Author Archives: jtellerelsberg

Reaganomics reconsidered

I’m always open to listen to arguments from the honorable opposition. You learn more from your critics than your allies, after all. And so, in the spirit of open mindedness, a reconsideration of Reaganomics via The Onion:

Reaganomics Finally Trickles Down To Area Man
October 13, 2007 | Issue 43 #41

HAZELWOOD, MO Twenty-six years after Ronald Reagan first set his controversial fiscal policies into motion, the deceased president’s massive tax cuts for the ultrarich at last trickled all the way down to deliver their bounty, in the form of a $10 bonus, to Hazelwood, MO car-wash attendant Frank Kellener.


Reminder: read “Beat the Press”

Dean Baker’s “Beat the Press” has so many good posts lately I’m not going to link to them individually, just encourage you to go browse. Required reading. Topics: Tom Friedman and USA Today continue to cry, “Social Security sky is falling”; Wall Street Journal gives free pass to Fred Thompson’s malicious ignorance; NPR gets “free trade” wrong; healthcare crises real and imagined; and so on.

Climate policy cont’d: Obama talking the talk

Barack Obama must have read the Jonathan Alter article in Newsweek, or maybe he shared the back of a taxi with Peter Barnes. Whatever the cause for his conversion, he’s now speaking a bit of the gospel.

Presidential hopeful Barack Obama on Monday called for reducing U.S. greenhouse gas emissions by 80 percent of the 1990 level by 2050. His proposal would force power companies and other businesses to pay for all their pollution.

He proposed a modified “cap and trade” approach to reducing emissions that would require businesses to buy allowances to pollute, creating an incentive to reduce energy usage.

Under a traditional cap and trade system, power plants or businesses that exceed pollution caps must buy or trade for additional capacity, generally from plants that have taken steps to reduce their emissions. Unlike some of his rivals, Obama said he would auction all allowances rather than grandfathering some to big emitters such as oil and coal companies.

“No business will be allowed to emit any greenhouse gases for free,” he said. “Businesses don’t own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution.”

Sweetness. Of course, Obama is still listed as a co-sponsor of Lieberman’s “big business owns the sky, so give allowances for free to the big emitters” bill, so we’ll have to see what he does in terms of walking the walk. But for all my cynicism, hearing the right talk is an unexpected pleasure.

Meanwhile, I’m surprised to see this statement in the Washington Post “campaign 2008” blog:

Most legislation offered to reduce carbon emissions takes this form [cap total emissions and allow trading of allowances within that limit], even though many economists believe a carbon tax would be simpler, if more difficult to sell politically.

Which “most” economists are they talking about? When you have a specific target you are trying to reach, taxes are a blunt and inaccurate instrument. Plenty of the nerdiest economists can whip up a quick model to show how a cap-and-trade system is more economically efficient (using the terms of market economics) than a tax system in this kind of scenario. Maybe someone needs to do a survey of economists or something. Anyhow, I badmouthed Congress the other day for being (or acting willfully) ignorant of simple economic principles.* But now, if the Washington Post is right, I’ve got to badmouth “most economists” and give credit to the politicians for getting this one right.

*”which is so Econ 101 it’s plain pathetic that most of Congress seems to be dismissing it out of hand

New inequality report reports old news

Not that the news shouldn’t be reported again, or again and again for that matter. Increasing inequality is serious business (pun acknowledged though not planned ahead of time) but not, unfortunately, the kind of issue that gets real traction. Thanks to Pizzigati for keeping track and to AlterNet for helping spread the word.

Trickle-Up Economics: New Report Reveals Staggering Global Wealth Concentration

A new business study on global household wealth documents how the world’s wealth is continuing to concentrate in the pockets of the awesomely affluent.

The world’s non-wealthy households haven’t done so well over the last half-dozen years, says a new report released last week by a major global business consulting company.

From 2001 through 2006, reports the Boston Consulting Group, the non-wealthy of the world — those households holding less than $100,000 in financial assets — saw the total value of their assets slightly decline.

Over those same years, the consulting group’s new Global Wealth 2007 documents, total world wealth actually increased, up a brisk 7.5 percent just last year alone

So where did all that new wealth end up? At the top. So far this century, the 16.5 percent of global households with at least $100,000 to invest have seen their assets soar 64 percent in value, to $84.5 trillion.


Climate bill followup: Sander’s bill better? Jury still out.

I’m in the process of playing catch-up with the climate legislation moving (or stalling, as the case may be) around Congress. I think I might have been wrong to identify Lieberman’s S.280 as the leading climate bill in the Senate. Turns out Bernie Sanders’ alternative bill, S.309, has close to twice as many co-sponsors (19) vs. Lieberman’s 11–including Senators Clinton, Obama, Dodd, and Biden, a clean-sweep of the Senate’s presidential hopefuls. Oh wait–politics sure is messy–Clinton and Obama are also cosponsors of the Lieberman bill. Covering their bases, it seems. In Lieberman’s favor, his cosponsors include a bunch of Republicans, so while he has fewer cosponsors, that indication of “bipartisanship” might mean his bill would do better in a full Senate vote. Maybe so, maybe not.

I’ve only skimmed the Sanders’ bill so far, but frankly I’m finding it rather confusing. Well, maybe not confusing, but overly vague. (That’s something Lieberman’s has less of; it proudly wears the badge of corporate welfare on its sleeve.) The heart of it seems to be with Section 704 (f) (2), where it directs the EPA Administrator to establish a market-based program for reducing greenhouse gas emissions. The vagueness lies in the fact that the Administrator is not obligated–as far as I can tell–to use an auction for distributing the pollution permits (“emissions allowances”) to industry. This seems to leave open the possibility of a give-away. If that happens, then this bill will turn out to be not much better than Lieberman’s. While Section 704 (f) (2) (A) tells the Administrator to distribute any leftover permits to “households, communities, and other entities,” this is only an after-the-fact distribution. First industry gets a crack at the permits (through a give-away? an auction?), and only after that do households and communities get a chance to participate in the program. I’m sorry to say, that sounds like something paving the way towards a give-away.

Also, if I understand it correctly, Section 704 (f) (2) (D) grants the Administrator the ability to issue extra pollution permits (or by some other means to give relief to industry) if the cost of permits rises too high (according to the Administrator’s understanding of “too high”). That’s a dangerous loophole. Again, I find the law-speak a bit confusing, so the size of this loophole isn’t entirely clear to me. It does seem–thankfully–to be limited, because the Administrator is required to begin reducing the number of permits available after a maximum of three years of stalling the program. Still, all this vagueness and potential loopholiness has got me feeling more cautious than optimistic.

That’s it for now.

Lieberman climate bill: “worse than nothing”

The other night I attended a presentation by Peter Barnes at Vermont Law School. He was talking about different possible policies Congress might pursue to address global warming. Barnes is a persuasive advocate for a specific form of cap-and-trade on greenhouse gases, wherein the limited permits for emitting greenhouse gases are auctioned off and the revenue that comes in from the auction is then distributed on an equal per-person basis to everyone in the country. More on that in a moment (or see Jonathan Alter’s nail-on-the-head article in Newsweek).

I’d heard about Barnes proposal before–in fact, Nancy Folbre, James Heintz, and I used it as the basis for a bit of the Field Guide to the US Economy. What I hadn’t realized was that there is currently legislation working its way through Congress that would implement a different variation of cap-and-trade on greenhouse gases. The leading version is Joe Lieberman’s S.280 in the Senate and the near-identical bill fostered by John Olver, H.R.620, in the House. (Part of my ignorance stems from the recent birth of my daughter Susannah. I haven’t been keeping up with the news very much.) (But she sure is cute!)

“Wow,” you might be thinking, “Congress might actually pass a bill that deals seriously with global warming. Will miracles never cease?” Well, um, don’t get too excited just yet.
Read more

“On being black and green” –anticipating unforseen consequences

Marcellus Andrews is guest blogging at On the Commons and has a nice essay on how the world looks to an economist who’s “black and green”–an African American with a passion for the environment. “Somewhere along the way, I became a bit green in my views on economic life and policy, though my ‘greenness’ has a distinctly black undertone.”

Further down in his essay, Andrews raising the question of how unequal racial power might force its way into scenarios that seem to be so wonderfully egalitarian, like the proposed “Sky Trust.” (See this previous Econ-Atrocity.)

…Yet, even as I struggle with mathematical models exploring all the ways that such “sky trust” type systems reconcile efficiency and justice in a narrow sense, my studies evade the ruthless bio-politics of inequality bound to turn “the commons” into another hierarchy of the powerful over the vulnerable. The vulnerable forever stand apart and below the powerful ““ even green, progressive power ““ objects of charity or even redistributive justice, but objects nonetheless. Charity becomes thin, stingy, evincing slight degrees of sadism when, when the vulnerable are the wrong color.

Green power, like all power in divided societies, will balance the needs of rulers and ruled, whether the rulers are a clique, a board of directors, or a voting majority with blood-based antagonism toward the Others. Green power ““ the use of public and private power informed by scientific, particularly ecological, and economic reason ““ is far more likely to be humane than other forms of power precisely because it is imbued with a sense of limits and balance. Indeed, green power, at its best, constructs better ways of pricing and managing collective risks, thereby mitigating the destruction of natural capital.

But our individual, family and communal access to resources and the resulting unequal control of development are shaped by the bio-political facts of society: we are born into families and communities of color, class, region, religion and language, inheriting access to resources and levers of power or the abyss of powerlessness. We inherit and the bequeath the social wars that grant us access to power or leave us in weakness, even the power to shift policy in a green direction.

As you can see, I am struggling with the uneasy relationship between sustainability and equality in a market and technology driven world economy, where economic and social innovation must now redesign capitalism to make it cleaner and ecologically viable, yet where the mechanisms of social/racial inheritance threaten to reinforce bio-political and social power in unacceptable ways. I ask your patience and your help as I work through the problematic economics of equality and sustainability, hardened as I am by my American blackness. I want to think about the economics of the commons in light of the fact that green power is unlikely to be shared across American color lines, even as it reconciles the way we make a living to the life process of the Earth….

More power, so to speak, to Andrews for his willingness and ability to face the demons we might wish away. A sky trust will be a great institution for many reasons, but it will not only change society, but be affected by the pre-existing features of society in a give-and-take sort of way. Not all of them will necessarily be for the best.

Social Security in the presidential debates

I didn’t see the Dartmouth College debate myself, but the local paper has an editorial pointing out that Tim Russert pressed the Democratic candidates on “what to do about the pending crisis” of Social Security at the debate in Hanover, NH, the other day. This makes for a good time to remind readers that the crisis is not nearly so cut and dry as it is generally portrayed. See these Econ-Atrocities from March 2005:
Bush’s fundamental error: Social Security is insurance, not a pension
Social Security: A Mythical Crisis


Jonathan Rowe at On the Commons is writing about clotheslines, and the “tragedy of the private” market that has made them illegal for millions of people. A useful reminder that–while no view is strictly objective–some absurdities are pretty easy to identify, and these are just as likely (more likely?) to derive from the unfettered association of individuals through the marketplace as from any other source, particularly when profit maximization is the mantra. (Because, in this case, it’s the hope that property values will rise as fast as possible that leads snobs to ban clotheslines from a neighborhood.)

Given that the Supreme Court has ruled that carbon dioxide should rightly be treated as a pollutant, but the EPA continues to fail to act, clotheslines in restricted neighborhoods might make a great form of civil disobedience. If you live in such a neighborhood, set up a clothesline and wait for the order to take it down. It’d make for a great story in the local paper, which would help to spread the word about this absurdity and, hopefully, lead to laws that overrule the we-prefer-to-pollute-the-atmosphere snob factor.

Pollitt: “Poverty Is Hazardous To Your Health” (That’s why they pay her the big bucks!*)

*Ha ha!

I’ve tried, oh I’ve tried, but good ole Katha Pollitt has said it better than I’ve ever managed. A tidy summary to why, indeed, poverty is bad for your health–IF you live in an economy like the U.S.’s where access to health care is largely dependent on your financial standing. Poverty, I’m sure, isn’t particularly good for your health if you live in an economy with a sensible, universal health system; but it sure won’t be nearly as outright dangerous to be poor.

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