December 2008 Archives

The Emperor

Obama is making infrastructure and energy a central goal of his administration. Therefore people were heartened when they heard that Obama will nominate Steven Chu, Nobel Laureate in Physics and Director of Lawrence Berkeley National Laboratory (not to be confused with Lawrence Livermore National Laboratory) to head of the Department of Energy. Chu has led LBL since 2004. He's a Nobel Laureate who has formed collaborations in the LBL, the Joint BioEnergy Institute, the Energy Biosciences Institute with Heliosgovernment, industry and universities to forward technological solutions to alternative and renewable energies.

Environmentalists like how Chu sounds because he says things like: "If I were emperor of the world, I would put the pedal to the floor on energy efficiency and conservation for the next decade", as he told Reuters last year. Business likes him because they know that the Energy Biosciences Institute was funded by British Petroleum -- Chu works with industry, of course.

Almost everyone is thrilled that Obama will nominate Chu for this position, and he gets fantastic ratings for his accomplishments to date. Of course there are always naysayers, like the U.S. Chamber of Commerce, representing business. Said William Kovacs, vice president of the organization:

"What you've got are people who are committed to moving forward with regulation of greenhouse gases under the Clean Air Act, which we believe is a huge mistake"...If we're embarking on a new infrastructure program that's going to involve building a lot of roads and bridges, the last thing we want to do is hold it up with CO2 regulations."

There's more than some gobbledygook here, but at least one aspect of his argument, that the economy is too fragile for "green initiatives" is a common kneejerk fallacy of "pro-business" camps. In today's Financial Times, for instance, Phillip Stevens wrote:

"The EU leaders have set a target of cutting greenhouse emissions in the EU by 20 per cent by 2020. They have pledged to increase energy efficiency by 20 per cent and to draw 20 per cent of energy from renewable sources...All this seemed challenging, but possible at a time of prosperity. The voters would surely accept a degree of pain to safeguard the future for their children and grandchildren. Industry had the cash (or cheap credit lines from the banks) to adjust...[but] no longer."

This is course a myth, a common one. People like Joseph Romm have long dispelled these assertions, but business persists. Mr. Chu addressed this himself in an interview last September, when he said: "if you went to an energy-efficient economy, you will kill the economy. That is just demonstrably not true." In fact it's the opposite. Businesses can become more cost efficient by becoming more energy efficient. Changing light bulbs in schools is just a start.

Mr. Chu will not be emperor, but part of Obama's climate team. The Department of Energy focuses on nuclear weapons disposal of nuclear waste and basic science. The Environmental Protection Agency (EPA) carries tremendous influence on emissions and health through its administration of the Clean Air Act, for instance -- or as we're accustomed with the Bush administration, by eviscerating the Clean Air Act.

The Chief Administrator

Not everyone is applauding Obama's choice for EPA head , Lisa P. Jackson. She has won accolades for diplomacy and her handling of various New Jersey environmental problems. However Public Employees for Environmental Responsibility (PEER) wrote a scathing review (some say unfair and uninformed) of her tenure as the Commissioner of the New Jersey Department of Environmental Protection.

PEER even went so far as to say she was worse than former New Jersey governor Christie Whitman. Ms. "your air is safe" Whitman not only launched New Jersey's path to fiscal insolvency, her state environmental policies weren't necessarily "environmental". Interesting how the "Garden State", known affectionately as the "Armpit of the Nation", or "What exit?", holds such a reservoir of EPA administrators.

Jackson has opposed the EPA's recent handling of California's bid to waive Clean Air to act its own program. She also said, "When it comes to the auto industry, the E.P.A. apparently is the Emissions Permissions Agency."

The Czar

Obama picked Carol Browner, Clinton's former EPA head, to be Climate Czar, to coordinate all the agencies involved with climate policy, such as the the EPA, DOE, the DOT, the White House Council on Environmental Quality.

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Acronym Required writes frequently on the EPA. We've also written on effective, versus ineffective government agencies in articles like

• When All That's Left is Blogging:

  Fifteen shopping days left in a holiday season that hasn't been exactly cheerful. October unemployment rates came in at 6.7% nationwide. Not included in that number are hundreds of thousands of people per month who stopped looking for work or took part time positions but needed full-time jobs. In some states the situation is worse. Michigan and Rhode Island have 9.3% unemployment, California has 8.2%, South Carolina has 8.0%.

  While grabbing coffee yesterday, I noticed once-were-businessmen arriving, full of hustle bustle habits, who then sat and read the paper from end to end, no better place to go. One man began by pouring over the obituaries, which I guess is upbeat than a 7AM perusal of the business section.

  Fortunately, just in time for media business sections to be all about "severe recession", economists have now OK'ed the use of the term "recession". The soon to be bygone business section, that is. The Chicago Tribune recently reported layoffs at Citigroup, United, Wyeth, Allergen, 3M, Sony, at the NFL, in the travel industry, in the real estate and service sectors. The Red Cross even laid off people.

  Of course then the Chicago Tribune announced its own bankruptcy. Not altogether unforeseen, Sam Zell's highly leveraged takeover never did bode well for the news. I, for one, am disheartened by the financially plagued New York Times, the now bankrupt Los Angeles Times, the Tribune, and many others. Will we have to depend on "blogs"? I'm not sure I could get all my news online, even if investigative journalism in media hadn't significantly slipped recently.

  Ariana Huffington told Jon Stewart: that blogging is a "first draft". "First thoughts, best thoughts." She tried to get Stewart to blog (for her). "Why should I give you...?" -- Stewart started. Then he got a hold of himself to politely demure that whatever was left in his brain after TV was "dreck". Not a blogger, or won't dilute his brand? Arianna's also recruiting unemployed bankers to "blog the recession."

  Huffington's blog definition reminded me of those written by Andrew Sullivan, who explained the appeal of blogs in the The Atlantic magazine recently: "For bloggers, the deadline is always now. Blogging is therefore to writing what extreme sports are to athletics: more free-form, more accident-prone, less formal, more alive. It is, in many ways, writing out loud."

  Cool, but still -- no newspapers? Ugghhh...

• Meanwhile, In the Land of Too Big to Fail:

  Lawmakers publicly chided the automakers for their arrogance and forced them to drive to Washington in their own vehicles, albeit "concept cars". Congress is now rewarding such good behavior by unfolding their hands from behind their backs to reveal a $15 billion dollar gold star and a "car czar".

  Usually the media labels the manager of a state's auto fleet a "car czar", or they dub Lee Iaccoco, or some Nascar race car driver a "car czar". But back in 1992 Automotive News actually clamored for President Clinton to hire a "car czar" to oversee "clear policies", and to "coordinate regulations". To sum it up, the magazine wrote: "Like it or not, we always have an industrial policy; right now, it is chaotic, to the great harm of the industry and of the economy." Of course that idea didn't fly, as one reader wrote in "Depend on market, not a car czar":

  "...you'll never hear Washington intellectuals admit the marketplace is superior to federal meddling because that would mean admitting their own superfluousness (Nov. 30, 1992)

  We're all real clear about superfluousness 15 years later. Or are we? In the current deal, automakers and Republicans have insisted on removing one important measure the Democrats tried write into the law. The measure would have barred automakers accepting federal loans from suing states seeking to impose tougher auto-emission standards.

  California and more than a dozen other states tried to pass stricter emissions rules this year, and were rebuffed by the EPA, auto and oil industries. It was too tough they said, the technology was unavailable. Now, two of those auto manufacturers claim in their business plans that they could surpass the California standard ASAP.

  Since Barack Obama would probably allow California its waiver, the automakers aren't quite as technically challenged as they were earlier this year when they fought tooth and nail against CAFE standards.

  Thomas Friedman tells us that electric cars will upend this nonsense.

• Recession Proof Banks:

  While many business sink in the economy, some still do fine. Nouriel Roubini and Nassim Nicholas Taleb, find themselves the belles of the talk show TV circuit. The Financial Times still publishes its glossy magazine "How To Spend It" for all the princesses and dukes in its audience, just as if it were 2005. The Financial Times hasn't declared bankruptcy.

  Still other institutions pull out all the stops for lavish holiday parties. First Republic Bank, owned by Merrill Lynch, which was bought in a fire sale by Bank of America, apparently threw a lavish holiday spread over three floors of the San Francisco Symphony last weekend. The blow out party has been the talk of the west coast. Sushi stations, prime rib and lamb stations, tuxedoed violin players on spiral staircases, a cookie making station and "7 or 8 bar stations with a wonderful high end selection of wines and champagne". Hearing it all described so gushingly, it was hard not to think -- Titanic.

  Hard to believe that Bank of America, one of the "too big to fail" financial institutions, is now strapped for equity and analysts have now downgraded the stock to "underweight".

  Of course institutions who squander taxpayers money once, will do it again. We're reminded of A.I.G., who once their bailout was assured, sponsored a lavish hunt in England. (As in animals running hither and thither, and guns) As Maureen Dowd noted:

  "In an astonishing let-them-eat-cake moment, the A.I.G. big shot Sebastian Preil held court at the bar and told an undercover reporter, "The recession will go on until about 2011, but the shooting was great today and we are relaxing fine."

  Perhaps it's a disease.

• Reminiscing About The 60's?:

  Quite a few commentators look at the future Obama presidency and ask us to harken back to the sixties of our imaginations if not our memories. During his campaign they compared Obama to the Kennedy brothers, saying he orated like John or Robert. Bill Moyers and Charlie Rose commented during that there hadn't been a leader who so inspired up and coming politicians since Kennedy. Lately people comment on Obama's leadership picks, saying he's chosen people who were brainy or savvy, often educated at Harvard. The "best and the brightest", they say.

  But other commentators, including Frank Rich in the New York Times, point out that David Halberstam's use of the phrase as the title of his book "The Best and The Brightest", was ironic. Even though he chose the smartest from business and academia, the Vietnam War proved disastrous.

  The shortcomings of the Kennedy team were especially pronounced in Halberstam's depiction of Robert McNamara, whose flawed hindsight was also illustrated in the excellent movie The Fog of War. Halberstam describes McNamara's approach to leading Ford, all numbers and predictions. Of course this characteristic outlook -- educated but somehow all cold calculation, was also evident in some of the Bush picks too. We hope the comparison is paranoid.

  Speaking of the 1960's, the Economist also reminds us of that era with its series of recent covers. In quick succession the magazine published covers asking "Where Have all The Savings Gone?", and "All We Need is Loans". I bet you don't have an endless and getting annoying loop of another generation's anti-war hippie dippie songs like Pete Seeger's "Where Have all The Flowers Gone", and The Beatles "All We Need is Love" running through your head now -- right?

The New England Journal of Medicine reported yesterday in two on-line publications, that the RTS,S malaria vaccine showed about 50% efficacy in two trials. If further trials prove successful, the vaccine would help protect against malaria.

Obama Change? Like Island Time?

When the Obama team signaled this week they would not follow through on their campaign promise to impose a windfall tax on oil profits, people wondered whether "Obama Change" was "change" only in some warped sense of the word -- like being on "Island Time" -- elusive, non-committal, eventual, perhaps. After all, he did say back in the day:

"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills."

That was June, 2008. So what was that campaign promise about? Easing the worries of families who were broke? Was it Obama's fleeting response to an audience who disapproved of oil companies getting super-rich while the economy flagged? Was it just an empty promise? Or perhaps now with oil prices so low windfall taxes wouldn't suffice to help individual energy bills. Did the president-elect's threat influence the price of oil? Perhaps oil executives lowered prices in order to dip below the radar a bit.

It's hard to know who's being more wily, Obama or oil companies. But before we can spend too much time wondering why the president-elect changed his mind on windfall taxes, Barack Obama gives us more promises. We reported a couple of weeks ago on Obama's address to the Governors' Global Climate Summit about his administration's intentions to act on climate change and invest in "500 million new green jobs that pay well and can't be outsourced."

In Obama's address to the nation yesterday, he re-presented the idea of the "National Infrastructure Reinvestment", which he also pushed during his campaign.

Highways, Information Super Highways, Technology, more Technology

On energy, Obama's promising to produce jobs by making buildings more energy-efficient. As he put it:

"We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won't just save you, the American taxpayer, billions of dollars each year. It will put people back to work."

"Installing efficient light bulbs." When Obama ran for president interviewers would ask him what he did to save energy and light bulbs and the exchanges became a bit of a joke. Here was his take on changing lightbulbs::

"...Brian Williams is asking me about what's a personal thing that you've done [that's green], and I say, you know, 'Well, I planted a bunch of trees.' And he says, ''I'm talking about personal. What I'm thinking in my head is, 'Well, the truth is, Brian, we can't solve global warming because I f---ing changed light bulbs in my house. It's because of something collective'."

When Barbara Walter's asked Obama about the light bulbs a couple of weeks ago, they both laughed -- a shared joke. But now he's launching his "collective" light bulb plan? Obama is also promising a "sweeping effort" to modernize schools -- to make them energy efficient also.

Additionally Obama promises his administration will invest in infrastructure, new highways and bridges. And not only tarmac highways but information super-highways too. Saturday Obama also mentioned technology to solve healthcare problems -- by networking hospitals, increasing broadband penetration so everyone is on the internet, and increasing student access to computers.

Infrastructure without the B-Word?

Obama is following through with his campaign plan to launch a 21st century "New Deal" and says such an investment hasn't been made since the Eisenhower days. As a Senator, Obama co-sponsored the National Infrastructure Bank Act of 2007" introduced by Senator Christorpher Dodd (D-CT) in August 2007. The idea is to establish banks to fund the a subset of the projects Obama spoke of yesterday. When Obama campaigned last summer on "rebuilding America", he also talked about a bank, as well as promising to withdraw support from Iraq to fund infrastructure.

As everyone knows, Iraq is a bit in limbo -- and where's the bank? Where's the follow through on banks? Or is it all a joke?

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Acronym Required wrote on infrastructure and the Minnesota Bridge collapse in "Guano Takes the Bridge, Pigeons Take the Fall". We wrote about infrastructure and the levees in "FEMA and Disaster Preparedness", "Disaster Preparedness - Can We?", and "Levees - Our Blunder". We're fascinated with technological salves for problems.

Outsourcing: Not Just Call Centers. Shocking.

Back in 2005, Esquire editor A.J. Jacobs wrote in "My Outsourced Life".

"Call centers do it. IT firms do it. Manufacturers are doing the hell out of it. Even the CIA does it. So why can't I?"

That 2005 piece was followed by articles and books by others who raved about personal outsourcing. "The 4-Hour Workweek", forwarded the idea that outsourcing would open up free time in our calendars and allow us to frolic as we wished -- drink lattes, go kite-surfing, or create like Rembrandt.

When he wrote his article, Jacobs was reading the first of Thomas Friedman's Flat series¹; "The World is Flat", and he wanted to test the outsourcing theory for himself. He ended up outsourcing not only the usual research and writing duties but calls to his parents, apologies to his wife, bedtime reading for his kid.

But Jacobs got a little nervous when "Honey", his Bangalore personal assistant, started sending him feature ideas for Esquire. India wasn't just a place to hand-off tedious chores to free him up for creative leisure, it dawned on Jacobs:

"the Indian workforce can be just as innovative and aggressive as the American, so the "benefits" might not be so beneficial. Us high-end types will be as vulnerable as assembly-line workers.

Friedman predicted that outsourcing would be more prevalent in the future. Companies outsource because it's cheaper and that's "what shareholders want". Americans workers go along more reluctantly than businesses, but corporations convince them they'll all get better jobs when all the 'low level' jobs go offshore. The secret to success is education Americans are told, over and over again.

The Tin Cup Corps

Americans protest outsourcing in fits and spurts, but resistance seems futile. Outsourcing is facilely explained as a natural phenomenon, 'the nature of economics'. So Boeing moved many operations overseas when it moved from Seattle to Chicago, and of course automakers outsource as much as possible. But while US manufacturing capability moved offshore and hungry off-shore workers always look for more work, American workers sink, over their heads in debt and unemployed.

Today, at a time when the US population is faced with a caving economy, people are furious at corporate automakers' malfeasance and insouciance and have come out vigorously against bailing out the auto industries. People seem too befuddled to protest en masse about the banks, the obtuse details of the Fed's bank bailouts are confusing and frustrating. So they seem to seek revenge for the whole mess by throwing the auto industry into the dumpster. ²

Of course the auto CEOs, like the banks on bended knee before them, are not too proud to grovel, as they do now with "concessions". They're relentless like the Salvation Army Kettle Drive man at Christmas, except the "cause" is less appealing. Whatever comes of the stand-down Americans won't want for cars. Imported cars back up in dry dock, just in case, if not just in time.

But what about jobs? What about manufacturing? If everything is cheaper overseas why bother? American cars guzzle oil and our air suffers for it. Last April Acronym Required wrote "The EPA: Mulish Days, Staring Out to Pasture", about the clout the auto industry used to try to keep emissions standards status quo. Our post discussed the industry assertion that any emissions standards must (as in 1970), preserve the "health of the industry", and we wrote:

"...We need to evolve policy to preserve the auto industry. In 1975, the Chevy Chevette got 40mpg highway, 28mpg city. Surely we can do better with mileage and emissions? Otherwise, if the health of the American auto industry is truly still a goal, maybe the government's kindest move would be to shoot it, or drown it in the bathtub, or whatever libertarian types do these days with ponderous, surly sectors they want to put out of their misery."

We wrote our acid response after the auto and oil industries successfully lobbied for another anemic CAFE standard. But we didn't really mean get rid of manufacturing. We didn't want to throw the baby out with the bathwater, just the bums. Last spring, congress didn't stand up to the auto industries to force them to change. Now the executives fly hither and yon on private jets seeking recompense for their habit of fiscal abandon. They've learned lucrative lessons in the past 30 years.

The question now is, would the US really consider letting the auto manufactures sink? Or is this the usual charade before they write the check? But no solution on the table today bodes well for America's manufacturing tomorrow.

Where Once a Country Stood, Now it Sits

If those jobs were lost would they morph into more creative consulting positions like Friedman suggested they would? We're skeptical. America was founded by craftsmen. I grew up with the lore of Paul Revere the silversmith, of clockmakers and furniture makers, pewterers and braziers and potters and glass blowers and iron casters, professions so antiquated my spell check tells me all these words aren't in the English language.

We need none of these materials now. (We have plastic.) And anyway, why make these products anymore, we're all hip economists who can outsource anything because of how "efficient" it is? But who will Americans be then? Folks of some gentle arts movement who construct Martha Stewart inspired husk pillows to stand in for manufacturing? Still, we're told, this is the way it's meant to be. (Economists announced today they found a recession as if they were biologists announcing a new species after an arduous jungle trek.)

Friedmans "Untouchables" (Pun Probably Intended)

According to Friedman, those who survive the flattening world with their livelihoods intact will be "synthesizers, explainers, leveragers, and versatilists". Friedman recommends that schools build right-brain skills that can't be computerized. A few years ago Friedman assured one audience of the the American advantage while trying to ease fears about China's quick economic rise: "I think this right-brain stuff is very culture-bound and hard to teach", he said.

A Harris poll in 2005 found that 71% of polled people agreed that "the long term success of the U.S. economy requires that we have a highly educated workforce who do highly skilled jobs here which cannot easily be done abroad." Only 13% disagreed with the statement.

If these jobs require sophisticated special-culture-delineated educational techniques, is that why schools tried and failed to outsource some teaching tasks to India? Or was that just parental outrage? Is that why Americans are moving overseas to go to school? Education is not so sacred, as it turns out, in the US. To believe that American has some cultural superiority that makes it more capable of the superior "right-sided thinking" is not only arrogantly condescending, its riskily short-sided.

This "flat" world is not only a world of opportunity but also of disparity, with gaps and canyons, and mountains of inequality. The world is not "flat" when some countries have no education, no health care, and 50% unemployment. The world is not flat when some people make .20 cents an hour and live in a dirt hut, and their counterpart in the West makes $80,000K/year.

This enables companies to arbitrage and profit mightily from the unflatness. If the world was truly flat then there wouldn't be an endless pool of cheap labor to exploit. If you're a business, don't worry, the change won't happen soon. India and China have not only outsourcing prowess but business chops to flourish even more. But how will the American autoworker, journalist, lawyer and doctor fare?

And what about other untouchable skills? Lawyers outsource legal tasks. Doctors are outsourcing test interpretation. A company called Wellpoint started a trial sending patients to India for treatment.

Maureen Dowd wrote about a company in Pasadena that outsources news reporting to India. The writers glean information about the story on the internet. One of Jason Blair's crimes as a reporter for the NYT was that he lied about places he claimed to visit and cover with live reports. Now we're paying people to do this type of reporting. The company's owner James Macpherson told Dowd: "'I pay per piece, just the way it was in the garment business,' 'a thousand words pays $7.50.'" Said Macpherson: "the newspaper industry is coming to a General Motors moment -- except there's no one to bail them out."

Maybe Maureen can walk over to Tom's desk and ask, who are these "synthesizers, explainers, leveragers, and versatilists"?

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¹ Thomas Friedman ("The Lexus and the Olive Tree), wrote "The World is Flat" (2005), "The World is Flat: Expanded Edition" (2006), "The World Is Flat, 3.0" (2007), and "Hot, Flat, and Crowded" (2008). We look forward to a sequel in 2009, something along the lines of, "The World is Hot, Flat, Crowded, in Recession, with Rising Disparities on all Planes -- but Flat Damn It!"

² Photo by Craig ONeal, or Florida, who risked his life to take it. Used with permission under the Creative Commons Licence 2.0 Attribution, Share Share-Alike.

The Presidential Universe of Me

Another year passed and today's World AIDS Day finds us with many of the same struggles as last year. However there's also been progress.

For instance this year brought funding for Bush's PEPFAR program for drugs and prevention. Bush had said at the ceremony for H.R. 5501, the Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis and Malaria Reauthorization Act of 2008:

"...I wish every single America '[sic]' could have seen the tens of thousands of people who lined the streets during our visit, and they were cheering and waving American flags in gratitude to the generosity of the American people..."

We all wish we could have seen it. Instead Bush will have to settle for some crowd appreciation today from President-elect Obama, who congratulated Bush for his efforts on PEPFAR. In response, first Lady Laura Bush said: "That's sweet, so sweet." Bush had been having a blue day, saying in various interviews that he was "unprepared" for war, (but noting there was no war on during his campaign.), that he was "sorry it's [the economic meltdown] happening", and that "some people voted for Barack Obama because of me." Some in the media called this an apology.

On the AIDS front, Bush established PEPFAR, but also ignored family planning which is effective at preventing the virus from spreading. The Obama administration, ever diplomatic, intends to loosen the Bush administrations restrictions on funding, which dictated abstinence only teachings for grantees.

From Failures, New Directions

In other AIDS news this year, the major vaccine initiative came up negative in clinical trials, motivating HIV/ADS programs re-focused their goals.

And in very optimistic developments, the South African interim government chose Barbara Hogan to work as Minister of Health until the new government takes office. See: "New Minister of Health For South Africa. Change Afoot?" Hogan recognizes both the crisis of AIDS as well as underlying issues such as public health infrastructure. Today, Hogan led a minute of silence in South Africa.