Bacon's Rebellion

To Larry Gross:

You often make observations or ask questions that raise important issues so I try to respond to them when I have the opportunity. (See Postscript) In the comments following “Freight Rail: The Robust Transport Mode” you commented:

“I have to admit that what I get out of EMR’s logic seems to be that we should not be buying light bulbs from China but instead (from) a local industry…

and that world trade of goods is inherently wasteful and the correct answer is to produce goods locally [NB: “local” and thus “locally” is a Core Confusing Word – produce goods (and services) Regionally] instead of importing them from afar…

If so.. it’s a pretty provocative concept and like Peter … I’d be bamfoozled…. so.. either I don’t understand or EMR’s ideas about land-use extend to commerce/trade/economics, etc.”

Larry, I am sorry to bamfoozle you! Here is a simple answer:

If all the location-variable costs were fairly allocated and citizens were really serious about maintaining (?recreating? / ?really creating for the first time?) a democracy with a market economy, then it would be less expensive and serve the overarching goal of a sustainable trajectory for contemporary civilization to buy the light bulbs made in the Region, rather than the ones made in China.

There is a relatively simple reason for this:

Trade vs Import Replacement.

In a nutshell Trade benefits those at the top of the economic food chain while Import Replacement benefits everyone in the “place” where commerce is focused. At this point we call this “place” a “Region.”

Benefiting the majority of those in any Region is a prerequisite for commerce in creating and sustaining a democracy with a market economy.

Since most economists are supported directly or indirectly by the denizens and agents of Trade, you have to dig a bit to understand the importance of this distinction.

A good place to start is Jane Jacobs’ book The Economy of Cities (1969 ). Since the book was not written by a card-carrying economist it is not often cited. (Planners do not often cite her Life and Death of Great American Cities either :>)

As we point out in The Shape of the Future Chapter 19 Box 2 – “Evolution of the Marketplace” – Jacobs’ book establishes a framework for considering Trade vs Import Replacement. (As we also point out in Chapter 3 Box 3, our only problem with her book is the use of “cities” in the title. Think how much more useful her book had been if it were titled “The Economy of Regions.”)

What one calls a “place” is very important. Over the past 8,000 years the “place” that has benefited from Trade has morphed from:

The compound of the chief / trader in a trading Village; to

The favored sector of the earliest “cities” (Ur, Choga Mami, Tell Brak, Hama, et. al.); to

The well-to-do quarter of the capital of the trading empire; to

The Zentrum of the most successful trading city-state; to

The financial districts in the urban agglomerations of the nation states with the large economies and / or control of scarce resources.

A pattern of Trade and Import Replacement can be seen in:

The earliest Neolithic Trading Villages

Pre Classical (Bronze Age) Mediterranean commerce Ugarit, Ulu Burum, Kommos, et. al.

Classical commerce of Greeks, Phoenicians and Romans

Mediaeval commerce between 400 and 1400

Colonial commerce between 1400 and 1950

Nation-state commerce between 1750 and 2000

Global and multi-national trading bloc commerce between 1960 and present

Over this period Trade primarily benefited those who controlled Trade.

However, in these same time frames the citizens who benefited the most were those who live and work in and / or were served by “places” that worked to focus economic activity on Import Replacement.

We will not bore you with the details but I am convinced that the same pattern could be found in the emerging cultures in Mesoamerica, the Pacific Coast of South America, Africa and elsewhere (including the “Mound Builders” of the Mississippi / Missouri River Valley and the Southeast) if their cultures had not been wiped out by guns, germs and steel. Hat tip to Jared Diamond. (I too went to Jared’s.)

Urban economic activity starts with Trade but must transition to Import Replacement to be sustainable. That is especially true as humans begin to push the limits of the exploitable resources (the price of oil continues up) and the reality that finite resources can be exhausted becomes apparent. See Jim Bacon’s post on “The End of Cheap Gasoline” of 19 November 2007.
The US of A fought a Revolutionary War and a Civil War over aspects of Trade vs Income Replacement. The causes of the two World Wars and the Cold War can be traced to resource allocation and control of commerce.

As the World becomes more “Flat” and civilization becomes more urban, the importance of the “place” and location grows and so does the pattern of human settlement.

The fundamental building block of contemporary civilization is the New Urban Region. The New Urban Region and the urban agglomerations in Urban Support Regions must move to transition from Trade to Income Replacement.

Cost of communication and information transfer and storage are going down and the real cost of Mobility and Access – if all the location-variable costs are fairly allocated – is going up at an accelerating rate.

In this context, Democracy and a market economy depend on Income Replacement.

This is why it is so important to understand the roles of the four Estates – The Agency Estate, the Enterprise Estate, The Institution Estate and the Citizen / Household Estate. This is the topic of our most recent Backgrounder which is being presented in four PARTs in the last two and next two columns.

POSTSCRIPT

We has originally intended to post this material as a comment on the “Freight Rail: The Robust Transportation Mode” of 10 December. The comment by EMR to which Larry Gross responded to was in that string.

However, upon further review…

EMR’s original comment was prompted by the facts that:

We believe that it is wildly premature to write off interRegional Passenger Rail for reasons stated in our previously comments in the original string.

We believe it is unwise to promote the views of a denizen of the Enterprise Estate as the view that should guide the Agency, Institution and Citizen / Household Estates. What is good for General Motors is not necessarily good for the US of A and that goes for Norfolk Southern as well for reasons we have noted in our response to Peter Galuszka. We hope Peter has the time to read these comments with care.

As happened with the comments that followed the “End of Cheap Gasoline” post the comments moved from a discussion of transportation alternatives to speculation about settlement pattern alternatives. Many of these comments are driven by three Myths we will be exploring in a future column.

For all these reasons (and the fact if buried at the end of 60 plus comments Larry would not see an answer) it seemed best to start over with an answer to Larry.

By the way Larry, I will get to your TAZ questions in due course. We will admit to being a bit put off by your asking if we had ever heard of TAZs :>) We just addressed the NUR / USR question.

EMR

Pepco is doing it in Washington, D.C. Why isn’t Dominion doing it in Northern Virginia — and the rest of its service territory, for that matter? From today’s Washington Post:

Pepco is about to start sending personal e-mail messages to Jonathan and Lauren Schwabish every few hours that could determine when they do the dishes, wash the baby’s clothes or turn on the air conditioner.

The couple will learn when the price of electricity for their old Capitol Hill home will spike the next day because Washington’s winter chill or its steamy summer is nudging up the demand for power.

If they wait to turn on the washing machine or they turn off the air conditioner when the sun beats down, they’ll be rewarded with a credit on their utility bill that could reach hundreds of dollars a year. Other D.C. residents have agreed to pay rates eight times the average if they use their appliances at peak times but rates well below it at off-peak hours, as part of a pilot program starting next month.

“Lexus lanes” are coming to the electricity grid. Energy conservation programs that died when the power market switched from regulation to competition are back, but with new technology and aggressive demands from government regulators facing anger over rising prices.

Just as long-awaited high-occupancy toll lanes will charge drivers a fee to travel at rush hours, electricity customers will pay more when the grid is congested and less when it’s not.

Ranked by absolute numbers, high-tech employment is growing fastest in Northern Virginia, but ranked in percentage terms, it’s growing fastest in Central Virginia (Richmond and Charlottesville), according to the 4th quarter Regional Scorecard for Virginia’s High-Technology Industries.

The Democrats may have taken power in the state Senate, but people are already worrying how well the new-found majority will hang together. Incoming Majority Leader Richard Saslaw, D-Fairfax, has said the changes could mean more money for Northern Virginia and Hampton Roads. If that funding shift comes at the expense of rural Virginia, what happens to the Democrats’ four rural/small town senators?

Tim Craig with the Washington Post has written a piece exploring the potential division within the Democratic majority.

“I think there is already some tension,” said Sen. Phillip P. Puckett (D-Russell), who represents coal country in southwestern Virginia. “I have just asked for some fairness. I understand the seniority system, but at the same time, rural Democratic legislators are concerned.”

As I’ve long maintained, General Assembly politics is driven by regional interests as much as philosophical principles. If the new Democratic majority expends a lot of effort rejiggering funding allocation formulas — most notably for schools and roads — rural legislators of both parties will unite against them faster than you can shake a stick. Things could get messy.

Do gooders across Virginia are fulminating against the evils of payday lenders for “targeting” the poor, charging unconscionable fees and perpetuating the cycle of poverty. In January, the General Assembly considered 16 bills that would have imposed restrictions. Although none of them have passed, the agitation continues against the industry, which generates $1.3 billion a year of business in Virginia alone.

It’s hard not to sympathise with poor people caught in a cycle of debt. And the charges on the micro loans are undeniably high: In Virginia, reports the Harrisonburg Daily News Record, lenders can charge $15 for every $100 they lend. Calculated as an annual rate, the interest comes to 391 percent, although the loans almost never roll over for a full year. Critics are lobbying for a 36 percent annual cap — a rate that payday lenders say would put them out of business.

Frankly, I’m amazed that payday lenders charge only $15 per $100. There are two reasons why the rate seems justified. First, there are paperwork and other administrative costs associated with each loan, regardless of the size of the loan. Secondly, the loans are going to a high-risk group. Although 95 percent of borrowers pay back their loans on time, or nearly on time, that means 5 percent don’t. That’s a high delinquency rate — higher, I believe, than the delinquencies in the infamous sub-prime mortgage market that is roiling the world of global finance.

Finally, I would observe, if the terms of payday lenders are so onerous, why do so many people patronize them? Because a large number of people have a need for emergency cash, and there’s nowhere else to get it… except from Cousin Vinnie and Uncle Guido, who will charge you even more, and they’ll break your kneecaps if you don’t pay on time.

If the Go Gooders think that payday lenders are so rapacious, there’s always one remedy available in a capitalist system. Go into business yourself and lend the money at rates and terms your conscience allows. If your instincts are right, you’ll find lots of customers and be successful. If you’re wrong… you’ll go out of business.

In this week’s column, I expand upon a short blog post I made in late October, “Conservation Capitalism,” which highlighted the Energy Efficiency Partnership of Greater Washington. That partnership, spearheaded by Virginia Tech, has set the goal of reducing energy consumption by 20 percent to 50 percent in some 100 major office buildings in the Washington region over the next five years.

Virginia Tech will drum up awareness through conferences and other outreach programs, Pepco Energy Services will conduct the retrofits and investment banker Hannon Armstrong will arrange an estimated $100 million worth of project financing per year.

While the politicians are talking about climate change and energy conservation, the level of activity on the ground — people actually doing something to increase energy efficiency — is remarkably low compared to other countries, observes Laurel Colless, the cosmopolitan New Zealander, wife of the Finnish ambassador to the United States, and mother of three children, who got the ball rolling. But the Washington region appears to have reached a tipping point. The response to the initiative has been enthusiastic she says. At last count, 38 major property owners had contacted the Partnership about participating.

Pepco will conduct detailed energy audits for serious prospects, ranking a list of energy-saving improvements: from double-paning windows and installing automated lighting, heating and cooling controls to installing solar panels on the roof or building a cogeneration facility to supply electricity, steam and hot water.

Energy service companies like Pepco have been around a long time. The crucial difference now is the appearance of companies like Hannon Armstrong that can bundle the savings into a single project, bridging the gap between the property owner’s expectation of a short-term payback and the 8- to 10-year time horizon required to recoup some of the more expensive energy-saving investments. Hannon Armstrong employs mixtures of equity and debt, and devises arcane structures such as synthetic and leveraged leases.

The energy savings are shared between the property owner, Pepco, Hannon Armstrong and its investors. For the property owners, the value proposition is effortless, risk-free savings. The Partners are confident the idea will take off.

Colless guesstimates that the potential exists to reduce electricity consumption by $3.6 billion a year in the Washington region. That’s just from the commercial sector, not including federal government facilities, hospitals or universities. By deploying energy-efficiency strategies across Virginia, we can delay the need to build expensive and intrusive new power plants and transmission lines for years — potentially until renewable fuels such as solar, wind and biomass are practicable to build economically on a large scale. The result will be lower electric bills and less pollution.

Read the full article here.

The Dec. 10, 2007, edition of the Bacon’s Rebellion e-zine is now online. Subscribe here for free to make sure you never miss an issue. Fan the flames, spread the Rebellion!

Who is former Gov. William Berkeley’s P.R. agent? I want to hire the guy!

In today’s commentary section, the Richmond Times-Dispatch selected “the greatest” Virginians of the 17th century: Capt. John Smith and Gov. William Berkeley. I won’t quarrel with Smith, savior of the Jamestown colony. But Berkeley — “Butcher” Berkeley, defender of the English monarchy, oppressor of Bacon’s Rebellion and instigator of Indian slave trading? Puh-lease.

According to Jack P. Greene, a Johns Hopkins University professor of
colonial history:

[Berkeley] more than anybody else during the seventeenth century, helped to give shape to early colonial Virginia society. He was an improver and during his long governorship endeavored to create a political society in Virginia that would incorporate English legal, political, and social traditions into the warp and woof of the rude agricultural world of the Chesapeake.

He provided the leadership for a people focused heavily on private estate building to insure the protection of property and the rule of law and to provide the religious and political institutional foundations for the transformation of Virginia into a recognizably English polity.

Read “Nathaniel Bacon Vindicated, Gov. Berkeley Shamed,” based on the scholarship of Richard Thornton, to see what we have to say about that!

As for Nathaniel Bacon — leader of the first colonial revolt against English misrule, advocate of landless farmers and freed slaves, and expositor of the “Declaration of the People” — the Times-Dispatch relegates him to the bottom of an article about the “most controversial” 17th century Virginians. Indeed, one Bland Whitley would create a special category, Worst Virginian of the 17th Century, to dishonor Bacon on the grounds that he established “a precedent whereby opponents of governing elites took out their resentment on those even more vulnerable than themselves (in this case the Indians).”

Who is this charlatan Whitley? Apparently, he is employed by the Library of Virginia as a historian and editor. The fact that Bacon represented the interests of white servants and black slaves against the royalist aristocracy once counted for something among historians. That interpretation appears to be out of fashion now that the greatest evil a historical figure can commit is being a European in the civilizational clash between Europeans and Indians!

Bacon probably wasn’t the nicest guy in the world when it came to his dealings with Indians. There was a lot of bad behavior back in the 17th century, when England, and by extension, Virginia, was ruled by a monarchy and aristocracy; a century when brutality and violence were endemic around the globe. Democracy, human rights and respect for multi-cultural diversity hadn’t been invented yet, people!

What do we know about the specifics of Bacon’s conflict with the Indians? Not much for sure. The evidence is incomplete and conflicting. For some reason, though, historians today are all too eager to embrace the narrative spun by the aristocrat Berkeley and his royalist chums, who blamed Bacon for upsetting the finely tuned alliances that enabled the enslavement and trade in the Indians living in the Carolinas and Georgia, over that of Bacon, the tribune of the people. What a travesty!

I can hardly wait to see the T-D’s selection of the greatest Virginian of the 18th century. I’m laying odds on Lord Charles Cornwallis!

Update: Here’s Bacon’s real sin: He was Virginia’s first recorded tax protester! The first of his complaints against Berkeley criticized the Governor “For haveing upon specious pretences of publiqe works raised greate unjust taxes upon the Comonality for the advancement of private favorites and other sinister ends, but noe visible effects in any measure adequate.”

The final count is in: General Assembly candidates raised more than $67 million for the 2007 campaign — more than doubling the $30 million total from four years previously. According to numbers supplied by Clayton Roberts with the Virginia Foundation for Research and Economic Education, Elephant Clan candidates amassed $30.0 million, while Donkey Clan candidates raised $28.3 million.

The biggest single fund raiser of all was Jeannemarie Devolites Davis, who rounded up $1,942,000 — all for a losing bid for a Senate seat.

Cool question: What word pops up when you run “Devolites” through Microsoft Word spellcheck?

Answer: “Desolates”!!

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