Cause and Effect: In Defense of the People of Ferguson

Pre-blog note: This blog is largely a technical one: the object here has always been to do the best I can to unpack complicated news stories that I think are important so that people who want to care about what’s going on in the world but are turned off by shitty or oblique coverage could get an access point into world events that affect them. There are plenty of blogs that do something similar and do it better than I do. You probably read this one because you know me or know someone who does. Anyway, the point is, while I try to stay on the technical side where I can back up all of my thoughts and observations with facts and stats, sometimes I take a guilty pleasure in straying over to the more pure values-oriented opinion-based side of things. This blog today is largely on that latter side, but if you’re reading this, odds are you give a shit enough about my opinion to allow me to take a shot at this and forgive me my lack of evidence-based faux-journalism for this post…

 

They are rioting in the streets in Ferguson, Missouri. A lot of facts are unclear at this juncture, but here’s what we know:

  • Ferguson, MO is a largely poor, majority-black community outside of St. Louis
  • The commotion started when police allegedly shot and killed an unarmed black teenager named Mike Brown. This attracted national media attention and sparked community outrage
  • Shortly after, people started rioting in the streets, looting was reported, and police were dispatched.
  • Since then, reports have been mixed, some emphasizing the violence and wanton looting of the rioters, some speaking to the militarization of the police force, the disrespect for civil rights, and the aggressive response.
  • To the former, we know that stores have been looted. We know that people have been injured. We know that property has been damaged.
  • To the latter, we know that the police are well-equipped, have video-documented evidence of brutality and aggression (though it should be noted that some have claimed their response is appropriate to the situation), we have evidence that the Alderman (local government representative) of the area has been arrested by police, as have two journalists covering the event, both of whom claim to have suffered police brutality.
  • Rioting and violence continue for a third day, and Ferguson is essentially in a state of chaos.

So that’s what we know. Now, I can’t claim to have any more insight on this than anybody on the ground, but I can respond to the way I’ve seen the dialog going on social media about this event. I am what you’d call a “systems” thinker. I believe that complex systems of rules, power dynamics, and institutions, as well as the often difficult to understand social networks to which we are all connected often affect human behavior far more than any other model we have of understanding why people do what they do. To put that another way: we’re social animals, and while we all believe in personal responsibility, I tend to feel its lazy thinking to not look at the reasons behind someone acting in a particular way and to simply write that person off as stupid, irrational, or evil. We’re all stupid and irrational sometimes (more often than we care to admit), and evil is just another word for an adversary whose value system you can’t understand. 

So where am I going with this? If you’re with me so far, I think I’ve laid the groundwork for the argument I want to make. Mainly, I want to refute the popular response that rioters are simply opportunistic idiots who care nothing for social justice, and that they are the clear bad guy here for their irrational response to this tragedy. Feel free to disagree (as you always should), but here’s what I think:

  • A majority-white, well-funded, near-militarized police force is charged with “keeping the peace” in a majority black, majority poor community
  • The people in this community have little to no economic activity or opportunity
  • The people in this community, speaking generally and from a socioeconomic standpoint, have lives that suck compared to almost anyone reading this blog right now. 
  • Throughout world history, the relationship between the police and the poor has always been a tenuous one, and especially so when there are clear racial divides between the two groups. In Ferguson, as in many other poor communities (and I am claiming this based on interviews I’ve heard and read, but have no statistical evidence to back it up) people do not trust their police force. 
  • (this is where things might get a little too “academic” for you) The police force is the most visible and regularly interacted with apparatus of the state in any given community. We do not see our politicians on the street, we do not think of our public utilities as “state” utilities, but the police are everywhere and very clearly represent authority.
  • When the most ubiquitous representative of the established order appears openly hostile, racist, insensitive to your frustration,  has an established reputation of being violent, aggressive, and is equipped in a para-military fashion, imagine for a second what the average person’s view of “society” must be. 
    • Society wants peace. Society wants order. Society wants these things because people for whom society is working (AKA anyone who is doing just fine playing by the rules (this means you)), law and order benefits us because it protects our well-being and the things we own (our cars, our money, our homes, our businesses)
    • When everyone benefits from being part of society, everyone wins when society is peaceful and orderly. This isn’t some high-minded concept — this is simple playground logic; when the rules benefit everyone, most people play by the rules. When the rules benefit most everyone but you, odds are you get pissed off. You may still play by the rules, unless you feel really cheated, in which case you probably go play with some other kids. Now, if everyone feels cheated by the rules, that’s when everyone decides to play a different game. The object of this game is usually “fuck the rule makers”. 
  • So: we have a socioeconomically depressed community with very little tying many of its members to establishment society, which bears witness to what it considers to be a blatant and pure injustice (the shooting of Mike Brown). Anyone in this society who still has faith that the established order is looking out for them feels utterly betrayed by the lack of response and culpability of the police on this issue. They collectively decide to play a different game entirely.

With that scene set, from my perspective this gets a lot easier to understand. Is rioting and looting in your own community a rational response to much of anything? No. But imagine yourself as a member of that community and look at where we are: we are a community with very little, we deeply distrust or are even fearful of every symbol of establishment law and order, and we feel as though the state has just openly declared us fair-game for violence through what we see as the unjustified and unrepentant murder of one of our children. None of these feelings are rational feelings, and odds are they aren’t expressed so succinctly by anyone there: like with any human being, these feelings manifest as anger, as pain, and as fear. What does one human do when it is angry, in pain, and afraid? Okay, now multiply that by a whole community, and add the rallying cry of injustice, and what you have is very simply a grassroots movement of “anti”. Everything that is at all representative of the established order is now inexorably emotionally connected to an institution that not only does not care for you, but seems openly hostile toward you. An entire community, backed into a corner, and the evidence that all of our fears are justified is all around us in the form of riot police, beatings, shootings, and sirens. This is chaos. 

Yes, some people are opportunistically looting. They have no justifiable political motivation for doing so. Some people just want a new TV and see chance. If there were no rules and your community was in utter chaos, you would likely still go to work and file your taxes and pay all the parking meters, right?

This is not a cause. This is an effect. This is the effect of ignoring and marginalizing the poor for so long, concentrating them in small enclaves of desperation, and then being surprised when their interests begin to strongly align against those of the greater society at large. There is a system of violence at play here: violence against human dignity begets violence against decency and order, which in turn begets violence against each other. You want rationality? You want logic? There it is, plain as day: cause and effect.

How Liberal/Conservative is Your City?

We’ve all heard that big cities tend to be more liberal than smaller towns, and I think that makes a certain degree intuitive sense. In fact, a recent study from City Lab concluded that densities of about 800-1000 people per square mile are a strong dividing line for voting behavior. Basically, if your neighbors are far away and you live in a less-densely populated area, you were more likely to vote Republican, and if your neighbors are close and you live in a more densely populated area, you’re more likely to vote democrat.

Now, as the internet loves to remind us, correlation does not equal causation, so it would be going too far to say that density (or lack thereof) causes political views to change, but it can be said with some degree of certainty that the two seem to be strongly correlated.

That’s why a recent study from the American Political Science Review identifying the most liberal and conservative large cities in the nation isn’t all that surprising — it basically tells us that big cities are more liberal. Both the study itself and the full report from The Economist are behind a paywall (you can read a summary here), so I’ll save you the trouble and give you the important takeaways:

  • The Big Picture: the study broke every thing down into a metric of conservatism, -1 being absolutely liberal, +1 being absolutely conservative, 0 being perfectly balanced between the two. Fort Worth, Texas hit right about on the middle. 11 cities ranked on the more conservative side, with 55 landing on the more liberal side.
  • The Top 5:
    • The top 5 most conservative large cities are:
      • Mesa, AZ
      • Oklahoma City, OK
      • Virginia Beach, VA
      • Colorado Springs, CO
      • Jacksonville, FL
      • Other notables include: Omaha, Tulsa, and Anchorage, Alaska
    • The Top 5 Most Liberal Large Cities are
      • San Francisco, CA
      • Washington, DC
      • Seattle, WA
      • Oakland, CA
      • Boston, MA
      • Other notables include: Minneapolis, Detroit, New York, and Baltimore
  • Which Side Are You On?: A few states were notable because based on where you live in the state, you could be in either a very liberal city or a very conservative city.
    • California: While San Fran and Oakland are among the most liberal large cities in the country, Fresno and Anaheim are among the most conservative. San Jose, Riverside, and Long Beach all hover somewhere in the middle of the list
    • Colorado: Denver is decidedly liberal, but both Colorado Springs and Aurora are significantly conservative.
  • Swing States: Ohio and North Carolina both found their major cities towards the center of this list with neither state having a major city rank in the top 15 for most conservative or most liberal. All Ohio cities studied swung liberal, though Cleveland and Columbus were more liberal than Cincinnati or Toledo. Both North Carolina cities in the study also swung liberal, though Raleigh was significantly more liberal than Charlotte.

TL;DR, larger, denser cities are more liberal, and more conservative cities tend to be concentrated in the south and south west.

Public Transit in the U.S. – How Does your City Stack Up

Nate Silver, famous for apparently being the only one in media with an understanding of statistics, has a blog called 538 where they run statistical analysis on all sorts of neat things. This article from Friday looks at public transportation systems in the U.S. and compares their usage for residents among large and small cities. The results are pretty interesting and you should really check out the whole article here:

FiveThirtyEight – Public Transportation: How Your City Stacks Up

For the lazy (and if you’re reading a blog called Too Long; Didn’t Read to learn about current events, I assume this is you), here are some key takeways:

  • New York is king in public transit: not only does the NYC metro area rank top in terms of public transit trips per capita (229.8 annually), but also, in terms of total public transit trips, has more per year than the next 16 highest public transport cities combined
  • The top 5 in terms of trips per capita are rounded out mostly by the usual suspects; San Francisco, Washington D.C., and Boston at #5. The #4 spot is somewhat surprisingly occupied by Atlanta. Though Atlanta is the largest, most densely populated city in the American south, it is also notorious as a sprawled out mess, and sprawl is generally not conducive to public transportation. Still, if you’ve been to Atlanta lately, you may have noticed MARTA has pretty solid coverage of where you want to be in the city.
  • College towns fared well: small cities in the U.S. are unlikely to have robust public transportation systems, but college towns, with tons of car-less, likely drunk kids and very few on-campus parking spaces, are the exception to the rule. In terms of ridership per capita, college towns make up nearly half of the top 25:
    • #7 Champaign, IL (U. of Illinois)
    • #8 State College, PA (Penn State)
    • #11 Iowa City, IA (Univ. of Iowa)
    • #14 Gainesville, FL (Univ. of Florida)
    • #16 Davis, CA (Univ. of California, Davis)
    • #19 Eugene, OR (Univ. of Oregon)
    • #20 Ann Arbor, MI (Univ. of Michigan)
    • #21 Durham, NC (Duke Univ.)
    • #24 Harrisonburg, VA (James Madison Univ.)
    • #25 Blacksburg, VA (Virginia Tech)* Also this is where I live right now. So that’s neat.
  • Regions are the rule: though college towns present some weird anomalies here, in terms of where people use public transit the most, where the city is located in the country tells you quite a bit. In general, in the Northeast and on the West Coast are the largest, most densely populated cities in the U.S., and that’s also where you find the most frequently used public transit.
  • Small Cities are unpredictable: among the U.S.’s 248 urban areas with fewer than 1 million people, there is almost no relationship between either population size or population density and frequency of transit use. We could likely attribute this to a bunch of small cities with poor public transit being radically offset by the college towns above.

Anyway, TL;DR if you’re not in a major college town, the northeast, or a densely populated city on the west coast,your public transit probably sucks.

Bombs are for Suckers: While No One Was Looking, Wall Street Wrecks a Country

In case the world being utterly clogged to the hilt with abhorrent sectarian violence and the tragic deaths of poor and desperate people on a gargantuan scale has distracted you, rest assured that Wall Street is still doing its best to shit on the parts of the world not currently embroiled in violent conflict.

You may have heard something in the news about Argentina defaulting on its sovereign debt and thought to yourself “I wonder if Messi will still be at the top of his game by the next World Cup,” and just kinda moved on. Understandable, given that Argentina has defaulted on its sovereign debt in the past, largely thanks to political tension in Buenos Aries as pro-capitalist and pro-socialist ideologies clash and form a schitzophrenic monetary policy over the last few decades. That and foreign (read U.S.) governments have been quite unfriendly to Argentina during the years when its economy swung more in a socialist direction: a direct influence of Cold War ideologies and the ever lingering fear of the “soft underbelly of America” that lead the U.S. to destabilize democratically elected governments in Central and South America many times during the 20th century. In short, if you are a South or Central American country in the last 100 years, and you haven’t been all “gung ho lassiez faire capitalism”, it was pretty sure you were a Soviet sympathizer and the U.S. was going to do its best to sink you.

But I digress….

So in 2002 or so, Argentina hit a wall with its economy and realized it couldn’t pay its debts, which is a big problem if you want people to loan money to you. The way a country gets money loaned to it is by issuing bonds. Bonds are essentially just loan guarantees that you may have gotten from your uncle on your 13th birthday. Basically, you as either a company or an individual, agree to give a country a certain sum of money now, and they guarantee a certain percentage return by a certain time. That’s why the saving’s bond your uncle gave you wasn’t actually worth $25 until 10 years later. Because your uncle is cheap. Digressing again….

So, in 2002 or so, Argentina’s government stopped pegging its currency to the U.S. dollar, which is a somewhat complicated maneuver that basically resulted in the country being able to help its economy recover significantly in the next few years. Currency markets are a bit hard to explain, but here’s a quick stab at it:

You start a country. In your country you decide everyone will trade big rocks for money. This is fine when there are plenty of big rocks to go around, but when you start to talk to lenders in other countries they say “we’d love to invest in your country, but we have to put all of our money into big rocks, and sometimes big rocks are worth a lot, and some times big rocks aren’t worth much at all, and its hard to predict what big rocks will be worth tomorrow, so this doesn’t seem like a good deal to us.” So, you say “fine, we’ll lock the value of big rocks to your dollars, so that the value of big rocks doesn’t change so much all the time and you’ll feel safer investing in our country.” This works for a while, until things start going wrong, and you realize that no one in your county can buy anything because big rocks are now worth WAY more than people making 1 tiny rock per day can actually afford, so everything is too damn expensive and no one has any money and your country kinda sucks.

So, if you followed that weird metaphor, in 2002, Argentina said “fuck dollars, we’re going back to big rocks”. And suddenly people in Argentina could afford shit again because the value of things started to square itself with how many rocks people actually had. Yay!!

By 2005, this had worked pretty well, and this is close to how the scene went down:

Argentina:”Hey world, we’ve got it together now. Sorry about before. We’d like to start getting you guys to invest in our country again,”

World: “Well, yeah I guess, but you still owe us all these bonds we got from you a long time ago,”

Argentina: “Right. Fuck. Okay so, I’m gonna be blunt here: we don’t have that kinda money. Like, at all. Sorry. So can we pay you back…..less than we promised.”

When faced with the choice of getting less than they had initially been promised versus likely getting paid nothing at all if Argentina defaulted, more than half of the creditors to Argentina (most of whom were giant American banks and hedge funds) said “Yeah sure” and accepted the deal. Argentina still had problems though, because a large portion of their bond holders were still saying “no, you need to pay us the original rate.” So, Argentina went back and made  a second offer where they said “Okay, we still honestly can’t afford to pay you the whole thing we promised, but we can offer a bigger portion of it than we did before.” This time, the deal was sweet enough that almost everyone Argentina owed money to said “yeah, that’s cool man, sorry about your hard times.”

So Argentina went about making its debt payments from this new agreement, but some hedge funds, and specifically the hedge fund managed by a guy named Paul Singer, decided they didn’t want to make a deal like everyone else had done, they wanted their full payment from the original bond and they weren’t going to take no for an answer. Well, the unfortunate bummer of the whole thing for that particular hedge fund is that the U.S. legal system and government don’t provide a recourse for companies that are holders of defaulted foreign sovereign debt to really do anything about it. Basically, Singer bitched and moaned, repossessed any Argentinian government property he could get his hands on (which wasn’t much), and continually filed meaningless lawsuits in New York courts to which the courts, Washington, and Buenos Aries collectively said “meh.”

That is until Singer’s hedge fund tried a different legal tactic. Singer made the argument in court that it was a violation of Argentina’s debt agreements to make payments to some of its creditors (read, basically everyone except Singer’s hedge fund who had accepted the bond restructuring) while not paying others (read, basically just Singer’s hedge fund). Ordinarily, there would have been nothing the courts could do about this, but Singer argued that since many of the banks and funds receiving payments from Argentina were based in New York, the court could compel those banks not to process payments received from Argentina. Believe it or not, the courts bought this argument, and ruled none of these payments could be processed. So, despite having paid their debt payments on time, despite having sent all the money they owed, the courts said the banks couldn’t take the money, and thus, Argentina had defaulted on its debt, resulting in a massive downgrading of Argentina’s bond rating and causing its currency to spiral.

For those of you lost in that last paragraph, let me quickly summarize: this guy Singer bought up a bunch of bad debt from a country that he knew couldn’t pay thinking he could get a sweet deal out of it. When all of the other companies that held that debt took what was a reasonable offer from Argentina, Singer decided he wasn’t making enough money in his jumped up collections racket and actually whined so much that a court said “Okay, if Singer doesn’t get his money, no one does” and then Wall Street turned around, pointed a big ugly finger at Argentina and screamed “AHHHHH THEY DON’T PAY THEIR DEBTS AHHHHHHH DON’T INVEST THERE, SELL ALL ARGENTINIAN STOCKS AND BONDS AHHHH!!” which of course was total bullshit since Argentina had made its payments anyway, but it didn’t stop the markets from utterly shitting on Argentina’s economy in a big way.

Now, Buenos Aries is at the negotiating table trying to find a way to work this out, but it would seem Singer and Wall Street have the country by the economic balls.

Tl;DR Who needs bombs?

Welcome to Corporate America

So I know I haven’t blogged in a long time and also said I wouldn’t be blogging until after I finished grad school in a few weeks, but yesterday’s proposed rule change from the FCC has me absolutely on edge.

Amid reports that America is actually more like an oligarchy than a democracy, that governors of some states are forbidding city governments within those states from establishing a minimum wage and banning paid sick leave, and that mining companies are now union-busting and undoing hundred year-old labor reforms, suddenly the FCC has completely reversed course on net neutrality, essentially ceding the internet to corporate entities.

Quickly, here’s what happened: internet access isn’t currently regulated as a “common carrier” like a railroad nor like a public utility like electrical service, and federal courts recently ruled that the way in which the FCC was regulating internet providers under the “open internet” guidelines set forth by the Obama administration was illegitimate. This left the FCC scrambling to find a way to continue to protect net neutrality. Instead, yesterday the chairman of the FCC came out saying the FCC would no longer attempt to defend net neutrality and would actually encourage a “fast lane” on the internet.

What does that mean? Basically, Comcast, Verizon, Cox, Time Warner, etc will not all provide the same connection to the same internet any longer. If you’re a company like Facebook or Netflix, you will have to pay those companies more to get “fast internet” while they feel free to slow down other internet service as they please. Not only does this stifle innovation by putting small companies that can’t afford this “fast lane” at a tremendous disadvantage, but you better believe companies like Netflix will not let these new fees eat into their margins and instead will pass costs onto the consumer in the form of higher prices. Your internet may become even slower and less reliable, your favorite services will cost more. While consumer advocates have been pushing for the federal government to regulate the internet as a public utility like electric power, drinking water, sewers, etc…, the FCC has announced its intention to go the complete opposite direction and hand over the internet wholesale to corporate interests. Not to mention that Comcast is still trying to merge with Time Warner to create a supergiant telecom that will dominate the world and swallow your children (I assume anyway, I haven’t read the corporate charter for the proposed new entity).

I mention this not only because I care about net neutrality, but because, coupled with those events I mentioned at the top of this blog, coupled with the recent McCutcheon Supreme Court decision and the constant battle of campaign finance and money in politics,  what we’re talking about is a continual and consistent landslide of this country, our politics, our policies, and the things we use and love to corporate interests. If you couldn’t tell, I have two feet now firmly planted atop my little soapbox here. Our country is being bought and sold right under our noses and our political and judicial systems are proving completely unable or unwilling to stem the tide. In the name of economic growth, in the name of increased profits, we are crushing labor rights, making private what once was public, and granting increasing access to the haves and increasing desperation and disenfranchisement to the have-nots. If we do not reclaim our political processes for the people rather than for the corporate interests that are currently dictating policy in our state and federal legislatures, we tacitly agree to drifting further and further afield from the values that saw this country in its greatest ever phase of economic expansion and improvement in general quality of life (WW2-1978ish).

These values: the necessary balance and cooperation between labor and capital, the pursuit by business of long term stability and growth over short-term profit, the idea of value maximization rather than profit maximization, and the central idea that a rising tide of economic growth should lift all boats, not lift the yachts while leaving the rest of us to play Life of Pi on our shitty metaphorical row boats – these values are being abandoned. Those who know have little to no voice or authority, those who might do something about it either don’t know or don’t care, and those fighting so vociferously for corporate welfare often don’t even realize what they’re fighting for. Take the poor former mine worker in West Virginia who depends on public assistance, lost his job because he had no union, suffers because of the poor environmental regulation on his water quality and the destruction of the natural resources around him, and can’t afford medical care or get a new job, yet goes to a Tea Party rally and shouts to keep the government out of corporate business because someone with a lot of money (Koch brothers) funded an emotional appeal to bend his fear until he is fighting like hell against his own interests.

My point is, the cancer here is not just in the monied interests which pursue more money at all costs, not just in our political system which has utterly collapsed under the weight of money, gerrymandering, and broken media, but in ourselves. We have stopped talking about class. We have stopped talking about public value. Our politics are about scandal, about fear, about cults of personality, and about ideology over humanism and communitarianism. We are selling away our interests and our country piece by piece because we don’t care, because we don’t know, because we don’t understand or we don’t feel like we can change it.

There is no boogeyman. You have your McCutcheons, your Koch’s, your Soros’s, etc…, and they undoubtedly wield huge influence, but here’s the truth as I see it: no one is running the show. There is no vast conspiracy. There is a system that rewards some behaviors and not others, and we have been content to let the rules of that system subtly shift until it has become something wholly unrecognizable. Yes, we can debate the relative merits of different welfare systems. We can debate drug laws, public vs. private schools, abortion vs. anti-abortion, gun rights, stand your ground laws, common core curriculum: we can debate all of it, and that’s politics, and whatever side of those debates you’re on, we can still be friends and have a spirited discussion over beers until we can’t speak in complete sentences any more, but when we talk about the fundamental promise of our country, what we’re talking about is the economic birthright of every person to some piece of the gigantic there’s-way-more-than-enough-for-everyone pie that is the American economy.

We’re not talking about 50/50 one side vs the other Republican Vs. Democrat: we’re talking about what benefits the vast majority of us (net neutrality, labor rights, companies that pursue stability and long term growth, economic development instead of GDP growth), vs what benefits vast companies which only distribute those gains in their boardrooms and not in their payroll.

I never thought I’d be this guy, standing here shouting (via blog, I guess) at the world to “wake up”, but we seriously, seriously have to wake right the fuck up. Whatever your pet issue, whatever your politics, I promise you they are petty bullshit next to this rising tide that destroys our communities, our environment, and increasingly, our chances at improving our lots in life.

I’m going to continue to take some time off from blogging here as I finish my degree program these last few weeks, but I am going to rededicate myself to more impartial blogging that is more purpose driven and proposes more answers than questions after I return.

Brazil Experiments Successfully with Basic Income (link)

Brazil’s Government Gives Money to Women from The Atlantic Cities

I’ve written before on this blog about the idea of universal basic income: that the government should simply give people money for being alive. The idea is rooted in the notion that as work continues to disappear, we will eventually live in a society where anything resembling full employment will be impossible because the low-skill jobs will simply not exist in our economy, and eventually many “skilled’ labor jobs will go away as well. Not to mention the meager investment that makes a huge difference in the lives of people at the bottom of the economic food chain, and the reduction in costs from eliminating some government bureaucracies which would no longer be necessary when administration of basic benefits is changed to a straight cash distribution plan. Check out the success they’ve been having in Brazil with only a modest basic income.

College Sports Unionize? (Link)

Northwestern University Football Team Unionizes from Grantland.Com

Normally this blog doesn’t deal with athletics, but the recent decision from the Chicago office of the National Labor Relations Board determining that Northwestern University football players are university employees and have a right to unionize is sending shockwaves through college sports fans and labor activists alike. Read a great breakdown of the whole situation at the link above.

Democracy to the Highest Bidder

Yesterday, the United States Supreme Court voted in a 5-4 decision in favor of McCutcheon, a guy who just didn’t think the law should stop him from giving all of his money to political candidates. To make a somewhat complicated issue very simple, federal law says that you can only give so much to individual candidates, and that a person can only give so much money in total, effectively meaning that, if one had a lot of money, one could give the maximum amount to about 26 candidates before hitting the individual giving limit, but not 27 or more (or something in that neighborhood). This guy McCutcheon thought that impinged on his freedom and took it to court. All the way up to the Supreme Court it went, and the court ruled yesterday in McCutcheon’s favor, effectively eliminating that individual giving limit. Of course, these limits don’t even apply to the 501c(4) SuperPAC organizations of much controversy in the last few years, which can take in any amount of money they want and don’t have to reveal their donors. Basically, in combination with the landmark Citizens United ruling a few years ago, we’re seeing a John Robert’s Supreme Court on a mission to completely de-regulate the American electoral system, operating under the normative assumption that people should be able to do whatever they want with their money, including influence elections to the largest extent possible, as long as they avoid what Robert’s calls “quid pro quo corruption.”

In truth, the McCutcheon decision on its own isn’t too terribly impactful. A report from the New York Times 538 Election Blog estimates that fewer than 600 donors nationally are likely to be affected. Still, what is more troubling is the larger trend predicted by many regarding the mission of the Roberts court. The limits on giving to individual candidates were not at issue here and thus were not ruled on by the courts, but many analysts feel that the language in Roberts’ majority opinion indicates that should the issue of limits of donations to individual candidates and parties come before the court, the court would be more than happy to eliminate those too. The court’s logic here is that the constitution doesn’t provide for government attempting to “level the playing field” of federal elections, but simply to prevent corruption. By this reading, how individuals behave with their money in an election is none of the federal government’s business.

So what does this decision likely mean in terms of the political landscape? Well, first of all, with limits going away, we may see a resurgence in the power of political parties. Of late, both democrats and republicans have been operating with tarnished brand images in the public eye, and support for both parties is low. Coupled with that was the rise of the SuperPAC as an election funding model, what we saw in the last election was the emergence of the first serious threat to the American two-party system in many, many years. In the past, it didn’t matter if the democrats or republicans had less power or popularity because they were always the primary source of funding for candidates and hopefuls, giving the parties more power to corral their congresspeople and candidates. However, with the rise of “shadow” donations through the un-regulated SuperPAC structure, candidates and congresspeople didn’t have to rely so heavily on the party funding structure anymore, and when the parties lost popularity, many candidates (I’m talking about you, Tea Party), said “to hell with this” to the traditional republican funding structure and got their campaigns funded through other means.

This McCutcheon decision will allow donors to give more money directly to candidates and parties, but why would that change people going to other sources for funding? The truth is, even though the line between PACs and candidates is very thin (technically and legally they can’t “coordinate”, but they obviously, definitely do), there is still a line, and people with a lot of money usually prefer to give directly to candidates or parties, because people who give money have an agenda and want to gain political favor with their donation. Basically, if they can, people do prefer to give to candidates directly rather than to PACs, so this decision will increase the power of both the parties and the wealthy donors. All of this at a time when donors are pumping out record amounts for the upcoming midterm election. 

If you’re into democracy of, by, and for the people, this is bad news for you (unless you have a lot, lot, lot of money, in which case, stop reading this blog and send me a check please). Our political parties are failing us, producing puppet candidates, the amount of money in politics is at an all time high, yet we’re going to see now an increase in power for those parties and for wealthy donors, and if things go the way many analysts are predicting, the individual donation limit for candidates may soon be on the chopping block as well, which would really tip the scales of federal elections in favor of the wealthy.

But all is not lost! Battles are being fought in state legislatures across the country right now for campaign finance reform on a state level. I’ve hyped these efforts many times on this blog, so I do recommend you check out the links here and here to learn more about contributing to efforts in your state to get rid of all the money in politics. If the national system is too corrupted by big money, working at the state level to reform electoral systems where politicians are still more responsive to the people of their districts than to large donors (or at least still somewhat responsible to the people in their districts), we have a chance of making major reform in this country. A little side note if you’re looking to make a difference: get involved with an already existing group above, and also follow this little bit of advice I picked up online a few weeks ago from redditor /u/somekindofmutant (take his/her credibility as you will):

An email to your senator or representative may result in a form letter response and a phone call to the office may amount to a tally mark on an administrative assistant’s notepad. But, for any given policy concern, if you want to get their attention a letter to the editor in one of your state’s 5-10 biggest newspapers that mentions them specifically BY NAME is the way to go. If your message is directed to your representative, pick a newspaper that is popular in your district.

That is the crucial thing to know–the rest of this post is an explanation of why I know this is true.

I know this because, when I interned in the D.C. office of a senator one summer, one of the duties I shared was preparing a document that was distributed internally both online and in paper format. This document was made every day and comprised world news articles, national news, state news, and any letters to the editor in the 5-10 largest newspapers within the state that mentioned the senator by name. I was often the person who put that document on his desk, and it was the first thing he read every morning after arriving to the office.

I began to suspect that this was standard operating procedure because several other senators’ offices share the same printer in the basement of the Russell Senate Office building, and I saw other interns doing the exact same procedures that I was involved in.

Since the internship, I’ve conferred with other Senate and House employees past and present and determined that most–if not all–offices use essentially the same procedure.

TL;DR Bad News Bears.

A reading list about the McCutcheon decision and it’s impacts

Analysis from the New Yorker | Washington Insider Analysis from Politico | Data Breakdown from 538 Blog

Will The US Ever Have High Speed Intercity Rail?

At the beginning of the Obama administration, there was a lot of hype surrounding a proposed map of a high speed rail network in the U.S.. In January of 2010, the president announced $8 billion in federal funding for an inter-city high speed rail networkrail_map_d3 that would eventually look something like the one pictured here. However, due to political opposition from congress, the plan all but died in the water. Then, if you followed the news a few weeks ago, Japan offered the United States a loan for 50% of the cost of a brand new, super-high-speed mag-lev train that would run from Baltimore to DC in 15 minutes. Japan wanted to loan this money because infrastructure financing makes big money (see, now you wish you read that boring infrastructure finance blog) and because a Japanese company would be building the new rail line. This deal too, however, seems to have stalled.

We know that building a high speed rail network in the United States would be expensive, but it would also create jobs temporarily in construction (we’re talking thousands of jobs across the country for quite a few years), as well as thousands of jobs for people who run and maintain the rail system down the line. Still, this is a nation that spanned itself with interstate highways inside of a decade just because Eisenhower felt like it, so surely this sort of rail network can’t be out of our reach, can it? Of course not, but given the 2008 recession, a committed and very loud voice in opposition to government spending in congress and in the nation, and a strange sort of anti-rail sentiment that seems to exist in this country, it all seems pretty unlikely.

It’s that last point I want to address in today’s blog. I don’t make this point to score points in some political argument about the viability of high speed rail in the U.S., because I think that debate abandoned logic and fact for ideology a long time ago and no amount of logic or fact will bring it back. In fact, I make this point simply to illustrate just how based in ideology and politics, and just how divorced from reason, this debate has become. A steady and long-lasting wellspring of the anti-rail argument in the U.S. hasn’t been spending but rather feasibility. The United States is a geographically large country with a large population, and building a rail network that can span that area and accommodate that population is just untenable, or so the argument goes. But what if that argument, were, say, completely wrong?

A recent study of Chinese intercity highspeed rail has revealed that China, which has on the whole a much larger and poorer population than the U.S., and also a somewhat comparable geographic landmass, is experiencing a high speed rail boom. People are traveling within China in record numbers, and yet Chinese domestic airlines are reporting record losses across the board. Meanwhile, the Chinese intercity high speed rail network spans over 6,000 miles (with a plan to nearly double in size to 11,500 miles by 2015) and currently transports nearly 2 million passengers between Chinese cities every day, compared to the approximately 1 million now being carried daily by domestic airlines. In the U.S., we have about 1.7 million airline passengers per day and airlines are among the least liked companies in the country, ranking right up there with cable and cell phone providers. A high speed rail network would not only create jobs, use less fuel, be better for the environment, and be just pretty cool, but it also provides a lower cost alternative to airlines which forces them to do a better job competing for our travel business. Right now, when the choice is basically between flying or taking a long-haul bus, the choice is clear for many travelers, but if airlines had to compete, not only would they have a smaller customer base to serve, taking some of the load off and allowing them to consolidate and get leaner and better, but they would also have to work harder on customer service and providing a good experience in order to keep our business.

TL;DR My point is a simple one: high speed rail is feasible in the United States, and the only argument against it is an argument of economic/fiscal ideology. China has comparable landmass, a similar amount of domestic travelers, and on the whole its population has less money than the U.S., yet their high speed rail is incredibly popular. We can do this. We just won’t.

Deals with the Devil: How Public Infrastructure Gets Built

How do our roads, bridges, and highways actually get built? If we want a new prison, a new power plant, a new tunnel, or a new dam, how do those things actually happen? Well, the short version is that someone pays some money for some stuff and some workers and then the workers go build that stuff into other stuff, but because very few cities, states, or countries actually have the cash on hand to pay for incredibly expensive projects, what we don’t see when we see a new stretch of highway being built can actually tell us a lot about how the world works and the forces at work behind, well, everything.

The ironclad rule of all property development comes down to three little letters: OPM. Other people’s money. If you’re going to build something really big, get investors, help reduce the risk on yourself by risking a lot of their money too. The same is true when we talk about infrastructure spending, and the world of infrastructure financing is incredibly important.

To make all of this make more sense, let’s use a long complicated metaphor (this will go well) Think about when you buy a car: most people don’t have the cash on hand to just buy a car, so you make monthly payments – you finance the car. Now, let’s think about that car for a second. Someone built the car, meaning that someone had the get the raw materials, design the car, buy the machines and hire the workers to build the car, and do all of the safety tests and paperwork associated with selling a new car, and advertise the car so people know about it. That whole process obviously costs a lot of money. By the time you enter the process, a lot of money has changed hands already, and the dealership likely bought the car from the manufacturer to pay their costs, so now the dealership is ostensibly “out” the cost of buying that car from the manufacturer. Now, obviously if the dealership sells you a car, they’re going to make a profit, but if you are paying off that car a little bit at a time (say over 3 years), it will take the dealership a long time to actually make their profit on that car. In the meantime, they still are at a loss from buying the car from the manufacturer in the first place, so in the end, the dealership would spend a lot of time in debt. That’s where financing comes in. Basically, someone with a lot of money (a bank), doesn’t mind waiting for a long time for you to pay off your car, because the bank has a shitload of money already and doesn’t mind taking that slow payment for a big payoff (interest), whereas your car dealership has a lot of money too, but significantly less than the bank, so they’d much rather have the bank pay them right away, and then let the bank service your car loan and take a little bit off the top so they don’t have to wait for their money.

This, in a nutshell, is financing. Someone with enough money to be able to take the “slow” profit fronts the cash for someone else to buy/build something. When we’re talking about infrastructure projects the world over, we’re talking about vast, vast sums of money floating around out there. In fact, according to a recent article from The Economist, consulting company McKinsey estimates that simply to maintain the current infrastructure we have in the world through 2030 will cost approximate $57 trillion (yes, with a “t”), or about $3.7 trillion per year. Current world expenditures on infrastructure are at about $2.7 trillion per year (about 4% of all world economic output). In other words, we’re already not spending enough world wide to build the subways, power stations, bridges, and tunnels that we need, let alone to create a new, green, sustainable infrastructure we all dream of. Part of the problem is that many of the traditional financiers of these major projects are still reeling from the 2008 financial crisis or the austerity measures implemented since and don’t have the patience to make the long investments required for infrastructure projects (typically over 20 years before you get paid back on your billions of dollars). New sources of money other than banks, such as private equity firms, insurers, and sovereign wealth funds (basically, the reserve money that a country has) are beginning to invest in these projects. So the money is coming from somewhere: does it really matter? The Economist estimates that there is some $50 trillion of wealth out there in the world from sources like the ones I just mentioned that makes a lot of sense to match up with infrastructure projects, but simply isn’t at the moment, or is doing so slowly. This could be avenue for investment in the future, sure, but what difference does it make to you and me?

Infrastructure projects are important for a few reasons: first of all, having infrastructure that works lets us do everything else we want to do. If we have good power, roads, bridges, sewers, and fiber optic lines, we can start businesses and universities and day care centers and whatever else you can dream up. Secondly, infrastructure projects represent something important in this finance-based economy: a major investment in an actual, real asset. So many investments are so derivative these days, we essentially just have giant companies trading money for other money in the form of complicated financial instruments barely connected to any assets of real value. In infrastructure spending, we have investment into something real that actually exists.

So again: what’s the big problem and what impact does it have on you and me. Well, let’s think about how money is actually made in infrastructure spending and we’ll start to see what’s going on here. First, in general, when a bank or other large investor invests in an infrastructure project, they are giving up short term money for long term profit, but who is “making the payments” on those long term projects? Well, the governments that ordered up the projects of course, and where do those governments get money? They get it from your taxes. So, no matter who is financing infrastructure, you and are eventually paying the bill and paying it with interest over a very long period of time.

Second, with these new investors now interested in funding infrastructure projects, many are deviating from the course of banks in years past that simply invested the money, collected their payments, and then went away. Many of these new investors are interested in ownership and fee generation. Take the case of three prisons recently built in France which were financed by a private investment firm called Blackstone. Blackstone paid the money but can’t start collecting their payments until the prisons are up and running, so now there’s a lot of pressure on builders and governments to be on time and efficient, and to start getting prisoners into the prison. Are we starting to see the problem? The Economist praises this type of process because it brings private sector efficiency to public infrastructure building, but in cases like building new prisons, do we really want efficiency of getting people into jail to be the top priority?

Think of the implications here: we the taxpayers owe some giant company a shitload of money for building us something – let’s say a toll bridge. Okay, so we’ve got this toll bridge and we owe a bunch of money, so now the government knows that it needs people to use this toll bridge to generate the money to pay back the financier. Well, that’s all fine as long as we like people driving over the bridge, but what if what the people really want is a subway system, a green infrastructure and sustainable public transport system that doesn’t really use toll bridges? Now we’ve created something called moral hazard where the government knows it must drive traffic to the bridge to pay public debts, but also knows public demand is asking for a project that drives people away from the toll bridge. Multiply this by thousands of infrastructure projects the world over and we start to see the essential moral hazard of private sector involvement and financing in public infrastructure projects, especially when private sector firms don’t just want to get the money from your car loan, but also want to own a piece of the car so you suddenly have to get a job delivering pizzas instead of being a software engineer so your investment starts generating income for your financiers.

TL;DR Private sector financing of public infrastructure projects has long been the way of things and inherently can lead to moral hazard, but a shift in the types of funds investing in infrastructure actually has the potential to increase this effect. Money. Rules. Everything. Vomit.