Bacon's Rebellion

Bacon’s Rebellion does not endorse candidates for any government position, but we do take pride when regular contributors (or former contributors) seek to elevate themselves from the easy work of punditry to the hard job of actual governance. Thus, we are delighted to take note that former Bacon’s Rebellion columnist and blogger Barnie Day is under consideration for appointment to the State Corporation Commission.

If picked, Day would succeed Judge Theodore V. Morrison, who is retiring at the end of this year. State Sen. William C. Wampler, Jr., R-Bristol, had been widely deemed a favored candidate for the seat but has withdrawn from consideration.

The three SCC commissioners are key players behind the scenes in the debate over Virginia energy policy because, among their other duties, they oversee rate making and other regulatory matters for Virginia electric-power and natural-gas utilities. Day provides this capsule summary of the philosophy he would bring to the job:

Generally, in the abstract, I believe that an unfettered marketplace is the best arbiter of private transactions between willing individuals. Over the past hundred years or so we, as a society, have collectively decided that our interests are best served by giving some businesses and institutions special status in the marketplace, and, in return, we have empowered the SCC to watch on our behalf these businesses and institutions, largely through the restraint of regulations.

I do not have a law degree and do not look at things through a lawyer’s set of filters, but rather a consumer’s perspective, tempered with appreciation for the vital role stock holders and employees play in our overall well-being. The General Assembly membership may deem that an all-lawyer commission remains the best composition of this agency. I have no qualm if they do. It is a prerogative entrusted to them by our constitution.

Well, I’m back from North Carolina, where I watched Wake Forest (my wife’s alma mater) triumph over the University of Connecticut in the Meineke Car Care Bowl. (Yes, that’s actually the name of the Bowl game — not one of your more prestigious events.) Thank you to EMR for stimulating discussion during my absence of Peter Galuszka’s important article raising concerns about the proposed third reactor at North Anna. While my inclination is to favor the expansion of nuclear power, there’s no gainsaying the legitimate concerns that Peter and others have raised.

I would like to draw attention to another significant article related to energy policy, “Cleaner, Cheaper, Better,” by Jim Kibler, vice president of governmental relations for the energy company that owns Virginia Natural Gas. Kibler outlines a schema for overhauling the rate structure for natural gas prices so as to encourage conservation of the fuel.

As Kibler explains, traditional rate structures were devised decades ago, when fuel was cheap and plentiful but the cost to build a grid to provide universal service was staggeringly expensive. Rate makers encouraged gas consumption: The more fuel the gas companies sold, the more money they had to continue investing in inter-regional transmission lines, storage facilities and pipes to the home. Writes Kibler:

Economists devised an effective mechanism to create the economies of scale necessary to provide universal service: Tag each molecule of the gas with a piece of the cost of infrastructure. Because utilities earned more money the more gas they sold, they had an incentive to encourage consumption, and that’s exactly what they did.

But policy priorities have changed. The infrastructure for delivering natural gas to homes and businesses has been built, and gas is no longer cheap. As the cleanest of non-renewable fuels and as a fuel that can be stored and burned to generate electricity during periods of peak power consumption, natural gas also is experiencing tremendous growth in demand.

Recognizing the desirability of conserving natural gas, other states have “decoupled” rates for gas utilities, Kibler observes. The structure works like this:

Under a decoupling model, the fixed costs of natural gas utility service are truly separated from the variable component – customer energy use. … No longer is each molecule of gas tagged with a slice of the infrastructure. The customer pays one charge based on the cost of building and maintaining the system (the only part of the bill that the utility controls) and another for his consumption (the only part of the bill that he controls). Natural gas utilities in Virginia would continue to pass through commodity prices at cost.

When gas companies are no longer incentivized to sell more gas, they can make money by selling energy-saving services and appliances to consumers. As Kibler says, “Utilities with a profit motive to encourage conservation can use their access to customers and heft in the marketplace to contract for cost-effective customer energy audits, lower prices on programmable thermostats and obtain good deals and rebates on more efficient appliances, among other things.”

Makes sense to me! Am I missing something?

No more blogging for a few days. I’m off to North Carolina to visit the in-laws, and my laptop has died on me. Everybody enjoy the holidays!

After a brief hiatus, I’m back to the Economy 4.0 series. It’s a truism that building our human capital — educating and training our citizenry — is the single most significant challenge that Virginia faces in the early 21st century. In the latest column, I take it for granted that our efforts to date have been largely unsuccessful. Expensive… very, very expensive… But not terribly effective. Compared to national norms, the educational achievement of Virginia’s students has barely budged; compared to international norms, the achievement of American students is slipping.

As I’ve argued before (See “The Tofflers on Education“), American educational institutions evolved to meet the requirements of the agricultural and industrial eras of development. Unfortunately, we have reached a stage of such institutional ossification — a gridlock of unyielding special interests — that our educational institutions are incapable of evolving to meet the demands of the knowledge era.

One reason we cannot bust this institutional gridlock, I believe, is the inability to imagine what a knowledge-era educational system might look like. I don’t pretend to be an expert in this field, but I do have some ideas — or seeds of ideas — of how a post-industrial education system might change. In this week’s column, “Education for the 21st Century,” I suggest that we’ll eventually see the following:

• The end of age segregation in schools. No more age cohorts marching in lockstep through 12 distinct grades. Each child will progress at his or her own pace.
• The end of nine-month school years. Why should children waste three months out of the year? To help their parents with the harvest? The time off is mostly wasted. Children need to spend more time learning.
• The end of “schools” as distinct buildings or campuses were education takes place. Home schools (or collaborations of home schoolers) and distance learning will show the way.
• The rise of free-lance teachers and professors. Teachers and professors valued for their ability to teach (as opposed to publish) will find the freedom to connect directly with parents and students without the intermediation of schools and colleges.
• Just-in-time education. The divisions between “school years” and “work years” will blur, as people learn what they need to learn, when they need to learn it and apply it. Instead of acquiring high school degrees and college degrees, which are increasingly meaningless credentials, people will acquire the competencies, skills and knowledge they need to perform on the job or pursue their self fulfillment.

Unless the process is blocked by the educational-industrial complex, the logic of evolving technology and the demands of the marketplace make these changes more or less inevitable. The real question is whether we ultimately build an educational system for the 21st century in the 21st century, or whether the process of institutional change is so slow that we won’t get there until the 22nd century… if then.

You’ve been eating too much, drinking too much, going to too many parties, staying up too late, and racking up too much debt on your credit cards. Thankfully, holiday season is in a lull right now until the final blast hits on New Year’s Day. It’s the perfect time to sit down in front of your PC and enjoy a little holiday Rebellion.

In an ideal world, you would subscribe to the Bacon’s Rebellion e-zine, which you can do here, so the e-zine will be sent to your in-box and you won’t miss a single edition. In the imperfect plane of existence in which we dwell, you can always hope to catch the e-zine when it pops up on the blog. Here’s the Dec. 27, 2007, edition to nourish your brain back to health:

Education for the 21st Century
As Virginians embrace lifelong learning, children will no longer progress in chronological lockstep, study a mere nine months a year and confine their education to school buildings.
by James A. Bacon

The Rise and Fall of Journalism
The age of traditional journalism is ending as media Enterprises lose their grip on information markets and advertising revenues decline. The big question: Can citizen-generation information take its place?
by EM Risse

Why Metro-to-Tysons Is a Mess
The reason the Metro-to-Dulles project is in danger of collapsing can be traced to unbalanced development, conflicting interests among landowners and developers, and the politics of Business As Usual.
by EM Risse

Making Government Work
Innovation in state government is not an oxymoron. The Productivity Investment Fund acts like an in-house venture capitalist to underwrite projects that spur superior efficiency and service.
by Michael Thompson

The Rhetoric of the Tax Debate
Mark Warner knew how to beguile Republicans lawmakers who didn’t like to raise taxes. Tim Kaine doesn’t have the same knack: He’s just getting them mad.
by Norm Leahy

Rethinking North Anna
Sure, Dominion’s third nuclear unit would have a small carbon footprint and be politically correct. But there are plenty of unanswered questions, from safety, to unproven new technologies, to cost, to fuel.
by Peter Galuszka

Cleaner, Cheaper, Better
Simple changes in rate-making philosophy could encourage Virginia’s natural gas utilities to promote conservation of their clean, efficient fuel — helping consumers and the environment alike.
by Jim Kibler

Nice & Curious Questions
Timing Is Everything: Stoplights in Virginia
by Edwin S. Clay III and Patricia Bangs

A Virginian-Pilot editorial quotes a recent study by the Center for Responsible Lending in support of a proposal to cap payday loans at annualized interest rates of 36 percent. That study takes on the argument of the payday industry that the vast majority of payday loans are used only for emergencies. That fact is, states the study, many borrowers are caught in an indebtedness trap.

• Over 60 percent of loans go to borrowers with 12 or more transactions per year
• 24 percent of loans go to borrowers with 21 or more transactions per year
• One of every seven Colorado borrowers have been in payday debt every day of the past six months
• Nearly 90 percent of repeat payday loans are made shortly after a previous loan was paid off

I find those numbers totally plausible. Millions of Americans live from paycheck to paycheck. All it takes is one big unexpected bill — a medical emergency, a car repair — and their credit cards get tapped out. There’s nowhere else to turn. And once you fall behind, it’s darn hard to ever catch up.

What I’m not comfortable with is the idea that legislation can protect people from their financial folly or misfortune. I don’t pretend to be an expert in this field, but it stands to reason that small, short-term loans are very expensive to make. Moreover, people who need payday lends tend not to be the best credit risks. If the General Assembly caps lending rates in Virginia, payday lenders may find it very difficult to make a profit and, I would hypothesize, curtail their lending significantly — if they don’t shut down operations in Virginia entirely.

In the absence of payday lenders, where would people go for short-term loans? Presumably, their credit cards are already maxxed out, or they wouldn’t be patronizing payday lenders in the first place. One thing they do, as pointed out in “Payday Lending, Do-Goodism and Unintended Consequences,” is bounce checks. Each bounced check carries a $30 fee.

How does that $30 charge compare to payday loan charges? Are the advocates of interest rate caps willing to cap bounced-check fees as well?

Another option is for borrowers to stop payments on their cars, furniture or appliances — until they are repossessed.

Are the advocates of interest rate caps willing to curtail the circumstances in which lenders can repossess collateral on unpaid loans?

Chronic indebtedness stinks. I don’t wish it on anybody. That’s why I charge everything to my debit card. If the money’s not in the bank, I don’t spend it. But you don’t solve the problem by restricting lenders. You solve it by changing peoples’ economic behavior. Americans — yes, even poor ones — need to be more disciplined about saving money. People in societies far poorer than ours do it somehow. The Chinese, whose incomes average about one twentieth the level of the United States, manage to save so much money that they can afford to lend us tens of billions of dollars every year.

The poor and the chronically indebted would be a lot better off if the Do Gooders preached economy and thrift rather than meddle in markets.

While a number of people still celebrate Christmas for the nativity of Jesus, most regard it as an occasion for partying, over-indulgence, the ritual exchange of gifts and mass overconsumption. The gift-exchange aspect of Christmas becomes ever more prominent as the holiday spreads beyond its Christian origins and insinuates itself into cultures all around the globe.

Around this time every year, my inner Scrooge comes out and I think, Christmas is simply out of control. We buy way too much stuff, giving presents to people who don’t really want or need the stuff, who in turn give us stuff we don’t want or need. I literally have 25 or 30 woolen sweaters piling up in my closets, shirts I don’t need, pants I don’t need, jackets I don’t need. Why? I tell people, don’t buy me more stuff, I can’t use it, I don’t have anywhere to put it, I’ll have to give it away, but they do it anyway.

Bah, humbug!

How many million tons of Christmas wrapping winds up in the landfills around the country? How many closets, basements and attics are crammed with stuff we can’t use but don’t dare get rid of because Aunt so-and-so gave it to us and her feelings would be hurt? How much square footage do we add to our houses to hold all of this stuff? How much more are we paying on our mortgages for that square footage? How much do we expend in BTUs to heat that space? How much are we racking up debt on our credit cards?

Bah, humbug!

To what degree can the endemic balance-of-payments deficit and plummeting value of the U.S. dollar be attributed to our Christmas mania for buying more stuff? To what extent will future historians trace the decline of American power to indebtedness brought on, like those villagers in South America you read about in first-year anthropology classes, by our inability to reel in our propensity for exchanging gifts?

Bah, humbug!

How much energy is consumed producing, packing, transporting and disposing of all this stuff? How much pollution is emitted as a result? What irreparable damage are we doing to the environment? I shudder to contemplate.

We need to resurrect Ebenezer Scrooge — the authentic, skin-flint Scrooge, not the wimpy, spread-the-Christmas joy Scrooge he became after the Christmas ghosts scared the bejeebers out of him — and make him the new national icon.

(Photo credit of Alistair Sim as Scrooge in the 1950 movie “Scrooge”: Mudsugar.)

Many Virginians still think of Virginia’s six coalfield counties in far Southwest Virginia as a bastion of unemployment and poverty in an otherwise robust state economy. The stereotype was true as recently as 10 years ago, but it no longer applies. As Rex Bowman writes for the Times-Dispatch, unemployment levels have reached lows not seen in decades — since the coal boom of the 1970s — and welfare roles are down dramatically. The key: Former Gov. George Allen’s welfare reform and well-funded regional economic development programs.

A rebound in the coal economy has helped the economy somewhat, but the main credit for job creation goes to sustained efforts to diversify the region’s industry base. Unemployment in Dickenson County, which stood at 14.2 percent in 1997, has fallen to 5.2 percent. The changes have been almost as dramatic in Wise and Buchanan Counties, the other two jurisdictions where coal mining once constituted an economic monoculture.

Said Gary Hale, manager of the Virginia Employment Commission in Norton: “I’ve got more jobs available than I’ve got people to fill them, and I never thought I’d say that.”

While job creation has been critical, so have sustained efforts to break the culture of welfare dependency. Bowman describes the strategems to ease the difficult transition from welfare to work. For the coalfield region, the number of people on welfare has declined from 6,o61 a decade ago to 3,614 today — a decline of 48 percent, compared to 43 percent for the state as a whole.

Statewide, the decline in welfare roles is saving the federal and state governments $957 million a year. But the benefit of reviving peoples’ independence and pride is incalculable. Kudos to the Times-Dispatch for highlighting this success story.

Doing the same thing over and over and expecting a different result – for example, building more roadways and expecting traffic congestion to go away – is often cited as a threshold test for insanity.

There is a second test that is useful to apply in the Blogosphere. This test is:

Attempting to describe, discuss or arrive at a well-considered public judgement on complex topics in cases where:

1. Key words / phrases are known to have different meanings to different people, or

2. A person or group of persons uses the same word / phrase to describe different places, actions or conditions

According to Lewis Carroll, Humpty Dumpty, when challenged on the confusing use of Vocabulary stated: “That word means exactly what I want it to mean, nothing more, nothing less.” In fact, Alice’s Wonderland is the only place such use of Vocabulary is appropriate.

Failure of the Vocabulary test of mental capacity is especially prevalent in discussion of human settlement patterns. Why is this failure to understand the need for a functional Vocabulary so prevalent in the realm of human settlement patterns?

First, and most obvious, the offending participants do not want to “understand.” Often this is because they fear an understanding will require abandonment of ideas and theories with which they have organized their lives.

The unfounded actions were often thought to have been taken in pursuit of the actors best interest. No one likes to find out that they have been acting in ways which turns out to harm their long-term self-interest and those of their Household.

Adherents of The Big Yard Myth and The Private Vehicle Mobility Myth are often in this category. Believers defend their pet Myths with religious tenacity.

Second, most of the commentators deem themselves to be experts “because they live there.” They apply their observations and experience in the context of the Myths they so want to believe.

Third, there are those who do not want to understand because they profit (or hope to profit) directly or indirectly from continuing confusion, debate and failure to reach a consensus on the most intelligent course of action for the majority.

This class of Humpty Dumpty adherents often know their statements are at best uninformed opinion and at worst deceptive.

Finally there are those who are offended that someone – anyone – would suggest they need to change their Vocabulary in the consideration of topics that they believe they understand as well as anyone.

Doctrinaire defense of “simple” language with respect to human settlement pattern discussion is a sure-fire way to identify Humpty Dumpties.

A great Holiday pastime is to see how many Humpty Dumpties you can identify at the gatherings you attend.

Happy Holidays.

EMR