We Americans are a distracted lot. I don’t have to tell you how difficult it can to focus on any one task in the era of smartphones. Email stalks you like a predator while your limited ability to focus is constantly assaulted by varying forms of media, all of which are hell-bent on siphoning away some of your prized attention span. We’re a captive audience living in a media bubble. Rarely do we have the time to form our own unique opinion about an important current event; slickly spun analysis is now part and parcel of the news media. The only way for newsmakers and advertisers to break through the clutter is to sensationalize by any means necessary! Capture that attention or somebody else will.
Last month the media circus dusted off one of its tried-and-true headliners for another spin. Lance Armstrong finally worked up the courage to tell some half-truths to Oprah about his blatantly obvious, decade-long doping scandal. Honestly, I can’t sit through an hour of Lance blabbing so I’ll let you watch the charade if you really want to. But I sincerely hope that you won’t. The more we talk about this, the more we create a world where celebrity scandal qualifies as legitimate news worthy of our most precious attention. I hate to burst your bubble, but all the cyclists are doping. You think Lance getting busted is going to stop any of that? Puh-lease. The funny thing is, we all know this and yet we keep talking about it.
The USADA (United States Anti Doping Agency) is a non-governmental organization. Even though they are an NGO, they do receive a large part of their funding from the ONDCP (Office of National Drug Control Policy), which is part of the Executive Branch and is most definitely funded by Congress. Don’t you think Congressional and Executive Offices have more important things to investigate than Lance sticking needles in his ass? I’m not saying we should do away with the USADA, but we could stop talking about doping so frequently. We could free up some capacity in the system to investigate real crimes. Ask and you shall receive! Some rays of light are starting to shine through the clouds of corporate impunity.
A couple weeks ago while everyone was talking about Beyoncé and the “Super Bowl Black Out”, the Department of Justice was doing something very uncharacteristic: they were filing charges against a corporate behemoth that had committed fraud on a scale that makes Lance look like a nice guy. You want to hear about fraud? I got a good one for you.
Congratulations, you’re the new CEO of a too-big-to-fail bank! First find an unsuspecting citizen who, based on their low credit score and modest income, has absolutely no chance of qualifying for a traditional home mortgage. Next, extend this person a mortgage loan by letting them fill in their own “income” figures without requiring verification. Is that legal? It’s your bank so you can do whatever you want! Your shareholders just want to see returns and this new brand of mortgages is as lucrative as it gets! Plus everyone else is doing it so who is going to stop you?
All right, the shitty loan has been extended. What’s next you ask? Next you’re going to take all these subprime mortgages —so called because the loan recipient may have difficulty keeping up with a payment schedule—and pool them together to create a mortgage-backed security or MBS. Now here’s where ratings agencies like Standard & Poor’s come in. You (the bank) are going to attest that, yes, while this bucket of loans contains a high percentage of subprime loans, you’ve properly spread the risk by pooling a lot of subprime loans together. The mortgage-backed securities should therefore be rated AAA, on par with U.S. Treasury Bonds. An investment grade rating allows you to peddle these things to “institutional investors”, i.e. insurance companies, college endowments, pension funds, and your banker buddies. These things are safer than safe, you promise the ratings agency. The only way these mortgage-backed securities would be threatened is if home values across the entire Untied States all fell at the same time, and everyone knows that will never happen.
Now you can take your MBS sausage and hock it to unsuspecting investors who are deceived by a Standard & Poor’s investment grade rating. After you’ve sold the most desirable slices of these mortgage pools to investors, come back to the farm and mix the leftovers—the most undesirable of the already-undesirable—with pools of new loans and go back to Standard and Poor’s for your AAA blessing. Rinse and repeat until you’ve taken the subprime mortgage stock in the United States from less than 8% to more than 20% of total outstanding housing debt in two years. Then write massive (and impressively cynical) short positions against those very same mortgage backed securities, effectively gambling against a product you just sold to your largest institutional customers under the banner of investment grade safety. Finally, light up a stogie and rake in the profits from your short positions while the global economy craters. Now that’s a real fraud. Go stick some more needles in your ass Lance.
Attorney General Eric Holder has finally begun to move towards punishing the ratings agencies for their negligence and profiteering at the expense of the American homeowner. The Department of Justice filed a suit against Standard & Poor’s in a Los Angeles federal court. The Justice Department alleges that Standard & Poor’s “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors [.]” I know, I know…Lance Armstrong tricked you too. Lance took $5.00 of your hard earned coin for a yellow bracelet that you must now throw away for fear of wearing it in public. Standard & Poor’s, on the other hand, is complicit in bankrupting the American residential mortgage machine resulting in millions of defaults and evictions. Why aren’t Lloyd Blankfein and Harold McGraw III sitting on Oprah’s couch apologizing for their dishonesty and selfishness?
While the Justice Department’s suit is better than nothing, they’ve filed it in civil court which means that nobody will go to jail. It’s embarrassing because even Lance Armstrong might go to jail! If the US Government can’t figure out how to indict and punish an actual person in the largest financial fraud in three generations…well I don’t know. The Wall Street Journal reports that the total loss to the global economy from the mortgage meltdown is in excess of $15 TRILLION, and yet the DOJ isn’t willing to indict anybody. Well, I suppose one could argue that they are punishing an individual, since corporations are people…right? This is just the latest in a series of largely ignored financial scandals to make their way to the courts. One by one they line up, and one by one the courts hand down an insultingly benign penalty. Let’s look at another, equally ruinous case—the LIBOR rigging scandal. Watch this 60-second video to get up to speed on why LIBOR matters so much:
Another massive financial clusterfuck, this one affecting upwards of $800 TRILLION in contracts worldwide. Almost every outstanding debt you have is, in one way or another, affected by the LIBOR rate. So what does Justice do about LIBOR rigging? Instead of criminally prosecuting executives from a well-known domestic bank like J.P. Morgan Chase over their complicity in the case, the DOJ has followed through on civil charges against Royal Bank of Scotland. RBS is a foreign bank that few in the US are even aware of. Put another way, RBS is the perfect fall man; Eric Holder & Co. can pretend to guard against financial crimes while not actually taking meaningful action against American banks. RBS has agreed to pay $615 million in fines, of which American regulatory agencies will collect $475 million with the rest going to European agencies. This is pitiful at best, especially considering the bank earned a pre-tax profit of over £2 billion in 2011. Compared to the scale of the fraud they participated in, the fine is hardly worth mentioning. The most baffling part is that nobody in the United States seems to give a shit about this. No, here the good old U.S. of A, we spend our time closely following the criminal prosecution of Barry Bonds.
Big-head Barry has been tied up in a steroids “scandal” since 2003 when his trainer was indicted by a federal grand jury in the United States District Court for the Northern District of California. There was all sorts of conjecture and smearing about who knew what and when, who supplied whom with what, and why exactly Mr. Bonds’ head was so colossally large. Granted, the first round of this happened in 2003 when the subprime-lending machine was just getting revved up. Standard & Poor’s wasn’t yet engaging in the type of widespread criminality that would soon double their profitability as they collected fees of up to $750,000 per rating.
After his 2003 grand jury indictment, things settled down for Mr. Bonds until 2007 when the feds came knocking again. This time they wanted to talk about possible perjury in his previous testimony. Keep in mind, the MBS fraud was in full swing at this time but instead the Department of Justice was focused on an athlete (who was paid to hit home runs) taking steroids to help him hit home runs. His official perjury trial was scheduled to begin in March of 2009, after the mortgage meltdown had commenced but because of appeals it didn’t actually begin until March of 2011, all while being endlessly profiled and speculated about in nightly news programs. Every time a Barry Bonds court deadline came near, it was news. Do you know how many banks were criminally indicted in that same two-year period? Exactly, nobody can remember. But everyone can tell you about Barry Bonds.
Here’s a timeline of the prosecutorial history of that same time period. Basically…nothing happened. Sure there were investigations, but the big fish got off the hook. Countrywide Financial— the most ostentatious of crap loan originators— and American International Group FP —the company that wrote the insurance policies on all the crap loans—had their investigations dropped by DOJ. These are perhaps the two most obviously guilty parties in the whole lineup of guilty parties, and they get a slap on the wrist and sent back out to recess.
The dust has long-since settled on the financial crisis. We now know exactly what happened and how. We know who is responsible. Matt Taibbi’s Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History and Michael Lewis’ The Big Short are perhaps the most entertaining books on the subject, but there have been hundreds of other books and thousands of articles penned about the crisis. Still we have yet to see one high level executive prosecuted. Save a few lowly patsies, nobody has gone to jail in what amounts to the biggest rip off since the Great Depression. Even Barry Bonds was sentenced to 30 days of house arrest, two years of probation and 250 hours of community service for an obstruction of justice conviction stemming from his grand jury appearance in 2003. Come on Department of Justice, it’s just embarrassing. A swing and a miss.
Remember Roger Clemens? His steroids “scandal” was even more high profile than Barry’s. The dude was on 60 Minutes! José Canseco made a second career out of dragging Roger Clemens’ name through the mud and the mainstream media was totally complicit, giving him all the airtime he needed. Come to think of it, José Canseco was on 60 Minutes too! If there was an Emmy for “Most Time Spent Distracting the American Public From Real News Stories By Instead Reporting On Steroids In Baseball”, 60 Minutes would take that thing to the bank.
I’m not suggesting that the courts and the media shouldn’t pay attention to illegal activities. Taking anabolic steroids is against the rules of baseball (and cycling). It is illegal if not prescribed by a doctor. There should be consequences because it sends the wrong message to kids, who might think they can simply juice their way to an MLB contract or a Tour victory. On the other hand, constantly giving a new version of the same old story the most prominent mainstream airtime violates a basic trust, especially when that story doesn’t really serve in the public interest. Well-functioning media is supposed to inform us about current events that affect our daily lives. As long as we remain woefully uninformed about the fact that too-big-to-fail banks have just perpetrated the largest financial fraud of our lifetimes and gotten away with it, the more inclined DOJ will be to sit on their hands.
On the other hand, if we the people were empowered, if we challenged our judicial system to prosecute financial criminals it might actually happen. Unfortunately, if nobody knows what’s happening then nobody will care. The Department of Justice is one of the three branches of government that, in theory, is required to uphold its duty to enforce the law and administer justice. And in all fairness, the DOJ hasn’t been completely aberrant in its duty to act on behalf of the American people.
In October of 2012, United States Attorneys in New York filed charges against Bank of America over their lending practices, noting that “the fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope.” Uh, yeah…it was. We’re all so glad that it only took DOJ five years to realize just how lawless Bank of America was in the run-up to the mortgage crisis. Guess what? They actually took a big hit in the settlement. Bank of America agreed to pay over $11 billion to resolve claims that it had hustled mortgage customers and sold the resulting crap loans to federally-controlled Fannie Mae which was subsequently devastated by enormous losses. Bank of America reported that 2012 fourth-quarter profits were down 63% as a result of the massive settlement. Well-played DOJ. Of course, nobody went to prison but it’s better than nothing, because for every base hit there is a huge whiff.
Just a month before the Bank of America settlement, former Assistant US Attorney General Lanny Breuer signed off on a civil settlement deal with banking giant HSBC. Their crime? Nothing much, unless you count the fact that HSBC admitted to laundering billions of dollars for Columbian and Mexican drug cartels in clear violation of the Trading With the Enemy Act. Apparently drug dealers “would sometimes come to HSBC’s Mexican branches and deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit in the precise dimensions of the teller windows.” If this doesn’t count a criminal banking activity then I don’t know what would, especially considering that some of HSBC’s Saudi and Bangladeshi clients had terrorist ties. Mr. Breuer abruptly resigned last month after Frontline aired their fantastic expose The Untouchables which explored the curious phenomenon of Wall Street banks emerging from the mortgage crisis relatively unscathed. You should watch it, it’s pretty awesome.
If the Department of Justice doesn’t have the nerve to criminally indict top banking officials over drug money laundering and supporting terrorist activities, then I doubt we’ll ever see other banking bosses go to jail over mortgage fraud. Indeed there has been no effective punishment of the banking elite. No criminal charges against the men responsible for green lighting disingenuous and illegal lending activities that ripped our economy in half. These banks have destroyed the lives of many of their most vulnerable retail customers. They’ve eviscerated the savings of their largest institutional customers. They’ve profoundly eroded the public trust in our financial organizations and yet they still continue to avoid the stigma of criminality. But Lance, Barry, and Roger…those guys are some unscrupulous characters. They need to be criminally indicted and held responsible for their lies!
I mean, just imagine an entire career built on a lie. How could someone sign a financial contract while knowing full well that they weren’t being honest with the person on the other side of the table? Imagine duping the public into believing you were doing something amazing without having to resort to cheating. Think about the crushing guilt that comes along with living that lie, and the audacity required to maintain your innocence even in the face of an obvious truth. You’re a cheater. You don’t deserve the titles and trophies and you know it. Unfortunately for us all, we can’t erase the effects of the ongoing financial crisis was an asterisk.
Welcome to Lance, Barry, and Mr. Roger’s neighborhood.
On January 21st, 2013 Barack Obama will deliver his second inaugural address. Many Americans, myself included, view his second induction in a very different light than Obama’s 2008 victory over John McCain. Gone is the empty canvas on which a sweeping progressive vision of American could be painted, restoring the rule of law and ushering in a new era of prosperity. Since 2008, blank-canvas-Washington-outsider-Obama seems to have been placed under the D.C. screen printer and given an awesome shade of business as usual. How naïve was I to expect a candidate to actually deliver on their campaign rhetoric?
I don’t suspect the next four years will reveal a renewed focus on bringing America back to full employment through a robust public investment program aimed at rebuilding our crumbling infrastructure. Instead of taking meaningful action towards preventing another massive Wall Street meltdown by destroying the concept of “Too Big To Fail”, President Obama and the White House will continue to double down on a culture of perpetual bailouts and corporate hubris.
We will forge ahead, increasing spending on military buildups, wars, and other power-projecting interventions abroad while spending on domestic programs, social security repayments, public infrastructure, education, and job creation continue to languish at home. Fabricated political crises like the “fiscal cliff”, the debt ceiling (otherwise known as paying your bills on time), and a government shutdown will continue to be used by Congress and the White House as bargaining chips in an ongoing ideological spending battle which has exactly jackshit to do with actual economics.
Unfortunately for all of us, while these budgetary crises are largely contrived, their effect on consumer confidence and spending, which makes up 70% of our GDP, is very real. Why would a business decide to hire someone when the owner can’t rely on a stable domestic economic condition but instead expects ongoing political squabbling that has an unsettling influence on the market? And yes, all of this is President Obama’s fault just as much as it is the fault of our most do-nothing Congress of all time.
I can accept acquiesce to entrenched powers as part of President Obama’s job, an unfortunate side effect of the perennially unproductive dance in Washington D.C. Granted, it has recently become quite a bit more unproductive but that’s to be expected with our swelling electoral polarization. I surely don’t expect Obama to dramatically reverse course on this range of issues now that he doesn’t have an election to win. Hell, it might even embolden him more in his use of unmanned aerial drones and persistent refusal to enforce habeas corpus for those deemed enemies of the state. Of all people Obama, the Constitutional law professor, should be ashamed of his flagrant usurpation of our founding document. But he is not.
However there is one betrayal, one failure to act that is wholly unforgivable. All these other breakdowns of moral leadership from a supposedly progressive President are but tiny speed bumps on the road to the real cliff; the climate cliff. Four more years without significant climate change leadership from the United States makes everything else a moot point. We might as well pack it in and give up. Let me clarify. By “it” I mean the giant flaming bag of shit we’ll be handing off to future generations in the form of:
- An archaic energy and transportation infrastructure that still runs on expensive and polluting fossil fuels.
- An economy wrecked by the reality of unstable but persistently high fossil fuel energy prices.
- A climate so totally geared to deliver gigantic storms, droughts, floods, wildfires, heat waves, crop failures, ecosystem meltdowns, and mass extinctions that it makes attempting to rebuild after every blow almost laughable.
Now I’m not suggesting that all of these things will happen in the next four years, but without strong leadership it’s only a matter of time. When we get to that point, I think the Borg said it best:
Here’s another clip you might be familiar with. Think back to 2008, when we were all still very hopeful about the prospects of our newly minted poster child actually taking action on climate change. Obama delivers this soaring promise, which would be laughable in today’s political climate if it weren’t so disappointing.
Obama gave another soaring speech on election night when he proclaimed victory over Mitt Romney and secured a second term in office. His victory lap had many of the same overtones as his 2008 speech and it was at that point when he finally broke the climate change silence that had befallen his entire campaign and the whole political discourse during his first term.
We want our children to live in an America that isn’t burdened by debt, that isn’t weakened by inequality, that isn’t threatened by the destructive power of a warming planet.
Seriously? This guy did not utter the words climate change or global warming for the entire two-year election cycle, not even once. And then, on the grandest stage of all, he has the bravado to make the proclamation that now he’s going to do something after four years of inaction (or depending on how you look at it—obstructionism). Really guys…I mean it this time. You believe me, don’t you? Now that’s the audacity of hope if I’ve ever seen it.
Obama’s spectacular oratory has completely lost its effect on me and hopefully on everyone else who is demanding urgent action to confront climate change. It is the most harrowing and dangerous challenge that has ever threatened human civilization and it demands real action, not fluffy speeches. There won’t be a fiscal cliff to barrel off of or a debt ceiling to tear down if we push the Earth’s climate system into an intractable tailspin of feedback loops that will destroy the greatest natural resource of all, a livable climate. Our climate systems won’t wait for politicians to act; Mother Nature hasn’t yet embraced the usefulness of a filibuster.
If President Obama wants to signal his intention to act as a responsible steward of the United States, as a man who thinks several steps ahead, as a truly compassionate intellectual capable of leaving behind a proud legacy of a vibrant economy and a stable climate then the first thing he will do is reject the proposed Keystone XL pipeline. If you’ve never heard of Keystone XL, please allow me to explain. I’ll start by saying that it’s not that crappy keg beer you used to drink at college frat parties—although Obama should pass some legislation rejecting that stuff too.
The Keystone XL pipeline would carry synthetic crude and bitumen from the Athabasca tar sands of northeastern Alberta (that’s in Canada, eh) to several refinery sites in the Midwest and Gulf Coast of the United States. There are serious local and global environmental impacts from the production of tar sand, which would only be exacerbated by the completion of Keystone XL. Instead of focusing on those harrowing impacts, let’s first examine the economics of oil sand. The most important concept when evaluating the economics of energy production is EROEI, that’s energy returned on energy invested or just EROI for short(er). Back in the day when we had light crude oil literally seeping out of the ground in Pennsylvania, they could stick a pipe in the dirt and oil would gush out, hence the term gushers. There was such a small amount of human and mechanical energy required to harvest the oil that the J.D. Rockefellers of the world were enjoying 100:1 EROI in the twentieth century. Early oilmen became very, very, very, incredibly, inconceivably, filthy fucking rich.
But every oil field follows a similar depletion curve. At some point in its life cycle, the fluid dynamics of an oil reserve change in such a way that more human and mechanical energy is required to extract the same amount of resource. At some point the production level is no longer sustainable and the EROI drops to a point where it is uneconomical to continue production. So it’s not like the oil just keeps coming out at the same rate until the milkshake straw starts making that sucking noise. Fields are abandoned when the oil becomes too expensive—the EROI too low—to extract any more.
Now take that same concept and apply it to oil sand production in Alberta, where the petroleum is quite literally mixed in with subterranean sand. The whole mixture must be dug up and separated from the dirt before they can even begin refining the bitumen into usable petroleum products. It requires an ungodly amount of Earth (some 2.5 tons of sand) to produce one barrel of oil. To dig up all that sand requires an incredible amount of human and mechanical energy in the form of gigantic trucks (the biggest in the world, thousands of them), gigantic cranes with gigantic buckets (again, the biggest in the world), and gigantic egos of modern oil barons who don’t mind destroying some of our Earth’s most important geophysical features for the sake of turning a profit. Most importantly, they wouldn’t be doing any of this if cheap, abundant liquid petroleum were still available. Canadian tar sands offer an EROI of between roughly 4:1 and 6:1, a far cry from Rockefeller’s day. Widespread low-EROI production methods should sound alarm bells for us all since the entire global economy runs on fossil fuel energy. We’ve run out of the good stuff so we’re starting to scrape the bottom of the barrel. See: deep-water drilling, Arctic exploration, deep bore fracking. It’s not all that difficult to connect the dots. And before you remark how low the EROI for solar photovoltaic is, I must say two things. One: the price of solar is coming down and will only continue to fall as capacity increases. For fossil fuels, the price goes in the opposite direction (up) as the resource is depleted. Two: the energy required to install solar panels is a one-time endeavor while tar sands open pit mining is a 24/7/365 operation. Oh yeah, and solar is clean as a baby’s bottom while tar sands are about as dirty as it gets.
Words simply cannot do justice to the enormity of these tar sands operations. YOU MUST CLICK HERE TO SEE MORE PHOTOS OF TAR SANDS EXTRACTION OPERATIONS IN ACTION. It is absolutely amazing and absolutely terrifying.
There’s more! You see, in order to get at all this tar sand, the holding companies—with familiar names like Royal Dutch Shell, Exxon Mobil, Koch Resources LLC, and Chevron—must first clear the “overburden”, or what most of us would call the forest. High latitude boreal forest is the most important terrestrial carbon “sink” left on the planet. These vast forests of the northern hemisphere absorb more carbon from the atmosphere than the Amazonian rainforests. They’re kind of important. To dig them up for any reason is bad. To dig them up in order to pump even more carbon into the atmosphere is a little like the Tom and Jerry episode where the mouse feeds the cat his own tail.
This is all bad news and should be reason enough for President Obama and incoming Secretary of State John “Longface” Kerry to deny the permits that TransCanada, a Canadian firm, needs in order to build the Keystone XL pipeline across several state boarders in the US. The environmental consequences are unspeakable, and we didn’t even get to the potential contamination of the Ogallala Aquifer, which irrigates almost 30% of the crops in the United States and provides drinking water for untold millions of Americans. But the real crime of Keystone XL would come in the form of missed opportunities to invest in the future instead of doubling down on the past.
The Canadian tar sands are an incredible source of liquid petroleum energy. Their vast size and production potential are truly unmatched by other tar sand reserves. However if President Obama and Mr. Kerry decide to approve this project, they will be sending a strong signal that America is not yet seriously interested in investing in the energy sources of tomorrow. Production capacity for solar panels and wind turbines will continue to evaporate from the United States as we pursue business as usual, foolishly trying to suck up the last, melted little bit of the milkshake.
We can do better. Business as usual is the default position of unimaginative politicians, locked in by special interests and afraid of trying to explain new concepts to their constituents. Instead of taking a risk and acting in the best interests of their people, our elected officials assume we’re a bunch of cows would couldn’t possibly understand the intricacies of a global energy market. The proposed Keystone XL pipeline route crosses the heartland of America, a place where energy and commodity prices have a particularly important meaning. I’d be willing to bet that these “laymen” who our elected officials are so afraid to shake up understand a thing or two about global economic forces.
Many people fully appreciate the significance of Keystone XL, and they’ve been taking the fight to TransCanada. These people aren’t all “environmentalists” either. As an aside: if you live on this planet, breathe its air, and drink its water then you are an environmentalist as you implicitly rely on the health of your environment for your own physical wellbeing. Yes, even you. Moving on…the protesters are not all tree huggers. World-renowned scientists like NASA’s Chief Climatologist James Hansen has been arrested protesting Keystone XL and he’s not tapping the breaks one little bit. He’s gone so far as to say that Keystone XL would basically be “game over” in the fight to maintain a livable climate.
As of late, things are not looking good. President Obama pushed off a decision about Keystone XL in response to a massive protest orchestrated by 350.org in November of 2011. Many suggested he was simply kicking the can until after the election, at which point he would be in a position to approve the pipeline without jeopardizing his reelection. That prediction appears to be coming to fruition. Just last week the Environmental Protection Agency’s director Lisa Jackson, a strong and vocal opponent of Keystone XL, resigned quite suddenly. Speculation is rampant that her departure is in protest to an impending Obama approval of Keystone XL. Her potential successor, outgoing Washington State Governor Chris Gregoire, has a mixed record on the environment. She has a reputation for being a real climate advocate for Western Washington crowds, but changing her tune quite profoundly on the other side of the Cascade Mountains where agriculture and transportation are key electoral factors. On the one hand I’d be proud to have a former Washington State governor serving at the EPA, but if she’s simply being brought in to rubber stamp fore drawn conclusions of the Obama Administration, Gregoire should keep out of it.
If President Obama throws the White House’s weight behind getting Keystone XL approved, it will be his most grotesque moral failure to date. More so than using drones to kill American citizens or approving the most recent National Defense Authorization Act, which grants Presidents sweeping powers to detain and hold prisoners indefinitely and without charge, regardless of where they are captured. Keystone XL represents complete ambivalence about the future of our children and grandchildren. It’s not just the pipeline we need to worry about. Approving TransCanada’s plan is supporting, one final time, our absolute and total addiction to fossil fuels. An “all of the above” energy policy supports not just tar sands, but everything else. NASA’s James Hansen put it best:
If [Obama] chooses the dirty needle it is game over because it will confirm that Obama was just greenwashing, like the other well-oiled coal-fired politicians with no real intention of solving the addiction. Canada is going to sell its dope, if it can find a buyer. So if the United States is buying the dirtiest stuff, it also surely will be going after oil in the deepest ocean, the Arctic, and shale deposits; and harvesting coal via mountaintop removal and long-wall mining. Obama will have decided he is a hopeless addict.
Some day in the not too distant future, liquid fossil fuels will become uneconomical to pull out of the ground and if we haven’t begun to move in a different direction, we’ll have hell to pay. We can’t rely on our children and grandchildren to be able to make an overnight transition to non-carbon energy. It takes, on average, four decades to transition from one energy source to the next. Steam to coal: 40 years. Coal to oil: 40 years. Why would we expect our transition off of fossil fuels to take any less time, or be any less inevitable?
Our first step in a hopeful direction for future generations is rejecting this pipeline. In the aftermath of the unspeakable tragedy at Sandy Hook Elementary, President Obama once again delivered a powerful speech; this one seemingly from the heart. The President spoke of his horror upon hearing about the massacre of 27 innocents, including 20 six and seven year-olds. He became choked up when he talked about his own young daughters and suggested, “We’re going to have to come together to take meaningful action to prevent further tragedies like this, regardless of the politics.” He looked at this horrifying event not as a politician, but as a father. Climate related policy issues demand the same metric of decision-making. It is, after all, our children’s future we’re talking about.
Want to get involved? On February 17th, 2013, 350.org is organizing another massive demonstration outside the White House. Tens of thousands of protestors will be there to express their opposition to Keystone XL and show their support for a new vision of the future. You can sign up to participate here, or simply register your support for those who will defy freezing winter temperatures and the risk of arrest for something they believe in. If nothing else, talk to someone about Keystone XL, spread the word.
If President Obama and his State Department approve Keystone XL, you can expect many more disappointing decisions over the next four years. Such a conclusion would expose Obama’s malleability at a very fundamental level. This is Obama’s chance to demonstrate true leadership in the national interest. I demand more of our President than simply rolling over for entrenched interests and anticipate that he will begin enforcing a forwarding-facing vision of the United States instead of desperately trying to hold onto the past.
It’s here. It’s finally here. After two years of scratching, clawing, eye gouging, and worse, Election Day is upon us. What happened to us during this election cycle? Already-bitter divisions have given way to a new level of abhorrent discourse. It seems as though we’ve lost faith in our fellow man. Matt Taibbi had a great piece at Rolling Stone this morning about just that. There is a genuine belief that, if elected, the “other guy” actually wouldn’t do his best to serve the interests of the American people.
I mean, I wouldn’t blame either man for abdicating his moral responsibility to serve the 49% of voters who end up voting against him. Both candidates have been subjected to unrelenting and unprecedented assaults, thanks largely to a Citizens United ruling that has allowed “independent” groups to distort, smear, and lie with virtual impunity. It would be hard not to hold a grudge. But the suggestion that the President of the United States wouldn’t do his version of the best is pretty insulting.
We all want prosperity for ourselves and future generations, we just disagree on the right way to get there. No President would consciously advocate against citizens who didn’t vote for him. Congress, for all its squabbling and obstructionism, is working against the other half of the aisle, not the other half of the country. It’s not just Republicans either; Democrats are equally capable of crippling obstructionism. As The Atlantic reports, this “unprecedented obstructionism” we keep hearing about is in fact quite precedented.
We’re all in this together and any realistic plan for making the United States a more vibrant place surely requires participation from everyone. Of course, each Presidential candidate favors different policies that would affect our nation in different ways. For example, economic planning that more aggressively redistributes government revenues works against the interests of affluent voters while across-the-board tax cuts end up hurting our vanishing middle class. The salient point is this: both candidates have a vision of their ideal America and some sort of plan on how to make it a reality. Whether they’ve been honest with the electorate about how they intend to make that vision a reality is another issue entirely.
Presidential candidates are selling a grand vision, but they’re constrained to an electoral process that leaves them little time and even less practical ability to enact the majestic fantasy on which they campaigned. Every four years we’re sold a reimagining of the American Dream, and every four years the President scarcely gets off the starting block before being bitch slapped by the cold hand of our current reality. This pattern is extremely significant. Our political process and indeed our entire industrialized economy has become locked in a destructive pattern of Short-termism.
The inability of our political system to act much beyond a four-year timeframe has crippled our ability to affect transformative change at a time when we need it more than ever. Economic imperatives force Wall Street to measure success in 90 day increments when their very survival requires they take a much more expansive view. The challenges we face don’t have four-year solutions. These are generational problems that require a strategic approach, but Washington is mired in tactical thinking. James Gustave Speth, former White House adviser to President Jimmy Carter, just released an excellent book entitled America The Possible, which presents a hopeful reimagining of the American economy. As always, the first step is admitting we have a problem. Here’s a sample from Speth’s book. He outlines some important areas for your consideration:
Compared to the 20 member nations of the Organization for Economic Cooperation and Development (OECD), America now has:
- the highest poverty rate, both generally and for children;
- the greatest inequality of incomes;
- the lowest government spending as a percentage of GDP on social programs for the disadvantaged;
- the lowest score on the United Nations’ index of “material well-being for children”;
- the worst score on the UN’s gender inequality index;
- the lowest social mobility;
- the highest public and private expenditure on health care as a percentage of GDP, and yet the highest infant mortality rate, prevalence of mental health problems, obesity rate, percentage of people going without health care due to cost concerns, and consumption of antidepressants per capita, along with shortest life expectancy at birth;
- the third lowest scores for student performance in math and middling scores in science and reading;
- the second highest high school dropout rate;
- the highest homicide rate;
- the largest prison population, both absolutely and per capita;
- the highest water consumption per capita and the second highest carbon dioxide emissions per capita;
- the lowest score on the Yale-World Economic Forum’s Environmental Performance Index, and the second largest Ecological Footprint per capita;
- the highest rate of failing to ratify international agreements;
- the third-lowest spending on international development and humanitarian assistance as a percentage of GDP;
- the highest military spending in total and as a percentage of GDP; and
- the largest international arms sales.
Does anybody have a four-year fix to any of the challenges on this list? If you do, submit your application to the Nobel Foundation right now. The truth is we can’t solve any of these without a concerted effort spanning multiple Presidential administrations and both parties of Congress. A small handful of the conditions above would be shocking; looking at all of them in a big long list is enough to make some folks give up. How can we even begin to whittle away at that rap sheet of social, environmental, and economic crimes? A model for the required mental shift can be found in the unlikeliest of places. Wall Street.
Before you close this webpage in protest, let me explain. Wall Street, you say? A place where pathological dishonesty and corruption is rewarded with bailout checks? A place that has, until quite recently, operated outside the constraints of pesky laws? A place where Short-termism is the holy word of the Lord? Well…yes.
In any system there are outliers. Darwin would tell us that sometimes these mutations produce a species that is better adapted to current environmental conditions than the previous generation. Over time, this outlier shifts to a position of genetic supremacy and becomes the new normal. This evolutionary process plays out in our biological processes as well as in our social constructions. Currently there is an evolutionary shift happening in the backbone of our industrialized economy. All of the problems on Speth’s list have economic roots and fortunately for us, Wall Street is slowly mutating into something more reasonable.
The 90-day doctrine has arguably done more to constrain our economy’s true potential than anything else. It forces the maximization of short-term earnings and stock prices at the expense of long-term value. This in turn creates an investor base that is more short-term oriented which of course produces a more volatile market. In the same way, the firm reports on a short-term basis and the investor base expects firms to focus on short-term goals. The resultant firm-client relationship is a positive feedback loop of negative behavior.
Given uncertainty about future performance and the observability of current performance, executive compensation is typically tied to stock price. When executives are compensated based on short run performance they pressure their managers to deliver favorable short run results. What’s more, it encourages firms to systematically underperform their full potential by forcing them to publically set expectations and then actively positioning to just slightly exceed those expectations in order to appease the Street. This whole management ideology reinforces the 90-day doctrine, often at the expense long run valuation. Shockingly, 87% of companies that were on the Fortune 500 list in 1955 no longer appear on that list today, either the result of bankruptcy, acquisition, privatization, or valuation collapse. The 13% of those firms that remain are companies like Boeing, Campbell Soup, Deere, IBM, and Whirlpool.
The good news? There is a growing pool of mutants. These companies that set longer-term goals and back those goals up with systems that reward long run management. Firms run on this basis consistently out-perform the 90-day sprinters of the world. George Serafim and some of his colleagues at Harvard Business School have written a number of articles on the high risks of short-term management. There’s one in particular that I love called Short-termism, Investor Clientele, and Firm Risk, published in February of 2012. Mr. Serafim and his colleagues have been able to demonstrate a measurable market advantage for firms that have environmental and social policies in place. In this video he explains how firms that imbed sustainable (see: long-term) practices in their strategy and operations clearly outperform their competitors.
In their study, Short-termism, Investor Clientele, and Firm Risk, Serafim and his colleagues reviewed over 70,000 earnings conference calls for more than 3,600 firms from 2002-2008. Using precise key word testing they were able to determine “the time horizon that senior executives emphasize when they communicate with investors.” It shouldn’t be a surprise that the firms who engender a systemically focused, long run attitude financially outperform the other group.
What the hell does any of this have to do with the Presidential election? Everything!! Nationally and at the local level, the disadvantages of short-term thinking and clearly demonstrable advantages of long-term thinking have never been more important. Tomorrow (God-willing), this election will be over and it will be time for our newly entrusted officials to start governing. Look back over that list of items that desperately need attention. Pick one of them and ask yourself, is any one man capable of solving this problem in four short years? Even in an ideal world, I seriously doubt either Presidential candidate could deliver on their broad vision of reshaping America in 48 months.
Our political system could seriously take a lesson from the slow, silent transformation of Wall Street. Pretend for a minute that tomorrow morning, General Motors’ CEO Daniel Akerson announced to the world that by 2030 GM would offer only electric vehicles to consumers. Akerson is 64 years old and is very unlikely to remain GM’s CEO for the next 18 years. Just because he wouldn’t be in charge to see the vision realized doesn’t mean he can’t survey the market, identify key trends, and respond accordingly. Then Akerson just has to trust that the next guy who comes along will see the same value in his long-term vision and believe that customers are going to continue to respond favorably.
Surely there would be individual employees at GM, perhaps many high-ranking managers who would disagree with Akerson’s decision. Still, I have to believe that Akerson would be making such a decision because it lines up with his vision of how to keep GM competitive well into the future. Some other potential CEO might have a different idea of how to best serve the GM shareholders, but the goal remains the same: invest in the long term health of General Motors.
All I want for Christmas is a United States government that’s willing to do the same. If we want to start crossing items off that foreboding list of failures, we need to set some long-term goals. Those goals should be rooted in an explicit acknowledgement that in many key areas, America is no longer the leader it once was. It doesn’t matter who starts the process of reconciliation, as long as the next leader doesn’t come along and try to dismantle it because its got the other sides’ cooties on it. Mr. Future President: Is this attempt at long-term planning serving the best interest of a majority of Americans? Yes? Okay, leave it the fuck alone.
The current elections process is Washington’s version of a Wall Street 90-day sprint. When it’s all said and done each candidate will have spent about $1 BILLION and not have much to show for it. On May 31st, 2012 FiveThirtyEight Blog had President Obama polling at 50.6% and Romney at 48.3%. Now several billion dollars later (if you include outside money), the President is polling at 50.8% and Romney is virtually unchanged at 48.3%.
If that doesn’t blow your freaking mind then I don’t know what will. Raising and spending billions of dollars on a two-year campaign that leaves voters’ opinions virtually unchanged is the exact opposite of an effective election system. It’s distracting, it’s corrosive to our national spirit, and it doesn’t allow our elected officials to do their jobs.
In the system I just described, one candidate barely squeaks out a victory and we all lose. It keeps us stuck in the same toxic polarization and undermines any attempt to set and administer new long-term goals. It’s up to us to decide that our growing list of failures is one item too long. Government responds to constituent demand. Are you as frustrated by this as I am? Who is your Congressman? Who is your Senator? Who is your State Representative? Take a minute to write (as in hand-write) your Representative. Tell them that you want them in their office working on your behalf, not out on the campaign trail stumping for half their term. Don’t be rude, just outline what you expect and what types of behavior would earn your vote in the future.
Want to get involved in other ways? Look at the list at the top of this post. Pick the item that shocked you the most and talk to a friend about it. American exceptionalism is alive and well; I’d bet dollars to a bag of doughnuts that most American citizens wouldn’t believe half the items on that list. Spread the word.
If you haven’t already, vote! But after the election is over, your voice is still your vote. There’s nothing stopping you from standing up for what you believe in, especially when we’re not in an election cycle. Talk to your friends. Talk to your enemies. Talk to the man in the mirror. Help someone understand that these are generation-long challenges that require persistent attention from all ends of the political spectrum. No single Presidential administration is equipped to solve challenges on this scale. It’s up to us to decide that we want a new way forward and demand a sacred, long-term plan capable of delivering the goods.
In September of 1789, shortly before the first Congress of the several States was convened, Thomas Jefferson wrote to James Madison from Paris. It was the last letter in a years-long correspondence with Madison concerning the Bill of Rights, which was to be proposed at that first Congress. In that final dispatch Jefferson raised an issue that the burgeoning American government had yet to consider:
The question Whether one generation of men has a right to bind another, seems never to have been started either on this or our side of the water. Yet it is a question of such consequences as not only to merit decision, but place also, among the fundamental principles of every government.
Jefferson seems baffled. To his knowledge this critical intergenerational issue had not been addressed in the founding documents.
As insightful as this first passage may have been, Jefferson’s letter is more well-known for the next rumination, the one where he prophetically acknowledges, “I set out on this ground which I suppose to be self-evident, that the earth belongs usufruct to the living; that the dead have neither powers nor rights over it.” To the modern man, this seems only a casual observation; of course dead people have no powers or rights over the earth… they’re dead. But 18th century wig-wearing men talked funny. It is Jefferson’s careful choice of words that reveals his apparent ability to time travel.
On the surface, Jefferson focuses the attention of his letter on generational debt and land transference. He’s urging Madison to consider how the new States want to deal with moral issues associated with an older generation contracting large debts, and then leaving the settlement of that debt to the next generation. However, his use of the word “usufruct” exposes a much broader sentiment about stewardship and intergenerational justice.
In the historical context, as well as the modern one, “usufruct”, which I had to look up, refers to “the right to make all the use and profit of a thing that can be made without injuring the substance of the thing itself.” It appears that Jefferson and his contemporaries had a well-established philosophy of intergenerational responsibility, the likes of which are completely absent from our national discourse at present. Just to be clear, Jefferson is writing to James Madison—the principle author of the United States Constitution and the Bill of Rights—to impress upon him the importance of preserving future generations’ opportunities by actively advocating for them. The timing of his letter suggests that Jefferson was urging Mr. Madison to enter such a license into the impending Bill of Rights. Of course, no such Article was explicitly included in the Bill of Rights or any subsequent amendment to the Constitution.
The fundamental question is this: Does the living crop of humans on our one shared Earth have a moral obligation to consider the well being of the next crop? The founders of our great Nation believed that we do and long before Europeans set up shop in the New World, native cultures understood the importance of considering future generations when making current decisions. The now-ubiquitous Great Binding Law of the Iroquois Nation required their people to work for the benefit of the seventh generation into the future. Ask yourself this, what kind of world do you want to leave for your children and grandchildren? I’m a newly married man, so for me this question has shifted from abstraction to reality. I want my children to have the opportunity to leave a better world for their children, my grandchildren. That’s what this website is about.
What if everyone (myself included) considered how their actions affect future generations? I take every element of our industrialized society for granted because it’s all I’ve ever known. I grew up in this world of plenty, where everything I could possibly need or want was readily available and cheap. I’ve been indoctrinated with the paradigm of infinite economic and material growth since the day I was born. But when my children are born they will be coming into a different reality, a reality I will explore through this public forum of self-expression.
I’m just like you. I want my life to keep coasting on the tailwinds of all the modern comforts I’ve enjoyed until now. However I can no longer fully participate in our consumption culture without feeling that I’m contracting a large debt and leaving it to my children to pay down.
Thomas Jefferson sought to officially establish our collective responsibility to leave the Earth, not just habitable, but in prosperous condition for future generations. Can you imagine what kind of world we would be living in had his sentiments been given legislative teeth? Towards the end of his letter to James Madison, Jefferson makes another critical point, “On similar ground it may be proved that no society can make a perpetual constitution, or even a perpetual law. The earth belongs always to the living generation.” He correctly observes that governing documents and indeed the societies that they govern are subject to the current milieu, not some past version of reality. Our context is changing and we would do well to change with it.