Just because its cheap, doesn’t make it clean ..

Toxic Coal Ash Spill in Tennessee

That’s the toxic coal ash spill from last month in Tennessee (photo courtesy of The Knoxville News Sentinel). It is a typical hazard of the burning of coal for electricity. All that fly ash has to go somewhere. All around the nation, more than 124 million pounds of toxic heavy metals is typically stored wet in similar empoundments. Those surface empoundments (also known as “wet dumps”) contain heavy metals like arsenic, chromium, lead, nickel, selenium, mercury and thallium. Coal ash has poisoned surface water and groundwater supplies in at least 23 states. Coming soon to a drinking water supply near you?!

Coal-fired power plants produce approximately 129 million tons of waste per year, making the waste from coal combustion the second largest industrial waste source in the US. The EPA has been studying what to do about the storage of coal combustion waste for 28 years. Apparently, it was considered too expensive to regulate as a hazardous waste!

Which suggests to us a bigger question about clean coal. Can we afford it?

This is not a trivial question as we take seriously efforts to reform our energy infrastructure. The cry is for clean, green technologies and even bona-fide climate change experts such as James Hansen suggests that this will have to include nuclear power and coal-fired power plants. But, the technology is expensive and following a long seen pattern of the nuclear industry, the coal industry is looking for a handout. Clean coal is never likely to provide power as cheaply as dirty coal plants.

So, the question has to be if clean coal is the best infrastructure investment that this country could make. Let’s put aside nuclear power for another time, and focus on the other alternatives – wind and solar. Both are well established and well studied technologies. We know the patterns by which the wind and the sun wax and wane, and so we know that we will have to store the power from the windy, sunny times for nighttime and cloudy days. That’s means storage – and that’s where an awful lot of R & D could usefully be put. Let’s figure out affordable solar thermal storage and let’s get to work on adiabatic compressed air storage. The Europeans are on to it. Why aren’t we?

Could it be that the wind and solar power industries don’t have as good a public relations operation as the coal power industry and the nuclear industry does? Maybe, then the recent illustration of the overall expense associated with coal and nuclear, particularly with their disposal of the waste products, will factor into the question of where the infrastructure investments should be made. Just because its clean doesn’t make it cheap.

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Here’s to your health!

I posted a comment over at NewWest about why business owners should pay for the health insurance costs of their employees. But I don’t think the owner, Jonathan Weber, quite understood my point. Bottom line is that it is best for the business.

Many employees of small businesses can’t afford to get sick. An extended illness or recurring injuring can be financially crippling. Once your sick leave runs out, most of us don’t have any way to pay the mounting hospital bills. Without health insurance the only option seems to be bankruptcy. Given the choice, most of us would take another way out, any other way out. But, that’s the sad truth of the cost of medical treatment – there is no other way out. The bills are just too big. Other than our homes, most of us don’t own sufficient assets to pay hundreds of thousands of dollars of medical bills.

So, while it is the right thing for the small business owner to protect their employees from bankruptcy, it is also in the best interests of the company to do so. Rather than being faced with financial ruin there is a good chance the employee can come back to work. All the time and effort that went into recruiting and training that person isn’t lost. All the accumulated wisdom isn’t lost. And with a bit of luck the business doesn’t suffer too much of a hiccup as they get back up to speed.

Of course, there’s also sound health reasons for providing health insurance. No one wants sick people coming to work, bringing their illness or disease into the work place. Just like lots of places offer free flu shots (in the hope that a flu epidemic won’t break out in the workplace), there is a real cost savings when fewer of your employees get sick. Hence, smart employers remove all possible barriers to folks staying home and getting the care they need. That’s why we have sick leave, that’s why we encourage preventative health care, and that’s why we make it cheap for people to get looked at before the illness or injury gets too bad. Much can be treated easily and cheaply if a prognosis is made early. Folks get better quicker, too. Which means they can come back to work sooner.

Moreover, employees with health insurance we have one less thing to worry about and that allows us to focus more on our work. A similar logic is used in Europe and many US corporations that provide child care for their employees. Simply knowing that you are taken care of means a much greater level of productivity and much less lost time.

It all sounds a bit patronizing and nanny-ish, but it does create ‘stickiness’. Employees are less mobile, less likely to flit from job to job, if the conditions at the workplace are good. And, if the work is good and the pay is good, then most of us are content to stay put and continue to grow the business as a mutual project. It gives us something to believe in, something to contribute to, something to be a part of. A sense of we’re all in this together.

Fact is that employing someone is a competitive project. Most businesses want to pay as much as they can afford. And most businesses have to pay as much as they can afford. Otherwise, they are likely not to get a fully qualified person or someone who fully meets the expectations of the job. To get the best you have to offer the best. And that includes offering health insurance. Because of the way the health system is set up today, it is much easier and cheaper for the business to buy into health insurance than it is for an individual to do so (particularly if they are middle-aged or have pre-existing conditions).

Jonathan was right, in a way, when he asked, “A healthy population with access to good medical care is a universal good that benefits everyone, not just employers, so why should employers alone be responsible?” Ideally, we would have universal health care and employers wouldn’t be responsible. But, that’s not the case in this country. And it might never be.

Until that day, it would seem that we have two options. Either the employer pays or the employee does. I would argue that the employee already does. Not only are they the person who is in hospital, but with the extensive co-pay or deductibles we are already looking at quite high bills. (A recent dose of pneumonia cost me over $10,000 and I have pretty good insurance).

I can accept the logic of co-pay to a certain extent in that it makes the consumer a bit more responsible with their selection of healthcare. But, in most cases it is not an ideal market – as patients we have no idea what we are purchasing, nor do we have the information or skills to know how to choose the right product for the right price. Literally, we are at the mercy of the health provider.

Its all an interesting argument, but I am struck with the question of why business owners want to ditch health insurance for their workers. Is it simply a cost-savings mechanism? That is, shift the cost for someone else to pay and forget about the full cost of labor. Socialize the externalities, right?

I admire small business owners. It takes a lot of guts, a whole chunk of money, and a huge stack of time and effort to make a go of it. They’re putting it all on the line and hoping that now is the right time for their great product or service. And in these tough times it must be even harder.

But, for a small business to survive and thrive they are going to need great employees. In sickness and in health!

Robbing Peter to pay Paul

Looks like I’ll be paying University of Montana tuition again next semester. I’ll be one of the lucky ones. Because one of the saddest ironies is that in this time of economic crisis we are going to see higher education price itself out of the range of a large chunk of the public.

There will be lots of demands on next year’s State of Montana budget including help for the unemployed, health care for the elderly and those who can’t afford it, school for everyone’s children, and continued protection of our natural resources. Universities and colleges could find themselves at the back of a long line, and it is going to be all too easy for our state legislators to skip their responsibility to fully fund them. The argument will be that there are lots of other revenue sources for the universities, such as tuition, research grants, and private donation. Whereas, other needy government services have few alternatives.

In doing so, state legislators will be continuing the privatization of our colleges and universities. The state now pays less than a quarter of the costs of running higher education. The rest the university has to raise.

However, it is privatization without a plan. The state legislators, and the long line of Governors who have overseen this revenue shift, haven’t thought through exactly what the consequences would be. While many were politically happy to shift it to a user-pays system, those same people had no plan on how the best and brightest in our state would be able to afford to pay. Tuition levels have sky-rocketed, eligibility for financial aid has tightened, and scholarship support for public universities is now being spread even more thinly across many more people who need it. Just like there are those who say not everyone should own a home, we now hear that not everyone should expect the opportunity to go to college.

As universities and colleges face this new reality they, too, have begun operating more and more like a business. They seek out the students who are most likely to be able to pay. They prioritize the students who will graduate the fastest. And they lavish attention on the athletes who keep our alumni cheering on with their donations. The next step will be enrollment caps as they struggle to offer classes for less money. Majors will be cut as professional degrees that involve a lot of laboratory time, field experiences, and specialized instruction will be replaced by large classrooms teaching basic skills and universal subjects like English, Math, Economics, and History. It will be a necessary efficiency in times of reduced funding.

Our public universities and colleges have been severed from the public. We have turned education from a public good (available and beneficial to all in our society) into a private good (available and beneficial only to those who can afford to pay). Whatever happened to the great promise of equal opportunity for all, regardless of race, circumstance, or financial status? Why are President Dennison (of the University of Montana) and President Gamble (of Montana State University) out in the public decrying the educational, economic, and social injustice of the systems they oversee? Their duty should be the provision of a high quality education for all those capable at a cost all can afford.

We used to see higher education as an investment in our children, their talents, and their future contributions to our state. It was all about hope and promise and a firm belief in the goodness of everyone’s kids. Instead, it seems we’ll be building a second major prison complex in eastern Montana, at a cost of more than $371 million. Somehow, that just doesn’t give me as much hope.

The Rebirth of Robert Reich, and the Debate to Come

Republicans are gonna love this. Robert Reich, former Harvard professor (currently at the University of California, Berkeley’s Goldman School of Public Policy) and Clinton-era Secretary of Labor, wants to resurrect Keynesian economics. The whole post is worthy of your time, but this paragraph in particular caught my attention:

What the hawks don’t get is what John Maynard Keynes understood: when the economy has as much underutilized capacity as we have now, and are likely to have more of in 2009 and 2010 (in all likelihood, over 8 percent of our workforce unemployed, 13 percent underemployed, millions of houses empty, factories idled, and office space unused), government spending that pushes the economy to fuller capacity will of itself shrink future deficits.

Remind me, again, why is the economy currently underutilized? I bet Republicans will say it is because the market isn’t allowed to run wild and crazy and free. Or they’ll just ask for more tax cuts for the uber-wealthy, in a perpetuation of the only-the-mighty-know-best theory. I know they’ll be lining up at Walmart at 4am, I just know it.

So, if the private sector won’t invest enough, maybe the general public will? Some how I don’t think so. Our paychecks seem to be getting smaller, our credit cards are maxed out, and we’re all dead scared of losing our jobs and our benefits. And no small ‘stimulus’ check for $600 is going to change that. Besides, what was your experience like last time, did it just get swallowed up by the credit card monsters, eh?

Nope, it’ll have to be the spender of last resort, Big G, government. Spending money on fixing roads and bridges before they fall down, repairing levees and ports before they reach breaking point; investing in mass transit, improving our water supply, investing in new sources of energy and new ways of conserving energy. Sounds like stuff we could all use.

Reich’s love affair with Keynes isn’t new. In fact, Reich’s piece for Time Magazine’s 100 Most Important People of the Century is a nice primer on Keynesian economics. Here’s where Reich repeats the nub of it:

Keynes’ basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That’s because the private sector won’t invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.

I might just be a Keynesian. Just don’t tell the Republicans.

Better not get sick, or old

The deficit hawks are all a twitter. With the President-Elect (and most world leaders) planning a significant economic re-investment package, there’s folks already calling for stripping off all unnecessary spending.

Put aside that cutting back on spending would have a de-stimulating effect on the economy. And forget for a while who is most impacted by the current economic crisis (hint: it isn’t the CEO’s of Bear Stearn, Lehman Brothers, GM, Citibank, or AIG). Let’s think about what targetting wasteful spending really means.

We couldn’t convince the McCain campaign of this, but “you get almost nothing from cutting waste, fraud, and abuse“, according to Robert Bixby of the Concord Coalition. As I mentioned previously, cutting earmarks and making government more efficient just doesn’t add up to very much. Laudatory? Yes. A solution to deficit spending? No.

So, that leaves the two other big elephants in the room. The so-called entitlement programs and the military. Chop, chop. That’s their heads on the block, isn’t it? You can hear it already. To be fiscally responsible we’re going to have to cut back on Medicare (for the elderly and disabled) and on Social Security.

I get upset when we put these programs in the “unnecessary” or “wasteful” category. Not only are they some of the most successful and popular government services, but they are also some of the most efficient. And, right now, the most necessary. As health care costs are outrageously high and our 401K balances outrageously shrinking, we are going to need Medicare and Social Security more than ever. Maybe the uber-wealthy won’t need ’em, but the rest of us will.

Perhaps we could all show a little ‘personal responsibility’ in our twilight years. But, somehow I still don’t think I’m going to be able to afford a night or two in hospital. Instead, we might start seeing more and more hard-working citizens out pan-handling or in the soup kitchens, looking for a handout to get them through the winter.

Anyone wanna own a bank?

Looks like pieces of Citibank might be up for purchase. Perhaps now would be a good time for the government to own a bank?

Nationalizing Citibank would be big. Really big. Citi was once the largest U.S. bank, with a market value of $274 billion as at the end of 2006. On Friday, it was down to $20.5 billion.

Now without getting too much into the virtues and sins of mark-to-market, it is still worth pointing out that Citi has $50 billion in capital above and beyond what the regulators require to be ‘well capitalized” and has around $2 trillion in assets. (Mind boggling numbers, eh?) Of course, the U.S. Government is responsible for $25 billion of that capital, a function of the $700 billion Troubled Assets Relief Program that isn’t for troubled assets any more.

Citibank is almost certainly in the TOO BIG TO FAIL category. So, we can expect to see the U.S. Government pony up more bucks, in a move that says the company has adequate capital and liquidity to ride out the crisis and thus calms panicked investors.

But, wait a moment. The company is now valued at $20.5 billion. And we’ve already injected $25 billion. Don’t we already own it?

OK, OK, I know. Market valuation isn’t that simple. Citi was worth way more than what we paid when we paid it. And there’s lots of other schmucks sitting on preferred stocks like us. And selling a company isn’t anywhere near as easy as accepting a no-strings-attached check for $25 billion.

But, still. At what point do we get control of the assets and management and decision-making for all the money we’re putting in? I don’t mean more loans or more debt guarantees. When do we get to own the whole shebang?

How now Uncle Detroit?

Democrats are pushing ahead with a bailout of Detroit’s failing automobile industry. Apparently, they and their suppliers are too big to fail. I don’t want to see all those workers lose their jobs. I don’t want to see all those who invested in a proud, American company lose their money. And, I don’t want to see the American automobile industry dominated by foreign corporations, who play by different rules.

But, I want to see some questions answered before taxpayer money is used to bail them out.

For instance, what happens if the taxpayer investment isn’t enough to turn around this juggernaut? If other investors don’t think these companies are a good bet, then why should the government think any differently? Will the government end up owning all the pieces of a failed enterprise? Will the government join the line of creditors owed money? Are we just putting good money after bad?

But, let’s say that the CEO’s of the Detroit 3 are right and all they need is a little rescue from the government. Is a ‘restructuring’ in the forecast? Because, of course, we all know what a restructuring or downsizing or reorganization is – a laying of off the workforce! So, in effect, you and I would be paying for workers to lose their jobs! Wait. Isn’t that we’re trying avoid in the first place?

What I worry about is that the CEO’s and corporate investors will make the claim that it is the ‘uncompetitiveness’ of the Detroit 3 that must be tackled. More code words. I fear that this means getting rid of comfortable union pay scales, worker pensions, and safe workplace conditions. Forget that it was management miscues that got them into this mess in the first place, and forget that senior management isn’t likely to lose much in the long-term. They still need to cut expenses in order to compete against ‘leaner’ competitors!

Perhaps, then, we should get rid of the senior management? Predictably, GM Chairman and Chief Executive Rick Wagoner has “rejected the idea that he might have to step down as part of a federal rescue.” And, I know, we would have to pay “market rates” in salaries for senior management, even though the companies clearly aren’t being priced by those same “market” forces. So, how much should we pay to run companies that aren’t considered “viable”?

What about dividends? Traditionally, shareholders have expected a return on their investment. Will the government receive dividends too? Or, will government be exempt from benefiting from their influx of capital? Maybe, we’ll just see a siphoning off of government money over into dividends?!

Lastly, I wonder what makes AIG (an insurance company) different from, say, GM or Ford? Why shouldn’t we nationalize the automobile companies? After all, this country still needs cars and trucks, so there should be a way to keep everyone employed, provide a more fuel efficient vehicle, and maintain American leadership in the industry. And, if the current CEO’s can’t do it, then why should we think that government sponsorship would be any worse?