Archive for November, 2009|Monthly archive page

This Is Why People Hate Big Banks

They say no good deed goes unpunished, and a recent event that happened in my presence is a true testament to that statement. Well, at least that’s the case when large financial institutions are concerned. I think you’ll agree that this story is yet another example of an industry completely consumed by the destructive forces of unchecked greed and inimical to the common good.

So I’m visiting my family in NYC for Thanksgiving weekend. Yesterday afternoon, my sister was walking outside our building when she saw a wallet on the ground. The wallet contained $60 and two credit cards. Unfortunately, no ID cards that would have provided us with an address. Sure, she could have left it on the ground, or taken the money and left it, or even turned it into the guard of our building. Many if not most would have done one of those things. But my sister knows how terrible it is to lose one’s wallet, and decided to be a good samaritan.

She first checked the building guest sheet to see if this woman, who we’ll call Alice, had signed in recently by chance. No luck there. Then, she came upstairs and looked her up in the phone book. An NYC land line number popped up, but the number was disconnected. So the next idea was to call the credit card companies to see if they’d be able to help.

So my sister called American Express, figuring they’d have an active contact number at which to reach their customer. They were moderately helpful, agreeing to call Alice and let her know of the situation. But three hours later there was no response from Alice, so it’s unclear whether they actually did make that follow-up and pass on the information she needed to get her money and cards back.

Then, my sister tried Chase (now owned by JP Morgan). There, the reception was much more hostile. The representative refused to take down any information or make a call to help out their respected customer. This despite the fact that a very simple action could have saved both my sister and Alice a great deal of hassle.  Such an act of good faith was clearly not within standard company protocol, said the customer “service” rep. My mother jumped in indignantly and quickly demanded to speak to a supervisor. The supervisor, of course, repeated the same line. The only possible reason both Chase employees could have said the same thing is that corporate higher-ups decided to categorically deny any requests for help that were not officially approved at high levels, because that would limit the company’s liability. Instead, the still-powerless supervisor suggested my sister go to the police. That’s what she ended up doing, but it took an unnecessary extra hour to do so, and exposed my sister to some risk that she would end up with some blame for anything that may have disappeared from the wallet. Thankfully, the officer at the local station was very friendly, also pissed at Chase’s selfish intransigence, and agreed to call them again to more officially demand their help as a law-enforcement authority. Apparently that worked more effectively, because today we received a call from Alice expressing her deep gratitude.

I suspect most of you would agree that my sister’s experience with Chase was unfortunately more of the norm than the exception when dealing with big banks. Maybe Chase’s unofficial customer service policy of “fuck off” makes sense from a pure short-term bottom-line perspective, but it also helps explain why they and their fellow financial institutions are deeply unpopular these days. Regardless of whether they took federal bailout money (and for the record, JPMorgan did in the Bear Stearns fiasco), the industry most directly responsible for our current economic woes has a great deal of nerve treating its customers like chattel and expecting the American people to sit back while they enjoy their massive profits during a deep recession.

The ancient Greeks had a word for this sort of behavior: hubris.

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Review of Two Recent Senate Energy/Climate Hearings

By Jason K. Chen, Carrots & Sticks Project Climate Intern

Note by Jeremy: this is the first of what will become a regular feature of the Carrots & Sticks blog, exclusive hearing reviews by our fantastic new intern Jason.

Hearing: Senate Energy and Natural Resources Committee, International Aspects of Global Climate Change, 11/17/09

After listening to the Senate hearing about the global impacts of climate change, I felt that the general message of all the speakers, including the senators, was that environmental policy has to be realistic. In other words, environmental policy has to both fight climate change and maintain economic growth.

Senator Murkowski was of the opinion that we should go back to the drawing board and work out a policy that the rest of the world would want to follow. Furthermore, she does not believe that other countries will automatically mimic the actions taken by the United States when it comes to mitigating climate change, strengthening the reason why she believes environmental legislation has to be realistic.

The witnesses testified to the current state of international efforts to battle global warming. From these testimonies we learn that other large economies are not waiting for the United States to pass legislation. Europe will use a wide range of tools to reach its emission goals and China is in the process of replacing its old coal power plants with cleaner, more efficient ones.

The issue of carbon tax was also mentioned and the point was made that it should not be taken off of the table, but the international community is leaning towards a cap and trade system. Also, which ever system the government decides to implement, the issue of offsets will be an important one.

Hearing: Senate Energy and Natural Resources Committee, Environmental Stewardship Policies Related to Offshore Energy Production, 11/19/09

Contrary to my expectations, the senate hearing on environmental stewardship policies related to offshore energy production only had to do with drilling; wind energy was completely left out of the discussion.

The witness panel was quite balanced by the presence of two representatives of oil companies and two representatives of environmental groups, the fifth witness being the Deputy Director of the Mineral Management Service. However, as far as I could tell, the witnesses as well as the senators were convinced of the fact that America still needs to drill. This is understandable because switching from fossil fuels to renewable energy will take time, but the length of time is the question that needs to be asked.

The representatives from the oil companies spent considerable time explaining how oil drilling is high tech and how the United States has the strictest standards when it comes to oil production. The representatives from the environmental groups reminded the senators that drilling is still dangerous and that our knowledge of the effects of drilling on the ocean is very limited. Everyone made their point, but I believe the oil companies came out on top; this was due not to their persuasion power, but to the existing opinions of the senators themselves.

Senator Landrieu of Louisiana was very critical of the environmental groups exaggerating the dangers of oil drilling. John Amos, the president of SkyTruth, tried to show that drilling is still dangerous by pointing out that an oil rig off the coast of Australia just recently had an accident. Senator Landrieu defended oil production by saying that the Australian oil rig’s design did not meet American standards implying that this accident would not have happened off the American coast. I don’t believe this is true. It was stated in the hearing that the cause of the accident was unknown, therefore, what actually did cause it might not necessarily have to do with whatever disqualified it from American standards.

A point that was not discussed was the negative effects of burning oil. Oil as a source of CO2 emissions might have been beyond the scope of that particular hearing, but it is definitely not beyond the scope of the general problem of drilling. In conclusion, I say that just because drilling is safer than ever, does not mean it’s ok.

Trust Me G”NO”P, You Don’t Want to Go There

I don’t think I’ve mentioned the Obama Administration’s Partnership for Sustainable Communities and its groundbreaking livability agenda on this blog, so I will now. It’s an interagency collaboration to better coordinate transportation, land use, housing and environmental policies in order to better incentivize healthier communities through smart growth and transit-oriented development.

Its six key livability principles are the following (click the link for more detail):

1. Provide more transportation choices.
2. Promote equitable, affordable housing.
3. Enhance economic competitiveness.
4. Support existing communities.
5. Coordinate policies and leverage investment.
6. Value communities and neighborhoods.

In my opinion, the livability agenda is one of the best things that’s come out of this administration so far in terms of unequivocally good policy. So naturally, Congressional Republicans are less than thrilled about it.

From late last week, via E&E Daily (subscription only):

President Obama’s push to reshape the nation’s transportation systems to focus on “livability” came under fire yesterday, as the top Republican on a House Science and Technology subcommittee complained the effort was poorly defined and could be construed as an “intrusion” into American lives.

“At a minimum, it represents an amorphous concept difficult to define and measure progress toward,” said Technology and Innovation ranking member Adrian Smith (R-Neb.). “More troubling, however, key aspects of the livability agenda appear to involve significant federal government intrusion into the manner in which Americans travel and live.

Yes, Adrian Smith has a point. Let’s set aside the fact that I’d be shocked if he actually supported this initiative, considering he represents one of the nation’s most rural and low-density districts. The government should not be rudely intruding into the manner in which Americans travel and live and distorting market choices. If I were him, I’d be introducing legislation tomorrow to end:

  1. All federal highway subsidies
  2. Massive bureaucratic hoops that non-road transit projects have to jump through to be approved for construction
  3. All homowner subsidies that encourage sprawl
  4. All policies that discourage or even ban mixed-use development
  5. Subsidies for fossil fuel development, direct and indirect alike
  6. Agricultural subsidies that mostly allow for inefficient and unhealthy crops to remain competitive, thus artificially inflating demand for rural development

Right. Smith and his Republican colleagues don’t want to do any of that (with the possible exception of transit approval streamlining). So they really need to STFU about getting the government out of the way. The livability agenda isn’t about adding an extra layer of government involvement in the land use and planning process, it’s about balancing the incentives to correct for misguided policies of the past and match demand in an efficient manner.

-Jeremy

The Primacy of Politics in Budget Policy

Regarding Evan Bayh’s Budget Commission I wanted to comment on the aristocratic and undemocratic nature of any such proposal.

Issue area commissions being undemocratic is not so noteworthy; they are created because the traditional democratic process has failed. There’s a strong case that the 9-11 and BRAC commissions made valuable conclusions and recommendations that politicians could just never make. But in the case of the budget you’re talking about outsourcing society’s decisions on a much wider basis.

And who gets to make the recommendations? You could expect former politicians and appointees of the Democratic and Republican parties, either evenly or almost evenly divided. So decisions about the future would be made by politicians of the past. You would make no effort to reflect the outcomes of recent elections and implicitly ignore the possibility anyone other then Republicans and Democrats would ever win elections in the future.

Because the process is undemocratic all the legitimacy of a Budget Commission would come from 1) The superiority of their recommendations and 2) It’s success in getting policy results. The second category would clearly be the most problematic, why exactly is Congress going to listen to this Commission and why should we waste our energy and focus if they won’t?

I think Evan Bayh focusing on this issue is admirable but, like so many proposals, the surrounding actions of the people making the proposals is more important then what they’re actually proposing. In terms of efficacy of the a Budget Commission it’s at least as important who supports it, then the details of it’s stated mission. A broad coalition of legislators and maybe the recommendations matter, a narrow group of legislators and it’s in a useless exercise. You can’t write politics out of policy making, but you can get buy in from politicians for a solution.

-Chris

Bernanke and Creating American Jobs

Via Matthew Ygelsias here’s a great post on the Fed abdicating it’s role in encouraging employment.

BEN BERNANKE:

“Since December 2007, the U.S. economy has lost, on net, about 8 million private-sector jobs, and the unemployment rate has risen from less than 5 percent to more than 10 percent…

Besides cutting jobs, many employers have reduced hours for the workers they have retained…These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone.

With the job market so weak, businesses have been able to find or retain all the workers they need with minimal wage increases, or even with wage cuts…”

THE ECONOMIST FREE EXCHANGE:
“The best thing we can say about the labor market right now is that it may be getting worse more slowly…
Clearly something here is badly amiss. The Fed has given up on easing further despite the fact that unemployment is approaching its highest level in 80 years, and despite the fact that prices are not stable but are declining.

Mr Bernanke owes America a better explanation. Either he believes that his mission is not actually his mission, or he thinks he is powerless to do anything about it but is unwilling to own up to that fact. In either case, it’s not clear that Mr Bernanke deserves to keep his job.”

As the Free Exchange points out the Fed’s mission is “[C]onducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.” This is both very important and troubling. The best scenario is that Bernanke thinks he’s powerless. The alternative is varying degrees of refusal to fight unemployment. If he’s seriously worried about inflation, he’s either got totally different numbers then the rest of the world or is responding a distant future threat.

The whole thing is like refusing to extinguish a house on fire because you don’t have insurance for water damage. If Bernanke doesn’t get unemployment is goal 1, goal 2, and goal 3 right now, I’ll second the notion his continued employment shouldn’t be among our goals at all.

-Chris

Mass-Transit Oriented Smart Growth

Great article by Jon Walker at FDL Action on Mass-Transit Oriented Smart Growth.

Recently there has been a lot of focus on a possible “blue/green alliance” among the political left in this country. The idea is that union workers would build the new equipment for the green economy. Things like solar panels and wind turbines. Clearly the idea appeals to those who long for the glory days of organized labor, when this country was still a manufacturing powerhouse.

Unfortunately, as long as this country maintains its strong anti-manufacturing policies, I don’t see the blue/green alliance manifesting itself in that way. I suspect the nation’s demand for solar panels will be met by imports from Germany, and our wind turbines will be made in China. There is no reason to believe this green manufacturing jobs will not suffer the same fate as previous manufacturing jobs.

Where I do see the blue/green coalition really coming to fruition is on the issue of smart growth or transit-oriented development. (Arlington VA is a prefect example) The idea is to build a series of walkable communities around a mass transit system. Within each neighborhood, people find it easy to fulfill most of their needs by walking to nearby stores. By connecting many such walkable neighborhoods with a mass transit system, it encourages people to not use cars as their primary means of getting around.

The many environmental benefits of transit-oriented development is self evident. By encouraging people to drive less they produce less CO2. Living in higher density communities allows more land to be left undeveloped. Having people live closer together also promote several types of increase efficiency. Less money and energy is wasted when providing services like water, sewer, electricity, and trash collection in higher density communities.

This is a key example of how you can combine long term needs to build sustainable communities and land use patterns with short term needs to create employment. The public option is an important policy and I’m glad people are fighting so hard for it, but this is an area were we can make a big impact if we really fight for good policy.

-Chris

You Down With the DCCC?

Here is Kos in the diary Bronwyn responded to last week.

I know the Politico thinks this is some kind of scoop or trend or something, but fact is, this site has never made a habit of fundraising for the DCCC, or for the party committees aside from some early DNC fundraising when Howard Dean was first elected chair.

For the party committees, as I’ve long said, their number one priority is electing candidates with “D”s next to their names. That’s it. If you don’t want your money going to the likes of Charlie Melancon in Louisiana (running for Senate, voted against health care reform in the House), then don’t give money to the DSCC. If you don’t want your money going to these no votes on health care reform in the House, then don’t give to the DCCC.

I’m not sure that’s controversial, and it’s certainly no shift in site policy.

Well it’s obviously controversial and it is a shift in site policy, although I see can how Kos convinced himself otherwise. In point of fact it’s clearly very different to not encourage something, then to discourage something. To give a simple example Kos, to my knowledge, has never made a habit of encourage people to pay their taxes, but it would be quite the departure from site and policy to discourage people from paying their taxes!

However, Kos has been strongly criticizing certain members of the Democratic party for quite a while and de-funding the DCCC is the logical the next step in that line of argument. It so closely follows it’s easy to see how the lines could blur.

On the same note because it’s very close to what he’s always said I can see why Kos would deny controversy. But it’s a naked challenge to the authority of the Democratic Party; it’s inherently controversial. I suspect it will become increasingly bitter, which will have some negative consequences. If Kos and those that agree with him don’t like the party they have, then they every right to try to make a new one.

-Chris

And this is why I love him…

I rarely gush over legislators, but this exemplifies what I want in one:

“In fact, Kerry was in Germany’s Black Forest, painstakingly inspecting yellowed tree boughs and browning pine needles caused by acid rain, when he learned that former US senator Paul Tsongas was about to announce his retirement because of cancer, clearing the way for Kerry to run.”

How many legislators care that deeply and do that much hands-on work even on their issues of choice? Hopefully, more than I think.

Hat tip to http://www.boston.com and Beth Daley at the Boston Globe.

–Bronwyn