Bacon's Rebellion

Welcome the newest player to Virginia’s nuclear industry cluster: Toshiba America Nuclear Power.

The newly formed company has set up shop in Alexandria with the mission of marketing and promoting advanced boiling water (ABWR) nuclear power plants and providing support for related services. As the business develops, Toshiba plans to expand U.S. operations to provide licensing and engineering support related to construction of future nuclear power plants, including plant design and procurement.

U.S. power companies have announced plans to build over 30 new nuclear power plants in coming years. According to a press release, Toshiba and Westinghouse, a Toshiba Group company, are promoting their advanced boiling water reactors and pressurized water reactors. Toshiba’s initial staff will be about 30, a figure that is expected to increase as work on U.S. nukes gathers steam (so to speak).

The new company also will be a vehicle for Toshiba and Westinghouse to exchange know-how for the operation and maintenance of existing plants. Toshiba America also will handle licensing for the 4S, a new type of super-safe, small and simple system for nuclear power generation, a promising technology for future distributed power sources, and lay the groundwork for future marketing of the system.

Besides the nuclear power plants operated by Dominion, significant pockets of nuclear-power expertise reside in Virginia, mainly in Lynchburg and Newport News. I had never considered the possibility that proximity to Washington, D.C., and the Nuclear Regulatory Commission might be a competitive advantage in attracting nuclear-related enterprises, but a hint in Toshiba’s press release — the statement that it will provide licensing support — suggests that may be the case.

Robert Reich, currently professor of Public Policy at the University of California, Berkeley has written another book. This one is titled Supercapitalism: The Transformation of Business Democracy and Everyday Life.

Supercapitalism is an important book and should be widely read. In particular, it should be read by Bacon’s Rebellion columnists and those who post and comment on Bacons Rebellion Blog. Why? Because the book addresses an issue central to any discussion of economic, social and physical ramifications of the road ahead.

Supercapitalism will not a ‘best seller’ or a favorite of the Bacon’s Rebellion Corps for reasons we outline below.

Reich has a simple message:

Consumers and investors in the US of A – and the First World in general – are far better off than individuals and Households have been in any society in history. Most have done especially well consuming and some have done exceedingly well financially over the last 3-plus decades.

On the other hand, individuals in their role as citizens have had a very difficult time over this same time period. Further, the quality and effectiveness of the democratic governance structure under which they live has eroded badly.

Reich has the data to back up these assertions. As it turns out, when one strips away the self-serving puffery and pandering rhetoric these realities are broadly agreed to across academic, political and economic spectra.

Reich does a splendid job of providing an economic overview of the US of A since the Civil War as he outlines how citizens got to the post WW II era which he calls “The Almost Golden Age.” Reich then describes how and why that era morphed after 1973 into what he calls “supercapitalism.”

Reich dismantles a number of illusions concerning why some individuals and some ideologies are credited with “economic miracles” along the way. These changes were underway long before the hero jumped on the bandwagon. He also put in their place a number of ogres like “greed.

[We will be adding three new columns to THE ESTATES MATRIX (V 2.0) – for the years 1870, 1920 and 1973 – that reflect some of his important insights. Yes, one of the reasons we like Supercapitalism is that it tracks so well with THE ESTATES MATRIX.]

To his credit, beyond documenting reality, Reich offers a simple “solution” to a key driver of economic and democracy dysfunction. His suggestion makes eminent good sense. Reich also provides a number of ideas which may make it into the platform of a presidential candidate. This is a startling accomplishment for a book dealing with a topic as complex as the future of democracy and market economies.

With this much going for it, why is Supercapitalism not on the way up the ‘best seller’ list?

One reason that a book that explores a subject of this nature may be unpopular is that it is long and hard to understand. That is not the problem with Reich’s book. It is only 223 pages plus end notes and index, even with large print and generous line spacing. What is more, if succinctly written, Reich’s core ideas could be well expressed in 50 pages or less. Of course, writing an essay / working paper would not meet the criteria for a “book” and would not make the publisher or the author as much money. This fact presents an ironic twist of Reich’s basic thesis on what is wrong with capitalism and democracy.

Reich makes simple, straight forward points and expresses them well. He then goes on to cite example after example that pound home the lesson from each of six chapters. Having this wealth of supporting data is a luxury afforded to those who dwell in ivy towers and have grad students and post docs to gather material and research budgets for processing, digesting and editing that material.

So what are the problems with Supercapitalism if it is not that it is long or hard to understand?

Best selling books either make readers feel good or they identify bad guys.

There is not much to feel good about from a clear eyed review of the economic, social and physical trajectory of contemporary society.

Villains sell books because they provide some thing or some one to get mad at.

There being no basis for a feel-good story line, the primary problem with the Supercapitalism becomes the fact that Reich identifies no villain.

In Supercapitalism there are no villains – unless one looks in the mirror. Pogo’s Epiphany applied to the state of the economy and democracy will not sell books.

Reich points out with chilling clarity the conflict within individuals between their roles as consumers and investors and their role as citizens. He calls this conflict “being of two minds.”

The villain vacuum compounds a reality that Tony Downs – the denizen of Real Estate Research and later The Brookings Institution – liked to spotlight in the context of Mobility and Access. Tony pointed out that:

In a democracy, it is very hard to get those who benefit individually from a course of action to support changes which will benefit society-as-a-whole but will limit or eliminate their own individual advantage or benefit.

We explore this issue in depth in The Shape of the Future in the context of “What is good for one is not good for all.” An urban dwelling on a five or 10 acre lot is the human settlement pattern poster child of this axiom. In the book this reality is termed “The Fallacy of Composition.” That is the term Robert Samuelson used to describe this core problem with capitalism and democracy.

[Those who want to use the “find” utility of the Adobe Reader to search The Shape of the Future for the relevant passages, key in “The Fallacy of Composition.”]

The second problem with Supercapitalism’s lack of popularity is that there will be those who find this book distasteful, not because of what the book actually says but, because of who wrote it. Zealots knowing that Reich is a self-declared “liberal” who taught at Harvard, served as Labor Secretary in the Clinton administration and is a backer of Barack Obama are likely to believe they must reject out of hand whatever Reich might have to say.

It would appear however, if those who occupy any station along the many and varied political / ideological continua that intersect the Economic Sphere are honest with themselves they would agree with almost everything that Reich says in this book.

OK, “some” can find “problems” with any statement as the Blogisphere and this Blog document. Let us just say contrarians would find it hard to locate evidence that refutes Reich’s key observations.

The confounding reality for the ideologues – and this is the same issue that arises with 12 ½ Percenters vis a vis strategies to evolve functional human settlement patterns – if they agree with Reich, they undermine many of the positions they have taken in the past with respect to economic, social and physical activities.

If Supercapitalism starts to move up the best seller lists, it will be attacked in MainStream Media by editors and talking heads because the book challenges the fundamental idea of Mass OverConsumption. Never mind that if democracies with market economies are to be preserved, the trajectory of the Mass OverConsumption-driven economy and society must be changed.

[See APPENDIX ONE: “Disorienting ‘News’ On Citizen Well Being” APPENDIX ONE in “GOOD NEWS: What MainStream Media Is, and Is Not, Telling Us.” [Link in 5 March 2008 Jim Bacon post “Good News, Bad Reporting” on this Blog.]

Are there shortcomings in Reich’s book?

Yes, three stand out.

First there is the core malady of Geographic Illiteracy. This is especially problematic in Reich’s discussion of large public corporations that have direct impact on creating dysfunctional human settlement patterns – Wal*Mart for example. See “Learning From Big Boxes, PART III of THE PROBLEM WITH CARS. [Forthcoming]

Reich makes no reference to, or connection between, Wal*Mart actions and dysfunctional human settlement patterns. What Reich’s ideas desperately need is a New Urban Region Conceptual Framework – or some other comprehensive distribution-of-human-activity conceptual framework – that will facilitate an understanding of the economic and social impacts of the actions that he portrays and the solutions that he outlines.

The second short coming with the Reich book also makes it harder than it needs to be to get across the importance of the core message of Supercapitalism. Reich does not have an overarching conceptual framework for the major organizing forces of society.

Chapter Six (“A Citizen’s Guide to Supercapitalism”) cries out for a clear way to distinguish the differences between the interests of Enterprises (the Second Estate) and citizens (the Fourth Estate).

Reich may or may not agree with the context established for Agencies, Enterprises, Institutions and Citizens / Households in THE ESTATE MATRIX. However, if he does not, then he needs to come up with an alternative because without a conceptual framework for discussing these issues it is easy to fall into a wasteland of babble with every reader applying their own definition in the best tradition of Humpty Dumpty.

The third and final shortcoming is that Reich suggests that a comprehensive “solution” to evolving a functional democracy in the 21st century is possible without a Fundamental Change in governance structure. His one simple idea about the nature of corporations is a great start, but it is just a start.

Were the book rewritten it could be easily absorbed in an hour. But the need for a conceptual framework with consistent vocabulary to spotlight the importance of human settlement patterns and the need for something like THE ESTATES MATRIX to illustrate the difference between the interests of citizens from the interests / driving forces of Enterprises (and in interests / driving forces of Agencies and Institutions) would be critical to making his arguments so powerful that they could not be ignored, even if unpopular.

Readers of this brief review will note that we did not go into detail on the conflict between individuals as consumers and investors and individuals as citizens. We also did not divulge the clear, elegant threshold solution Reich presents for a key driver of dysfunction or the specific ideas that may end up in Barack Obama’s platform.

Why?

It would be a good idea for you to read Supercapitalism yourself.

EMR

Over at The Caucus, they’re talking about making the federal government more transparent using new technology. Whether our betters in DC will ever allow more sunlight to shine on their work remains doubtful:

…Ellen Miller of the Sunlight Foundation, which pushes for more government transparency, said the White House site is mostly full of P.R.-friendly statements.

As with any revolution, Mr. Meinrath said, some uncertainty lies in whether Congress will ever make use of all the Internet tools available to it. “That’s an open question,” he said.

Mr. Glover had a, well, slightly morbid outlook: Congress might not become more technology-forward “until older people are voted out of office or die.”

Danny can be forgiven for his pessimism…particularly if he paid any attention to the push for greater transparency in Virginia government during the current session.

From the White House to Capitol Square, the political class is none too eager to have the masses scrutinizing the books…or letting them know where the books are kept in the first place.

Virginia is doing such a good job of running state government (see the previous post) that the General Assembly now feels competent to tell lenders how to conduct their business. In the latest iteration of the payday lending saga, committees in both the state Senate and House of Delegates have passed a bill that creates complex conditions on the issuance of the short-term payday loans.

Jeff Schapiro describes the new regulatory regime as follows in the Times-Dispatch:

The new proposal — disparaged by lenders and their opponents — would restrict borrowers to one loan at a time. But the bill allows 10 loans a year — a level that troubles critics. It also would block borrowers from drawing another loan for 45 to 60 days if they’d had five within 180 days.

The length of the so-called lockout — the period of time a borrower would be ineligible for another loan — would be determined, in part, by what the customer owed.

The proposal caps interest rates at 36 percent but largely preserves pricey fees that lenders collect. The 36 percent figure is an important symbol for the industry’s critics because it is the maximum allowed by law.

Borrowers who promptly pay the five loans would have to wait only 45 days. But those who can’t repay on time would be eligible for a 60-day payoff plan and then would be prohibited for additional 60 days from taking another loan.

Further, the base cost of a loan would rise. Now $15 per $100 borrowed, it would increase to $20, pushing the price of the maximum $500 loan from $75 to $100. But because the loan must be repaid over a longer term — in the case of the typical borrower, four weeks rather than the current two — legislators say its cost would actually be lower.

Got that straight?

This bill looks like it’s destined for passage, and there’s a good chance that Gov. Timothy M. Kaine will approve it. The lobbyists and legislators will pat themselves on the back for a job well done. Then do-gooders will move on to other meddlesome good deeds. Will anyone bother to track the repercussions of the bill? Will anyone be able to measure whether poor and working class people wind up any better off than they were before? Will anyone notice if there’s a surge of bounced checks, or an increase in loan sharking, or a rise in personal bankruptcies?

I’m betting that no one will notice, or care. Payday lobbyists predict that some lenders will go out of business, foreclasing an option for at least some people in financial distress. But the lobbying-and-media circus will move on to the next cause of the day, and poor people will be forced to find whatever other means they can to make ends meet.

Virginians are Virginia’s harshest critics. We have little good to say about our government or the people who run it. But all things are relative. When outsiders rate the states, as the Pew Center on the States has done, Virginia comes out on top, sharing the highest grade, A-, with Utah and Washington state. To mangle a Winston Churchill quote, Virginia has the worst government — except all the others.

The Pew project, Grading the States 2008, rates the states on four broad criteria: fiscal systems, human resource systems, quality of infrastructure, and information technology. Virginia performed consistently well across the board, scoring the highest grade in the country for human resource systems.

Fiscal systems: A-
Human resources: A
Infrastructure: B+
Information technology: A

See the 50-state summary here. View details on Virginia here.

House Majority Leader Richard Saslaw, D-Springfield, could do for the Democrats what former Sen. John Chichester did for the Republicans: Keep them divided and fighting amongst themselves.

Del. Christopher Peace, R-Mechanicsville, is a bright, young up-and-comer in the House of Delegates. I’ve been impressed by the way he has worked with the Virginia Open Education Foundation in pursuit of open-source textbooks for Virginia schools that can be easily updated and printed on demand as circumstances warrant. (See “A ‘Textbook’ Study of Knowledge-Wave Education Policy.”)

But I was terribly disappointed by Peace’s defense of GOP budgeting for education in an op-ed piece published in today’s Times-Dispatch. The House of Delegates’ budget “does more for public schools” than any of the Democratic alternatives, he argues. By “doing more,” he means, “spends more money.”

Our budget increases funding for K-12 public education by more than $1 billion compared to the existing budget. In total, the House budget directs $13 billion to public education — exceeding the Senate’s proposal by $68 million and the governor’s by $193 million. By adopting our budget, we not only rejected the governor’s proposal to cut school construction grants by $220 million, but actually added $70 million. We also made a first-year pay raise for teachers a priority by providing the state’s share of a 2 percent raise in 2008.

This is why people pejoratively refer to Virginia’s two parties as the Repucrats and Demoplicans. The only answer either party offers for the challenge of reinventing education for the 21st century is “Mo’ Money!” Other than the so-called “65% solution,” which would require school districts to spend a larger share of their funds in the classroom and less on administrative overhead, Republicans have devised few alternatives to the if-schools-are-failing-they-must-need-even-more-money approach to education.

In Peace’s defense, his column does address the runaway-spending aspects of the Standards of Quality formula that determines the allocation of state aid for K-12 school programs. But that’s not a cause that will catalyze people into thinking creatively about education. The formula is so arcane — almost kabbalistic in its impenetrability — that peoples’ eyes glaze over when anyone tries to describe it. By contrast, open-source textbooks was a clever idea that anyone can grasp. Why can’t we see more fresh thinking like that?

If the Republicans want to differentiate themselves from the Democrats, bragging how they spend more money on education won’t do the trick. The public will always associate Democrats with greater spending on education. If the GOP wants to present an alternative to voters, they need to argue, it’s not how much you spend but how you spend it.

Middle income families enjoy the benefit of school choice — they can afford to move to better school districts. Most lower income families don’t have that option.

One way to extend school choice to poor families is to create educational tax credits encouraging donations to not-for-profit groups that would fund scholarships, suggests Chris Braunlich, a vice president of the Thomas Jefferson Institute for Public Policy and a regular contributor to Bacon’s Rebellion. The usual objection to tuition tax credits is that they would constitute a drain on the state treasury, but Braunlich offers a clever way around that.

In a new research paper, “Better Education for All Children,” Braunlich proposes limiting the size of the scholarships to the amount of state aid allocated to the student’s school district. That way, what the state loses in tax credits it recoups through a reduction in state aid to local education.

Scholarships limited by the size of state aid would not be terribly large, Braunlich concedes, ranging from $1,204 in Fairfax City to $5,870 in Lee County. Because such sums normally would cover only a fraction of private school tuitions, I cannot see them comprising a meaningful school-choice option by themselves. However, if private schools could supplement these scholarships with tuition breaks — as many already do for poor students — the number of students affected could be substantial.

Concludes Braunlich: “The impact on the state budget would be a ‘wash,’ neither having more or less money for educational needs. Most localities would still have the funding they need to educate their students and at-risk children would have an alternative for a better education.”