 10

Solomon R. Guggenheim Museum

1071 Fifth Ave., N.Y.

(213) 423-3500

www.guggenheim.org

TINO SEHGAL

Through April 24

CCA Wattis Institute for Contemporary Arts

1111 Eight St., SF

(415) 551-9210

www.wattis.org

Robert Skidelsky: The big bank fix

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Robert Skidelsky: The big bank fix

If reformers are to win, they must be prepared to fight the world/s most powerful vested interest

By Robert Skidelsky 

Robert Skidelsky, a member of the British House of Lords, is Professor emeritus of political economy at Warwick University, author of a prize-winning biography of the economist John Maynard Keynes, and a board member of the Moscow School of Political Studies.

LONDON – Two alternative approaches dominate current discussions about banking reform: break-up and regulation. The debate goes back to the early days of US President Franklin D. Roosevelt’s “New Deal,” which pitted “trust-busters” against regulators. 


In banking, the trust-busters won the day with the Glass-Steagall Act of 1933, which divorced commercial banking from investment banking and guaranteed bank deposits. With the gradual dismantling of Glass-Steagall, and its final repeal in 1999, bankers triumphed over both the busters and the regulators, while maintaining deposit insurance for the commercial banks. It was this largely unregulated system that came crashing down in 2008, with global repercussions.

At the core of preventing another banking crash is solving the problem of moral hazard – the likelihood that a risk-taker who is insured against loss will take more risks. In most countries, if a bank in which I place my money goes bust, the government, not the bank, compensates me. Additionally, the central bank acts as “lender of last resort” to commercial banks considered “too big to fail.” As a result, banks enjoying deposit insurance and access to central bank funds are free to gamble with their depositors’ money; they are “banks with casinos attached to them” in the words of John Kay.

The danger unleashed by sweeping away the Glass-Steagall barrier to moral hazard became clear after Lehman Brothers was allowed to fail in September 2008. Bail-out facilities were then extended ad hoc to investment banks, mortgage providers, and big insurers like AIG, protecting managers, creditors, and stock-holders against loss. (Goldman Sachs became eligible for subsidized Fed loans by turning itself into a holding company). The main part of the banking system was able to take risks without having to foot the bill for failure. Public anger apart, such a system is untenable.

Premature rejection of bank nationalization has left us with the same two alternatives as in 1933: break-up or regulation. Taking his cue from Paul Volcker, a former chairman of the US Federal Reserve, President Barack Obama has proposed a modern form of Glass-Steagall.

Under the Obama-Volcker proposals, commercial banks would be forbidden to engage in proprietary trading – trading on their own account – and from owning hedge funds and private-equity firms. Moreover, they would be limited in their holding of derivative instruments, and Obama has suggested that no commercial bank should hold more than 10% of national deposits. The main idea is to reduce the risks that can be taken by any financial institution that is backed by the federal government.

The alternative regulatory approach, promoted by Nobel Laureate Paul Krugman and the chairman of Britain’s Financial Service Authority, Adair Turner, seeks to use regulation to limit risk-taking without changing the structure of the banking system. A new portfolio of regulations would increase banks’ capital requirements, limit the debt that they could take on, and establish a Consumer Financial Protection Agency to protect naïve borrowers against predatory lending.

This is not an either-or matter. In testimony to the Senate Banking Committee in early February, MIT’s Simon Johnson endorsed the Volcker approach, but also favored strengthening commercial banks’ capital ratios “dramatically” – from about 7% to 25% – and improving bankruptcy procedures through a “living will,” which would freeze some assets, but not others.

Many details of the Obama package are unlikely to survive (if, indeed, the plan itself does). But there are powerful arguments against the principles of his approach. Critics point out that “plain old bad lending” by the commercial banks accounted for 90% of banks’ losses. The classic case is Britain’s Royal Bank of Scotland, which is not an investment bank.

The commercial banks’ main losses were incurred in the residential and commercial housing market. The remedy here is not to break up the banks, but to limit bank loans to this sector – say, by forcing them to hold a certain proportion of mortgages on their books, and by increasing the capital that needs to be held against loans for commercial real estate.

Moreover, many countries with integrated banking systems did not have to bail out any of their financial institutions. Canada’s banks were not too big to fail – just too boring to fail. There is nothing in Canada to rival the power of Wall Street or the City of London.  This enabled the government to swim against the tide of financial innovation and de-regulation. It is countries like the US and Britain, with politically dominant financial sectors competing to take over financial leadership of the world, that suffered the heaviest losses.

This is the point that the well-intentioned regulators miss. At root, the battle between the two approaches is a question of power, not of technical financial economics. As Johnson pointed out in his Congressional testimony, “solutions that depend on smarter, better regulatory supervision and corrective action ignore the political constraint on regulation and the political power of big banks.”

Such proposed solutions assume that regulators will be able to identify excess risks, prevent banks from manipulating the regulations, resist political pressure to leave the banks alone, and impose controversial corrective measures “that will be too complicated to defend in public.” They also assume that governments will have to the courage to back them as their opponents accuse them of socialism and crimes against freedom, innovation, dynamism, and so on. In fact, this chorus of abuse has already started, led by Goldman Sachs Chairman Lloyd Blankfein.

There is another interesting parallel with the New Deal. Roosevelt got the Glass-Steagall Act through Congress within a hundred days of his inauguration. Obama has waited over a year to suggest his bank reform, and it is unlikely to pass. This is not just because the banking crisis in 1933 was greater than today’s crisis; it is because much more powerful financial lobbies now stand between pen and policy. If reformers are to win, they must be prepared to fight the world’s most powerful vested interest.

Robert Skidelsky, a member of the British House of Lords, is Professor emeritus of political economy at Warwick University, author of a prize-winning biography of the economist John Maynard Keynes, and a board member of the Moscow School of Political Studies.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org

Rambling Jerry Brown speech raises fear among Dems

Sasha Cuttler
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Rambling Jerry Brown speech raises fear among Dems

If Jerry Brown’s keynote speech last night to a gala environmentalist dinner is any indication, the Democratic Party faces an uphill battle to win this year’s governor’s race. The rambling, alternately vague and academic, and often pointless address did little to inspire or excite a large, sympathetic crowd that was loaded with top Democrats. In fact, some party luminaries were openly aghast at the poor performance, with one making this succinct (if off-the-record) assessment: “We’re fucked.”

Brown has never been a dynamic speaker, but the unscripted, half-hour speech – given at the Sierra Club San Francisco Bay Chapter’s David Brower Dinner in San Francisco, a $250 per head affair that drew top Bay Area Democrats – illustrates the danger of letting a primary be decided by legend and money rather than political persuasion.

Brown’s fundraising prowess and strong poll numbers chased Gavin Newsom and other potential rivals out of the Democratic Party gubernatorial primary, even though Brown hasn’t really outlined his political vision for California, given many extended speeches since being discussed as a candidate for governor, or even officially declared his candidacy (he and others have until March 12 to do so).

“This thing is really daunting,” Brown said of the governor’s race toward the end of the speech, seemingly unsure that he was ready to run, but saying he would make an announcement sometime in the next couple weeks.

Brown started his speech by telling the crowd that he didn’t know what he was going to talk about, so when he arrived (late) for the speech, he asked San Francisco Democratic Party chair Aaron Peskin what he should say, and Peskin told him to talk about how there were more salmon in the streams and better overall environmental health back when Brown was governor in the ‘70s.

But rather than taking that advice and giving a forceful call to strengthen environmental regulation or conjure up California’s better days, Brown meandered around and mused on that and other topics, feeding fears that the 71-year-old candidate might come off as a nostalgic, slightly senile former-Governor Moonbeam rather than an effective agent of needed change.

“During that period when I was governor, I’m not going to call it the golden age because some people think I’m in the golden age, so I don’t want to get people confused. That’s why I don’t want to talk about way back then, because there are a number of people I can see weren’t even born then, so it gets a little embarrassing and I like to pretend it was just yesterday. But in that period, California created almost twice as many jobs as the nation did. We created jobs at about 24 percent over eight years and the nation grew jobs at 13 percent, so almost twice as much. And then Deukmejian did pretty good, he had about the same, maybe half a percent more,” Brown rambled, ticking off statistics, hedging his point by noting how little governors can really do to create jobs, before working up to a decent line that was flatly delivered: “It was a time when the environment got its biggest boost, as far as public policy.”

Nobody applauded, so he continued. “I was thinking tonight, I was trying to figure out that if I did announce, what the hell would I say? And so I decided to go back and read my first announcement, January 24, 1974. I was 35 then, it was another time, I’m now a little older than that. But I talked about clean air, I talked about the energy crisis and getting new sources of energy. I talked about statewide land use planning” – that last item drawing some applause – “and I talked about jobs. And I was thinking, wow, we still got a jobs problem, we got an energy problem, we have a land use problem that feeds into the energy problem, and while the air is cleaner in many respects, it’s not clean enough, or it isn’t healthy enough.”

On substance, Brown had his moments. But even on the need for better statewide land use planning, he went off on a tangent, saying he didn’t even know what that meant when he filled out a Sierra Club questionnaire back in the ‘70s, and he’s not sure how to accomplish it now. 

“You have to make it easier to live closer to where you work,” Brown said in what of his few lines of the night that drew applause, although he didn’t begin to explain how he might achieve this goal. And on a controversial subject that is easily attacked by the right – big government wants more control over private property – Brown’s lackadaisical discussion of the issue was disconcerting.

He even rankled a few Sierra Club members by vaguely criticizing East Bay growth controls designed to reduce sprawl, which the Attorney General’s Office is seeking to overturn: “Pleasanton wants to create 50,000 jobs, but they have a housing cap – for all I know, Sierra Club probably supported that housing cap, so I want to just rub your nose in the housing cap for just a minute – the trouble with the housing cap is they want to create all these jobs.”

Brown tried to argue that allowing more housing in Pleasanton is a strategy for combating global warming because there are jobs there and it would reduce commutes, but he’s going to need to be more on his game than he is right now to win that argument. Instead, we get his fairly dismissive summary of this important issue: “Land use is a big deal, it’s difficult, lots to do on that.”

Against businesswoman Meg Whitman, the Republican gubernatorial primary frontrunner, there is real potential in Brown’s basic belief that markets need to be regulated and that running the government isn’t just like running a business. And somehow, Brown will need to find a way to better distill and deliver that message to counter the right’s pro-business sound bites. 

“There are people saying business knows best,” Brown said, meandering off about companies and widgets for a minute before continuing his point. “But when you look at what we really have to deal with, it’s not just about economics and the market. It’s also about ecology and morality, and morality is about customs, it’s about traditions, it’s about our deepest patterns of how we all relate to one another and that can’t just be assimilated into market incentives. The market assumes honesty, you meet your promises, and also assumes there’s a framework, because things can just run off the cliff and that’s exactly what’s happening. As you add more people, you have more cars, and when you have more cars, they burn fossil fuel and what’s happening in California is you have cars reproducing faster than people…That’s the real challenge here, that we’re trying to get the idea out that we’re trying to save the future.”

Editor’s Notes

David Talbot
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Editor’s Notes

Tredmond@sfbg.com

I have been watching and listening to the Meg Whitman for Governor ads, and they all seem to have the same basic message, one we’ve heard many times before from rich former executives wanting to get into politics. Whitman thinks that her experience in private business will make her a good governor, that she can run the state the same way she ran eBay.

Her policy proposals are horrible (just check out what she wants to do to the schools and how she plans to cut the state workforce by 40,000 people, a brilliant move in a recession). But beyond that, there’s a serious disconnect here.

See, California isn’t a business. And private-sector training, private-sector models, and private-sector management don’t translate very well.

At eBay, Whitman’s goal was to make money for shareholders. The idea was to expand markets, grow market share, increase revenue, and keep expenses low enough that at the end of the year, there’s a nice profit left over. Not to go all Marxist or anything, but you had to pay every employee a bit less than actual value of their work; that’s how investors make money.

California is — at best — a nonprofit, and even that model doesn’t directly apply. Forget the political skills it takes to work with the Legislature and thousands of interest groups and stakeholders. Just consider the basic economics.

The state doesn’t exist to make money, but to provide public services. Fiscal prudence may be necessary to keep things afloat, but it’s not the point. As the late, great David Brower used to say, any environmental group that isn’t busting its budget, isn’t doing enough work. Revenue doesn’t exist to pay dividends, or even big salaries. In a well-run state, just about every dollar that comes in gets spent. And many of the outcomes — the results that CEOs are always looking for — can’t be easily quantified, certainly not in the short term. (Spend an extra $20 billion on public education and you’ll definitely get better schools — but you might not get better test scores, certainly not for the first few years.)

There’s a reason that CEOs don’t tend to do well in politics. It’s a different game.

 

Newsom’s $72 million corporate giveaway

Sasha Cuttler
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Newsom’s $72 million corporate giveaway

City economist Ted Egan yesterday released his analysis of the payroll tax exemption for new hires that Mayor Gavin Newsom has proposed, one of several business tax cut proposals that we discuss in this week’s Guardian. Egan estimates that the net revenue loss (which takes into account taxes paid by the new hires) to the city would be $72 million over the next two years.

“The proposed policy will have a strong positive effect on local hiring, albeit at a steep costs the City’s General Fund,” Egan wrote, later adding, “The policy would also make the City’s serious current budget deficit worse, and likely lead to significant employment reductions in the City’s workforce.”

While the tax breaks amount to only about 1 percent of businesses’ payroll costs, Egan’s models predict they would spur the creation of 4,330 jobs, or about 5 percent of the jobs lost since 2007. Yet he also notes that the unemployment rate in San Francisco has been dropping in recent months and the economy is predicted to add about 20,000 jobs in the next two years even without this subsidy by taxpayers.

Both Newsom and Egan have tried to cast these tax breaks as similar to the approach being taken by President Obama. Egan writes, “The policy is a targeted tax cut that mirrors the President’s New Jobs Tax Credit, which is supported by a wide range of economists.”

But the big difference is that the federal government can deficit-spend and doesn’t have to reduce its own spending, which would have a negative impact on economy, as Egan’s report acknowledged a few pages later: “Because the City cannot run a fiscal deficit from one year to the next, the lost revenue would necessitate reductions in City staffing and services, like any revenue shortfall.”

The report specifically doesn’t analyze the impact of that reduced government spending on the local economy, with Egan writing that, “is not considered, because the City could adjust to that impact in many ways.” New taxes, for example, which Newsom has avoided proposing as a partial solution to the city’s gargantuan $520 million projected budget deficit.

In an interview with the Guardian this morning, Egan also affirmed what he has told us before, that the consensus among economists is that direct government spending stimulates the economy more than tax cuts, even though these tax cuts tied to new hiring are better than general tax cuts.

For example, Egan said that another current Newsom tax cut proposal – a $2,000 tax break for businesses that provide health care to employees – “would have a negative effect on the economy” because it doesn’t encourage hiring.

While the report is generally favorable to the notion of these targeted tax cuts, it doesn’t make a recommendation. And it does take away a key argument that Newsom and other believers in trickle down economics generally make, that the tax cuts will ultimately be paid for by increased economic activity. Instead, the report shows the cuts will cost $85 million of two years and the new hires will generate $12 million in increased sales, hotel, and other taxes. Even stretching that analysis out over 10 years, assuming the new hires remain employed after the tax exemption ends, the reports says the policy will still cost the city $42 million.

Sup. John Avalos, the chair of the Board of Supervisors Budget and Finance Committee who has been skeptical of Newsom’s tax cut proposals, has set a Feb. 24 hearing on the proposal.

Basically, this is a policy decision rooted in ideological beliefs: Should the city subsidize private companies at great cost to the public treasury, payroll, and services? Does the public sector exist solely to serve private corporations? Economic conservatives who are hostile to government generally think so, but progressives think it’s crazy to make deep cuts to government spending and services just to subsidize private sector economic growth, most of which is going to occur naturally anyway.

The “jobs” shell game

Jesse Hawthorne Ficks
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The “jobs” shell game

Written with Nima Maghame

news@sfbg.com

While many San Francisco city officials have been trying to figure out how to close a projected budget deficit of more than $520 million, Mayor Gavin Newsom has spent the last month trying to make that spending gap even larger by aggressively pushing a variety of business tax cuts that economists say will do little to improve the local economy and could actually make it worse.

Newsom first proposed his so-called “local economic stimulus package” a year ago during his ill-fated run for governor, just as President Barack Obama was pushing his own economic stimulus plan. But unlike the federal government’s $787 billion plan, about a third of which involved tax cuts demanded by conservatives, Newsom proposed to cut local business taxes while also deeply slashing local government spending and laying off hundreds of city workers.

Most economists say that’s a terrible idea. In fact, a report issued at the time by Moody’s Investor Services made it clear that every dollar of direct government spending adds about $1.60 into the economy (or $1.73 if it’s on food stamps, the most stimulative spending government can make), whereas business tax cuts add only about $1 to the economy for every dollar spent.

We clashed with the Mayor’s Office at the time on our Politics blog (see “Mayor Newsom doesn’t understand economics,” 2/13/09), with Newsom’s spokesperson telling us the mayor was relying on the input of City Economist Ted Egan. But when we interviewed Egan about the issue, he agreed that it’s a bad idea to slash government spending to pay for tax cuts.

“We were in no way saying you should cut taxes to stimulate the economy, particularly if it means reducing government spending,” Egan told us then. And when we asked directly whether it’s better for San Francisco’s economy for the city to directly spend a dollar on payroll or to give that dollar away in a private sector tax break, he told us, “The consensus among economists is that most of the time government spending stimulates the economy more.”

The Board of Supervisors basically ignored Newsom’s proposal. But he revived it last month, expanding the proposals with even more private sector subsidies and making them the centerpiece of his Jan. 13 State of the City speech, publicly pushing it since then with a series of public events at businesses located in the city.

And this time — with the local economy still slow, projected city budget deficits bigger than ever, and little serious talk about how the city can bring in more money — it appears the proposals will be the subject of a series of hearings before Board of Supervisors’ committees in the coming weeks.

Newsom’s tax cut proposals include a proposal to waive the 1.5 percent payroll tax (the city’s main business tax) for all new hires; extend and expand the payroll tax exemption for biotech companies (see “Biotech’s bonanza,” p. 12); give small businesses tax credits for their spending on health plans; and allow developers to pass one-third of their affordable housing in-lieu fees onto future homeowners.

Newsom and his Press Secretary Tony Winnicker have spoken euphorically about the proposals, saying they’re desperately needed to spur the local economy. “We believe that enacting these tax incentives, particularly the payroll tax credit for new hires, is one of the single biggest things we can do for economic growth,” Winnicker said.

Despite repeated questions about the economists’ concerns over financing tax cuts with government spending cuts, we couldn’t get them to address the tradeoff directly. “The mayor will support critical public services,” was all Winnicker would say about the deep cuts that Newsom is expected to announce in his June 1 budget.

Sup. John Avalos, who chairs the Board of Supervisors Budget and Finance Committee, expressed more skepticism about the mayor’s proposals. “Do tax breaks have the intended effect of stimulating the economy? As we underfund government services, are we getting a net gain or are we getting something taken away? For the very small businesses in my district, it’s going to be trickle-down economics. It’s very unrelated and unmeasurable in benefit,” he told us.

David Noyola, board aide to President David Chiu, said his boss is supporting the biotech tax credit but reserving judgment on the rest. “It’s going to be a cost-benefit analysis,” Noyola said. “When we’re talking about jobs, we’re talking about public and private sector jobs, always.”

While Egan’s economic analysis predicts tax cuts will encourage some economic growth, even he is circumspect about the good it will do, particularly without finding a way to avoid deep cuts in city spending. “The truth of the matter is that our stimulus efforts are small because the city has relatively small power to affect the local economy,” Egan told us.

That’s the consensus economic opinion. Huge federal spending can help a national economy a little bit, but local economies are just different animals that local governments are largely powerless to really alter, particularly through tax cuts.

“I agree with Egan: city government has little power over the local economy,” Mike Potepan, an urban development economist at San Francisco State University, told the Guardian.

Both economists agree that tying tax cuts to job creation or development stimulus is better than general tax cuts, but that neither is good if it means laying off more city workers.

“Research shows that by cutting taxes you have more business activity where studies show it is likely to effect employment,” Potepan said. “On the other side, you have to think about revenue. Cities are going to have to balance their budgets, which could mean a cut in services.”

Author Greg LeRoy expresses a more critical perspective in his book The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (1995, Berrett-Koehler), amassing evidence from economic studies and CEO surveys that corporate tax breaks, even those tied to new job creation, have almost no effect on private companies’ decisions about where to locate and whether to hire.

“How can companies get away with this? Because the system is rigged. Corporations have it down to a science. They have learned how to chant ‘jobs, jobs, jobs’ to win huge corporate tax breaks — and still do whatever they wanted all along,” LeRoy writes. “That’s the Great American Jobs Scam: an intentionally constructed system that enables corporations to exact huge taxpayer subsidies by promising quality jobs — and lets them fail to deliver. The other benefit often promised — higher tax revenues — often proves false as well.”

While proposing to forgo collecting millions of dollars in payroll taxes (the Controller’s Office is still working on a projected total for the tax cut package), the Mayor’s Office also wants to spur development of new housing with a proposal that would delay collection of needed affordable housing money by more than a decade.

After hearing mostly from a large crowd of desperate developers and construction workers during a Jan. 21 hearing on the proposal, the Planning Commission approved the package on a 4-3 vote, with the mayor’s appointees in agreement and the board’s appointees in dissent. It will be considered by the Board of Supervisors Land Use Committee sometime after Feb. 12.

The most controversial part of the fee reform package involves reducing the fee developers pay to support affordable housing by 33 percent, then charging a 1 percent transfer tax to subsequent buyers of those homes. Egan estimates developers would save almost $20,000 per housing unit, and that it would take an average of 16 years for the city to recover that money. But for high-rise luxury condos, the city would eventually recover about $27,000 per unit.

“It’s a classic make-an-investment-now-to-get-more-later strategy,” Michael Yarne, who crafted the policy for the Mayor’s Office of Economic and Workforce Development at Newsom’s direction, told the Guardian.

“If it makes it feasible for projects to be started, then it is worth passing,” Tim Colen, a representative of San Francisco Housing Action, said at the Planning Commission hearing, expressing hope that it will help create desperately needed construction jobs and new market rate housing.

But affordable housing advocates and some progressives criticize the policy as completely backward, saying that affordable housing development is desperately needed now, during these tough economic times, rather than a policy that encourages more market rate housing and bails out bad investments made at the height of the real estate bubble.

“What the city needs to do is directly build affordable housing, for which there is a demand,” affordable housing activist Calvin Welch told us. “The problem is that the banks don’t want to lend these guys money because they know nobody can afford to buy houses at the prices that these guys are demanding.”

Debra Walker, who is running for supervisor from District 6 and voted against the proposal when it came before the Building Inspection Commission (the sole vote on a commission dominated by mayoral appointees), agrees.

“The whole argument is that it stimulates development, but it doesn’t,” Walker said, arguing that the incremental gains (about 25 housing units per year, Egan estimates) will be offset by delayed affordable housing construction. “There would be more economic stimulus by using the fee to build more affordable housing.”

Instead, it simply shifts resources to favored entities: from home owners to developers, in the case of the affordable housing fees, or in the case of the tax credits, from the public to the private sector. But Newsom’s office just doesn’t see it that way.

“The Guardian believes in protecting public sector employees over private sector employees,” was how Winnicker formulated our understanding of what the economists are saying. “Most people don’t work for the city, and if we can support private sector jobs, that adds to sales tax revenues and benefits the economy. Despite a short-term impact of the tax credit, that’s a benefit.”

Adam Lesser contributed to this report

 

Joseph Stiglitz: Muddling Out of Freefall

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Joseph Stiglitz: Muddling Out of Freefall

Here is our monthly installment of Joseph E. Stiglitz’s Unconventional Economic Wisdom column from the Project Syndicate news series. Stiglitz is University Professor at Columbia University and the winner of the 2001 Nobel Prize in economics. His new book is Freefall.

NEW YORK – Defeat in the Massachusetts senatorial election has deprived America’s Democrats of the 60 votes needed to pass health-care reform and other legislation, and it has changed American politics – at least for the moment. But what does that vote say about American voters and the economy?

It does not herald a shift to the right, as some pundits suggest. Rather, the message it sends is the same as that sent by voters to President Bill Clinton 17 years ago: “It’s the economy, stupid!” and “Jobs, jobs, jobs.” Indeed, on the other side of the United States from Massachusetts, voters in Oregon passed a referendum supporting a tax increase.

The US economy is in a mess – even if growth has resumed, and bankers are once again receiving huge bonuses. More than one out of six Americans who would like a full-time job cannot get one; and 40% of the unemployed have been out of a job for more than six months.

As Europe learned long ago, hardship increases with the length of unemployment, as job skills and prospects deteriorate and savings gets wiped out. The 2.5-3.5 million foreclosures expected this year will exceed those of 2009, and the year began with what is expected to be the first of many large commercial real-estate bankruptcies. Even the Congressional Budget Office is predicting that it will be the middle of the decade before unemployment returns to more normal levels, as America experiences its own version of “Japanese malaise.” 

As I wrote in my new book Freefall, President Barack Obama took a big gamble at the start of his administration. Instead of the marked change that his campaign had promised, he kept many of the same officials and maintained the same “trickle down” strategy to confront the financial crisis. Providing enough money to the banks was, his team seemed to say, the best way to help ordinary homeowners and workers.

When America reformed its welfare programs for the poor under Clinton, it put conditions on recipients: they had to look for a job or enroll in training programs. But when the banks received welfare benefits, no conditions were imposed on them. Had Obama’s attempt at muddling through worked, it would have avoided some big philosophical battles. But it didn’t work, and it has been a long time since popular antipathy to banks has been so great.

Obama wanted to bridge the divides among Americans that George W. Bush had opened. But now those divides are wider. His attempts to please everyone, so evident in the last few weeks, are likely to mollify no one.

Deficit hawks – especially among the bankers who laid low during the government bailout of their institutions, but who have now come back with a vengeance – use worries about the growing deficit to justify cutbacks in spending. But these views on how to run the economy are no better than the bankers’ approach to running their own institutions.

Cutting spending now will weaken the economy. So long as spending goes to investments yielding a modest return of 6%, the long-term debt will be reduced, even as the short-term deficit increases, owing to the higher tax revenues generated by the larger output in the short run and the more rapid growth in the long run.

Trying to “square the circle” between the need to stimulate the economy and please the deficit hawks, Obama has proposed deficit reductions that, while alienating liberal democrats, were too small to please the hawks. Other gestures to help struggling middle-class Americans may show where his heart is, but are too small to make a meaningful difference.

Three things can make a difference: a second stimulus, stemming the tide of housing foreclosures by addressing the roughly 25% of mortgages that are worth more than the value the house, and reshaping our financial system to rein in the banks.

There was a moment a year ago when Obama, with his enormous political capital, might have been able to achieve this ambitious agenda, and, building on these successes, go on to deal with America’s other problems. But anger about the bailout, confusion between the bailout (which didn’t restart lending, as it was supposed to do) and the stimulus (which did what it was supposed to do, but was too small), and disappointment about mounting job losses, has vastly circumscribed his room for maneuver.

Indeed, there is even skepticism about whether Obama will be able to push through his welcome and long overdue efforts to curtail the too-big-to-fail banks and their reckless risk-taking. And, without that, more likely than not, the economy will face another crisis in the not-too-distant future.

Most Americans, however, are focused on today’s downturn, not tomorrow’s. Growth over the next two years is expected to be so anemic that it will barely be able to create enough jobs for new entrants to the labor force, let alone to return unemployment to an acceptable level.

Unfettered markets may have caused this calamity, and markets by themselves won’t get us out, at least any time soon. Government action is needed, and that will require effective and forceful political leadership.

Joseph E. Stiglitz, winner of the 2001 Nobel Prize in economics, served as Chairman of the Council of Economic Advisers from 1995 to 1997. He is the author of the recently published bestseller, Freefall: America, Free Markets, and the Sinking of the World Economy.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org
For a podcast of this commentary in English, please use this link: http://media.blubrry.com/ps/media.libsyn.com/media/ps/stiglitz122.mp3

 

“Cult of the Hermaphrodite” mystery deepens

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By D. Scot Miller

herma200110.jpg
The Cult of the Hermaphrodite — our own Da Vinci Code

I loved Juliette Tang’s piece on the cult of the hermaphrodite poster. One of the beautiful, sexy things about San Francisco is our collective psychosexual make-up. I’m turned on by the seemingly infinite ways our sexual selves can manifest, inhabit… twist?

On one of those few recent warm nights, I was walking down Polk Street and when ran across this same poster taped to a telephone pole. What drew my attention was the Scotch tape and white out. Each poster had been touched by a human hand. I live near Frontlyne Video (1428 Bush Street. “Speciality” movies. Large TS section. Stop by and say hi), so I stopped by to look at the book: “Cult of the Hermaphrodite Unveiled…is part 2(two) of Master R.J. Daniel’s PATH of the ASTRONOMER/SCRIBE/PRIEST/WARRIOR from “A Private Think Tank” known as the “Almasi Scholars Research and Consulting Organization”, who are “Observers and Trackers in trends in adult entertainment. economics, religion, politics, male-female-family and gender.”

I must confess that I pulled what little sex clout I’ve garnered writing SFBG Sex SF blog, and the the counter guy was cool enough to let me sneak a peek. The truth was revealed to me in crude, meticulous drawings, collage, and Situationist-inspired type-text :

“Hermaphrodites, calling themselves SHE MALES/TRANSEXUALS, travel a NATION-WIDE CIRCUIT of LOVE-MAKING, where they are WORSHIPPED as GODESSES of EROTIC LOVE. LOVE PISTOLS on TOUR Fully LOADED”

Written more like an expose than a story (though it begs to be one), Master Daniel traces the still-influential Cult of the Hermaphrodite to the ancient Phoenician city-states and the sex-cults of King Solomon 6,000 years ago. The affluent male devotees of the cult, known as satyrs, wish to re-establish the erotic link between the god of cunning, swiftness, and commerce (Hermes) with the goddess of love, beauty and raw sexuality (Aphrodite). After his initial thesis, he backs it up with a complex cosmological and numerical system based on astrology, astronomy, pornography and folklore.

Cruising through the Polk district on another rare warm evening, with Diva’s down the block and the TS sex-workers mingling on corners, stepping out of town cars, limos and taxis, even I could see the possibilities of a cult rife with sultry rites lurking in the catacombs. Could Master Daniel be right? Wouldn’t it be fun to make him so?

I’ve seen Master Daniel, and have run across one of his business cards. Call me a freak if you need to, but I love stuff like this. My novel — Knot Frum Hear (2010) — is loosely based on an actual San Franciscan known as James Bond Zero who also printed his own business card. Though there is a 30 year difference, they could be working for the same company, William S. Burroughs CEO.

Master Daniel’s book, which Frontlyne reports has been selling “pretty good,” is copyrighted and with his written permission, I will post more of his actual text and images. Yes, I will be calling him. Is that another story or the same one? We’ll see…

Newsom’s faith-based economic plan

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By Steven T. Jones
time-reaganomics.jpg
The theory that cutting taxes on corporations and the rich creates wealth that eventually trickles down to help everyone — a policy that drastically widened the income gap — is back, and in San Francisco of all places.

Is it “ideological” to question whether the business tax cuts that Mayor Gavin Newsom is proposing will exacerbate the city’s huge budget deficit, potentially doing far more harm than good? Press Secretary Tony Winnicker, who finally returned my call about the proposal, told me that it is.

But Winnicker denied that conservative economic ideology is behind Newsom’s belief in the healing power of business tax cuts, calling it simply “practical” and telling me, “The mayor doesn’t share your hostility toward the private sector.”

That may be true, but I don’t share his hostility toward the public sector, which would lose even more of the “jobs” that Newsom claims to value so highly in order to pay for his experiment in trickle-down economics. Winnicker grudgingly acknowledged that short-term fiscal reality – and the fact that they didn’t study how much revenue will be lost before proposing the plan, or in the year since it was first pitched — but argued that it will somehow help the city over the long run.

“We believe that enacting these tax incentives, particularly the payroll tax credit for new hires, is one of the single biggest things we can do for economic growth,” Winnicker said.

But he couldn’t cite any evidence supporting that belief, which is a matter of faith for economic conservatives. Yet even the city’s fairly conservative economist, Ted Egan, says that reducing government spending in order to cut business taxes just isn’t smart.

Newsom’s corporate giveaway

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By Steven T. Jones
state of city.jpg
After going through a ridiculous security check (I waited 15 minutes for an “escort,” but they never even inspected my bag) to get into Mayor Gavin Newsom’s invite-only State of the City speech last night in the Asian Art Museum, I chatted with my colleague Melissa Griffin, the blogger and Examiner columnist, as Newsom worked the room.

The mayor eventually wound his way over to me, and when I turned to greet him, he gave me a playful shove, knocking me off balance and telling me, “Be nice!” Just minutes into his speech, in which he promoted corporate tax breaks and a discredited “local economic stimulus package,” I understood what he meant.

When he introduced this trickle-down economics initiative almost a year ago, we cited studies showing that it was a political gimmick that didn’t work and shot down Newsom’s claim that the city’s economist supported this giveaway of public funds to the private sector.

But last night, Newsom chided the Board of Supervisors for not scheduling hearings on his proposal to waive payroll taxes for new businesses and new jobs, create tax credits for health insurance costs, and extend current tax breaks for biotech companies, seemingly oblivious to the fact that such actions will add to the massive budget deficit that he barely mentioned.

The Chronicle today quoted gleeful Chamber of Commerce head Steve Falk and the chilly reaction that this strange initiative got from supervisors, but San Francisco Democratic Party chair Aaron Peskin went even further, this morning telling us, “I am so disappointed that the mayor of San Francisco is taking a page from the playbook of the Republican Party. This sounds like Ronald Reagan’s trickle down economics. In an era when some of the richest corporations have made zillions of dollars and the U.S. government just gave them zillions more, now we’re going to close hospitals and say we can’t pave our streets.”

Stiglitz: Overcoming the Copenhagen Failure

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Here is our monthly installment of Joseph E. Stiglitz’s Unconventional Economic Wisdom column from the Project Syndicate news series. Stiglitz is University Professor at Columbia University and the winner of the 2001 Nobel Prize in economics. His forthcoming book Freefall will be published this winter.

Overcoming the Copenhagen Failure

By Joseph E. Stiglitz

NEW YORK – Pretty speeches can take you only so far. A month after the Copenhagen climate conference, it is clear that the world’s leaders were unable to translate rhetoric about global warming into action.

It was, of course, nice that world leaders could agree that it would be bad to risk the devastation that could be wrought by an increase in global temperatures of more than two degrees Celsius. At least they paid some attention to the mounting scientific evidence. And certain principles set out in the 1992 Rio Framework Convention, including “common but differentiated responsibilities and respective capabilities,” were affirmed. So, too, was the developed countries’ agreement to “provide adequate, predictable and sustainable financial resources, technology, and capacity-building….” to developing countries.

My heart belongs to daddy

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My heart belongs to daddy

andrea@mail.altsexcolumn.com

Dear Andrea:

OK, I get it about the hot moms, but what about dads? Does anyone ever talk about them? I remember when our son was younger and my husband would be out with him in the Baby Bjorn or stroller, he would tell me he got a lot more attention from women than he did otherwise. Some of that was really about the cute baby, but really, he was pretty sure those women were flirting with him. What was that about? He had a wedding ring and a kid!

Is there a thing about DILFs like there is about MILFs? It kind of seems like there would be, but it’s not something you ever hear.

Love,

Wondering Mom

Dear Mom:

Kinda. Did you try Googling "DILF?’ There’s a ton more out there than I would have expected, but since you’re not the first one to bring this up, I have been looking. A lot of it is just online porny zeitgeistiness — "people are talking about MILFs, so people will be wondering about DILFs, so I, sex-site owner or promoter or whatever, will make sure there’s something for them to see." The perhaps unexpected (although not to me!) detail is that almost every hit brings you to gay porn. This should not be a big surprise when you remember that there just isn’t a lot of "hot guy!" stuff marketed to women. There is some, but most porn made for women is very couple-y. So "DILF" for porn purposes seems to refer to somewhat older men-for-men, and fits neatly alongside already-existing categories like "daddies." And "daddy" for porn purposes never had the first thing to do with taking the kids to the park. There are also bears, of course, but they are likewise not associated with babies. Not even Baby Bjorns. Ahem.

I did run across "Am I A DILF?" and "How To Be A DILF"-type posts on various dad blogs, but I find something unconvincing about the entire question, not to mention the suggestions. Use hair product? Work out a lot? Really? There is no question that attractive dads get a lot of attention (including a great deal of media attention, if they’re Jude Law or Brad Pitt), but I am not sold on the idea that they are getting it for their abs, let alone their well-gelled hair. Rather, I think a nice-looking guy pushing his daughter on the swings or toting an adorable toddler in a backpack attracts extra attention because (unfairly to today’s crop of fully involved fathers) a father who knows how to be a dad, not just a contributor of genetic material and material support, is still seen as an exception. And he is attractive to women who hope to find such a partner themselves, or who wish that the partner they did have would be more like that. He is not being fetishized for his fecundity (or for keeping his trim figure), nor are most admirers hoping to bed him. The women who are staring are well aware that he is married. Few are seriously plotting or even fantasizing a seduction. Now, for the attractive single dad at the playground …

While I do believe that the good father’s good-fatherliness is a large part of his appeal, it’s worth mentioning here that recent theories in sociobiology have poked giant holes in our previous, somewhat cartoonish view of protohuman, early human, and modern hunter-gatherer sexual politics and economics. It’s no longer safe to assume that women are hardwired to look for one reliable provider to raise our expensive, fragile, slow-maturing offspring with. Newer theories hold that human kids are so expensive and slow-growing that the preindustrial nuclear family could never have supported them. You need relatives, older children, and friends, as well as a husband, to keep a baby safe and well-fed.

This does open up a little room for us to view men, including men with children, as sex objects and not merely provider-objects. But I am just not buying the idea of women (most women, that is) seeing a handsome dad out daddying and thinking, "Now there’s a dad I’d like to fuck." I think most women who find, say, Brad Pitt sexy just find him sexy. There’s no special category for "has kids but is still hot." Rather, I think the sight of a man ministering to or goofing around with his young kids inspires an "aaww!" reaction that is, while not specifically antisexual, certainly not sexy-sexual. It may make you want to marry him or wish you had married him, or hope that when it is time to marry you find someone as handsome-plus-good-with-kids. It adds to a man’s attractiveness as a theoretical life partner, not as a potential fuck buddy. And I do not believe the same goes for MILFs. Having the hots for a dad is never going to carry the enormous cultural madonna-versus-whore weight that the "hot mom" does. And he can be happy about that.

Love,

Andrea

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