Wednesday, August 25, 2021

The Actual Reagan Legacy

 from When the Tea Party Came to Town [p. 96]

Of course, the freshmen [congressmen elected with Tea Party support] ...should have known--it wasn't ancient history but rather had occurred even in their lifetimes--that their hero Reagan had raised taxes eleven times in the course of his presidency, had tripled the debt and grown the federal government, and had granted amnesty to illegal immigrants. Practially a socialist in their eyes! This crowd would have found Reagan as useful (as [Congressman] Dingell liked to say) as feathers on a fish.

Tiny Houses

From here (by Josh Kruger, a former City staffer, is an award-winning (and losing) writer in Philadelphia.)

If you think tiny houses are cool or a great way to end homelesness, I am here to ruin your day.

First, let me back up and say that I was homeless—as in literally sleeping outside, and then in a city shelter. Later, I also spent time working for the Mayor’s Office and the Office of Homeless Services. Now, I’m a journalist and commentator again. So when I write, I have several hats on, including lived experience.

There are three reasons why tiny houses are really a huge problem for society: they cost too much and help too few; they don’t end homelessness, they sustain it; and they advance the idea that homeless people are subhuman.

First, the most inflammatory of my claims deserves immediate explanation. What do you keep in a shed in the backyard? Would you keep your mother in a shed or kennel with no running water? Why is this viewed as a great idea when it’s applied to people experiencing homelessness?

This is also why I am not enthusiastic about restaurants donating “leftovers,” also known as garbage or compost, to the homeless. What do you give your own table scraps to? What have some of you done with your literal doggie bags when walking down Center City streets?


MORE ON SOLVING HOMELESSNESS


While the gentrifying middle class in Philadelphia loves their dogs, applying this approach to other human beings is offensive to me. I think it implicitly allows a current of bigotry against people experiencing homelessness to continue, too. “So long as they’re less than me, that’s OK, they deserve help,” the bourgeoisie might think. “But provide them actual homes? In my neighborhood? Make them peers and equals with me?”

What of solutions, then? At least the people treating the homeless like dogs are doing something. Am I just complaining?

It’s a great question. The solution is simple: We can end homelessness tomorrow. It’s just that our legislatures are all on vacation and nobody’s proposed it—yet.

When I worked at the City’s Office of Homeless Services, we estimated that for about $30 million yearly, we could effectively end street homelessness in Philadelphia. That sum would encompass the local cost of permanent supportive housing for every chronically homeless person on the street and then some. It’s a rather large overestimate, really. I never understood why we didn’t just ask for it.

Researchers recently estimated it would cost about $30 billion to do the same on a national scale.

Instead of this great solution, City Hall would rather view $30 million—which for the record is 0.6 percent of the City’s overall $5 billion budget—as better for other projects, perhaps the bloated police budget that never affects crime rates either way or maybe toward the $40 million the City paid for OnePhilly, the payroll system that took half a decade to get up and running that didn’t work its entire first year of operation.

This solution they’re ignoring would effectively end chronic homelessness in Philadelphia. Talk about a return on investment. Even better? It can be done in a research-backed, ethical and professional way using best practices.

Permanent supportive housing is, unlike tiny houses, evidence-based and, unlike OnePhilly, actually works. It’s proven to be about 90 percent effective at preventing a return to homelessness. Likewise, rapid rehousing is a government housing program often but not exclusively focused on families that lasts up to 24 months that is over 75 to 90 percent effective at preventing a return to homelessness (see page 14) depending on the population served.

This research-backed, data-driven efficacy is why the U.S. Department of Housing and Urban Development funds these programs and is not as enthusiastic about, say, “tiny house villages” which in the 1930s were more accurately called “Hoovervilles” and later were called, at least until recently, encampments.

The annual local taxpayer cost of permanent supportive housing for one person is a little over $12,000. This is a fraction of what advocates estimate is the cost of that one person staying on the street, which is about $35,000 in estimated police, EMS, and other costs—to say nothing of the strain this puts on local business, civic, and tourism groups.

There are three reasons why tiny houses are really a huge problem for society: they cost too much and help too few; they don’t end homelessness, they sustain it; and they advance the idea that homeless people are subhuman.

Along with housing, which comes by way of an apartment or dorm-style efficiency in a building focused on similar needs or a housing subsidy, the federal government kicks in Medicaid-supported wraparound services, like mental health treatment, substance use disorder treatment, and medical care.

You can see why, if someone lives with a serious mental illness or has other barriers putting regularly paying for market-rate housing out of reach for them, PSH is so effective.

The Hooverville the City is currently allowing a contractor to erect off State Road has been less vocal about cost, aside from the City saying about $500,000 of federal CARES Act money would go toward it. If you ask me, it’s a great way to light half a million in once-in-a-generation funds on fire.

I can imagine the initial hesitancy to itemize cost beyond that: A similar project in West Philadelphia says it will feature 12-two bedroom tiny homes and cost about $1.2 million. That’s $50,000 per person. Sure it’s a one-time construction cost, but do you think there’s no upkeep, depreciation, or rebuilding cost to this scheme? Let’s talk about scope, too. We’re talking about a solution for, what, a handful of people?

Call me crazy, but I feel like publicly funded or otherwise supported solutions to highly visible, politicized social problems need to be scalable and achievable instead of just feel-good money pits.

Philadelphia somewhere around 900 people experiencing homelessness if you look at the last few Point-in-Time Counts, which date from before Covid-19. You tell me how valuable tiny houses are to ending homelessness.

To be fair, both the West Philly and State Road projects are operating on the assumption that they’ll receive no local tax dollars. There’s still a cost, though. And, that West Philly project might cost more than the project off State Road, because it features indoor plumbing.

The State Road project, far from where homeless Philadelphians actually are and nearly impossible to get to easily from Center City without a car, no such luxurious frills like running water or working toilets in the homes. They have electricity, though. If you have to use the toilet, you have to visit a communal structure somewhere else.

Again, we as a society are engaging in this theater despite a solution to homelessness existing at a fraction of the cost. I’m left wondering why. Is it just too boring? Evidence-based, data-driven results aren’t as adorable as a tiny house with a cute little window and a teeny planter outside, I admit.

The so-called tiny house village offers what? An experiment using human lives when we have a solution that works that we simply don’t fund? A vanity project for rich or privileged people providing a bridge to nowhere, no permanent housing? What on earth are we thinking? This is like when Elon Musk “discovered” mass transit by spending millions to develop a private subway.

Human beings deserve better than this. They deserve affordable housing. Given how achievable this is, it’s inexcusable for us to do anything less.

Probably the most obvious and glaring problem, at least to me, is that tiny houses don’t actually end homelessness. They sustain it. They give people a reason to think they can take the pressure off the government to create more affordable housing under the guise of a solution to homelessness. They’re often called a step toward ending homelessness. How is that true when the final step, affordable housing, doesn’t even exist?

By taking homeless folks off the street and putting them in remote areas while never giving them housing and in some cases “offering” them sheds without running water instead of actual homes, you are doing what, exactly?

Until there is more affordable housing, this “solution” leads nowhere. Instead, these are just feel-good boondoggles so middle and upper class people can feel like they’re doing something. Even worse, they don’t solve a problem, they make it easier to ignore. They’re storage sheds for human beings who otherwise remind us all of our society’s failure to care.

If you ask me, tiny houses aren’t heartwarming. They’re insidious. Human beings deserve better than this. They deserve affordable housing. Given how achievable this is, it’s inexcusable for us to do anything less.

 

Afghanistan a decade ago

 From When the Tea Party Came to Town [p.99f]

At about 10:30 in the morning on March 1, 2011, the House floor was completely empty and no more than eight high school students sat in the public galleries when a Republican congressman named Walter Jones walked to the well to give the seventh of sixteen morning hour speeches that day. He was a slightly built, gray-haired sixty-eight-year-old man with the gentle bearing of a Sunday school teacher, and he spoke in the elastic twang that was typical of the eastern flank of North Carolina, where he had in fact spent his entire life, in the town of Farmville. For the past sixteen years, Jones had represented the state's 3rd District, a largely coastal region that also included the Marine Corps base of Camp Lejeune. To hold that seat is to be unerringly pro-military. But in recent years Walter Jones had developed a surprising interpretation of what this meant.

Gesturing to a large placard he had placed on a stand beside him, Jones said, "I bring a photograph of a flag-draped coffin--it's called a transfer case--being escorted off a plane at Dover Air Force Base.

"Mr. Speaker it is time to bring our troops home. They have been in Afghanistan for over ten years. I would also say it is time that this Congress met its constitutional responsiblity to debate war and whether we should be there or bring our troops home...

"How many more young men and women must lose their legs, their lives, for a corrupt government that history has proven will never be changed? Why should they be dying and losing their legs for Karzai, who doesn't even know that we're his friends? It makes no sense."

He read from a letter sent to him by a retired military general, which maintained that the war in Afghanistan "can't be won." He read from another letter, this one by a recently retired Marine lieutenant colonel who viewed the war as haveing "gone on for too long." He spoke of a recent visit to Walter Reed Army Medical Center to stand beside the bed of a twenty-two-year-old Army private whose body below the waist had all been blown away.

And then he concluded with a kind of prayer, with eyes closed: "God bless the House and Senate that we will do what is right in Your eyes for today's generation and tomorrow's generation. I ask God to give wisdom, strength and courage to President Obama that he will do what is right in the eyes of God.

"And three times I will ask: God, please, God, please, God, please continue to bless America."

Walter Jones walked away from the microphone. The next speaker happened to be Democratic Minority Whip Steny Hoyer. He grabbed the Republican's hand and spoke in his ear for a moment.

Then, when the Democrats' second-ranking leader turned to the microphone, his first words were not from his prepared text. "First I want ot congratulate the gentleman from North Carolina," Hoyer said with a stricken expression. "He is a Republican and I am a Democrat, but I will tell you this: We are friends, and we work together. And he is one of the most conscientious members of this House, who follows his conscience and his moral values in making decisions. He gave a very moving and important speech on the floor today. I thank the gentleman, Mr. Jones, from North Carolina."

Saturday, August 21, 2021

Afghanistan: Media Mutes Peace Advocates

“Where are the anti-war voices?” [Popular Information]. “Yesterday’s newsletter detailed how the media is largely overlooking voices that supported Biden’s decision to withdraw from Afghanistan. Instead media reports are almost exclusively highlighting criticism of the withdrawal — often from people complicit in two decades of failed policy in Afghanistan. We have reason to believe that this is not an accident. On Wednesday, Popular Information spoke to a veteran communications professional who has been trying to place prominent voices supportive of the withdrawal on television and in print. The source said that it has been next to impossible:

I’ve been in political media for over two decades, and I have never experienced something like this before. Not only can I not get people booked on shows, but I can’t even get TV bookers who frequently book my guests to give me a call back…

I’ve fed sources to reporters, who end up not quoting the sources, but do quote multiple voices who are critical of the president and/or put the withdrawal in a negative light…. In so many ways this feels like Iraq and 2003 all over again.

From nakedcapitalism.com

 

Saturday, August 14, 2021

The Green Bank

(c) by Mark Dempsey

One of the most avid environmentalists I know recently sent me a Volt podcast about the proposal for a "Green Bank" in the Biden infrastructure bill. The written introduction to the interview with Green Bank advocate Reed Hundt contains the following:

"[Such a Green Bank] would not, contrary to some popular misconceptions, be an agency of the federal government, nor would it finance projects purely with federal money. Rather, it would be an independent, nonprofit entity that uses an initial grant of federal money to pull private capital off the sidelines and into climate-related projects. After the initial grant, the bank would be self-sustaining.

"The model has been tested: there are green banks in more than a dozen states, which have generated $5.3 billion in clean energy investment since 2011, including $1.5 billion in 2019 alone. And there are more than 20 states where the process of establishing a green bank has begun."


Hundt is critical of the Obama administration. They went small, constrained, short-range, when dramatic action was clearly required. He's much happier with Biden who is pursuing a variety of priorities simultaneously, rather than, a la Obama, one at a time.

However Mr. Hundt has some fundamental confusion. For example, for him, government contracting out roadwork is public/private partnership, and the ownership of the work product is unimportant. So...if it's a toll road (private) there's really no big deal difference between that and a toll-free (public) road?

Hundt also appears to believe a local government selling a bond so they can pave a road is the kind of thing the federal government needs to do. But local governments don't print the money. The federal government does. This is a big deal. It means the federal government does not have to "borrow" any money. Ever!

What are those Treasury bonds, then, if not borrowed money? Answer: They are dollars that bear interest, promising dollars later. It all boils down to dollars, in the end, and the federal government is the monopoly provider of dollars. It doesn't borrow in the conventional sense any more than someone getting a loan payable in autographs is "borrowing" as we usually think of it. It's pretty painless to pay a loan payment when you can print the means to repay it.

To Hundt, selling bonds is necessary. In reality it is not. Why not just print the money? Somehow "private money" must be "pulled in" or catalyzed for this Green Bank. His project must "raise money" in the private sector. 

Quick question: where did that private sector get its dollars. What was the ultimate source? Could it be the monopoly provider of dollars?

In a strange side-track, the interviewer asks for reassurance from Hundt this won't be another Solyndra, without providing any context or understanding of what went on in that "debacle." Just to remind you: Solyndra was a solar panel company with some innovative technology. A "public/private partnership" (PPP) of venture capitalists who lent money with federal loan guarantees to give Solyndra enough money to start manufacturing. 

Unfortunately, the Chinese had given their solar panel makers orders of magnitude more research money than the U.S, so Solyndra would have been obsolete when it began manufacturing on its original schedule. Solyndra asked the PPP for a delay to incorporate the new Chinese technology in their process. The private venture capitalists refused, insisted on their original deadline and cashed in the loan guarantee (~$500m) without any manufacturing. And ever after this is supposedly the demonstration that government is incompetent. But Solyndra wasn't a failure, it was the private sector's financial demands that made it shut down.

So...that's about the quality of this interview. It's based on Partial knowledge (PK).

Another PK incident: no one mentions an important "bank" precedent: the Reconstruction Finance Corporation. The RFC was a Herbert Hoover innovation that FDR used to fund big projects like the Tennessee Valley Authority, and the first Bay Bridge to San Francisco. In present dollars it made many more loans for infrastructure than the proposed "Green Bank." Eisenhower terminated the RFC.

More PK: To Hundt, deposits are somehow the basis of lending! Nope. Loans create deposits. Here's a typical loan in double entry bookkeeping:

Bank                                                                Borrower
Liability                       Asset                            Liability                    Asset

$1,000 Check Acct.   IOU for $1,000            IOU for $1,000         $1,000 Checking account

Notice that at no point do deposits appear in this entry of the bank's business. Yes, because of regulation, banks need capital, but they do not lend the money on deposit. 

This is not something I made up. Here's the Bank of England's paper that says the same thing: From its Quarterly Bulletin 2014 Q1: Money creation in the modern economy. Some excerpts: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits." "In normal times, the central bank does not fix the amount of money in circulation ‘multiplied up’ into more loans and deposits."

Another bizarre bit of PK: Transit & zoning somehow are separate questions for Hundt. Really? So having enough transit customers within a comfortable walk of the stops is not connected to the viability or success of transit? Perhaps we should send buses out to our rural areas too. The truth is that fully-used transit has one-eighth the impact of single-occupant autos, but low-density sprawl insures transit can never be financially viable. Not enough riders live within a comfortable walk of the stops. As a bonus, infrastructure for sprawl is roughly twice as expensive to maintain as compact infill infrastructure.

Anyway, as you can see Hundt's proposal is a dog's breakfast of partial knowledge. He actually believes the federal government must raise private money. The bankers tried to convince Lincoln to borrow money for the Civil War from them too--at 26% interest. Lincoln responded by ignoring their offer and issuing greenbacks.

Sadly, he's not alone. Even sophisticated, very well educated environmentalists believe that "tax & spend" is the pattern of government fiscal policy. But where would tax payers get dollars to pay those taxes if government (the monopoly provider of dollars) didn't spend them out into the economy first?

Logic dictates that "spend first, then retrieve some dollars in taxes" is the pattern of federal fiscal operation. And what do we call the dollars (or bonds) left out in circulation, not retrieved in taxes? Answer #1: the dollar financial assets of the private sector. Answer #2: National 'debt.' Both answers describe exactly the same thing.

This is analogous to a bank account. It's the depositor's asset, but the bank's liability. And what are we owed for those dollars that are national 'debt'? Answer: a dollar's worth of relief from an inevitable liability: taxes. Taxes make the money valuable.

"Deficit hawks" are like some con artist trying to persuade people to march down to their bank and demand it reduce its debt. That would reduce the size of their accounts too, but we're to ignore that.

So I'll be rooting for the success of Mr. Hundt's green bank, but praying for a little more financial sophistication than he displayed in this interview. Meanwhile, even a much bigger lender, FNMA, has got the "green" bug, although there's evidence it too is at least overstated.

Monday, August 2, 2021

Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It

Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Yves Smith, July 30, 2021 [from Naked Capitalism]

Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.

There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.

Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.

But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.

Sunday, August 1, 2021

They Did It!

 

My Letter to Speaker Pelosi (Feel free to write your own)

House Speaker Nancy Pelosi 8/1/2021
1236 Longworth H.O.B.
Washington, DC 20515

Dear Speaker Pelosi,

Thanks to Stephanie Kelton, I recently read your comment on Twitter: “Suppose…your child just decided they, ...[do] not want to go to college but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that." Ms Kelton remarked that the president ran on student loan forgiveness.

Although many dispute taxes for war, etc, no replies to your Tweet dispute your “PayGo” principle saying we need taxes to provision federal programs, or to pay student debt. “Tax and spend” resonates with most people who have to earn money before they can spend it. But that phrase is for currency users, not currency creators. Dollars retire the inevitable liability of taxes, so dollars are valuable (“taxes drive money”), but taxes do not, and cannot, provision federal programs. The federal government creates the money. And how could people pay taxes if the government didn’t spend the dollars out into the economy first? The real sequence for currency creators is “spend first, then retrieve some dollars in taxes.” Alone in the economy, the creator of currency is fiscally unconstrained. And what do we call the dollars not retrieved in taxes? Answer #1: the dollar financial assets of the population. Answer #2: National ‘debt.’ Both answers describe exactly the same thing.

“B...but if we just print money, we’ll get [gasp!] [hyper-]inflation!” is a common objection. First, we always “print” the money. Inflation comes and goes, irrespective of the money supply (typically reflecting shortages, like oil in the ‘70s). See this graph of money supply growth vs. consumer prices:



According to its own congressionally-mandated audit, the Fed issued $16 - $29 trillion in credit to the financial sector in 2007-8. Where was the inflation surge then?

So I urge you to consult with Ms. Kelton, and stop giving Americans invalid excuses for continuing to collect student debts. Forgiving the debts is not something taxes would pay anyway. Your excuses aren’t valid not just because your priorities are misplaced, but because you do not understand the power of government as a currency creator.


Regards,





The Davis Vanguard Wants to Sacramentorment Davis Housing

(c) by Mark Dempsey Editor David Greenwald's recent Davis Vanguard commentary " Housing Production Continues to Fall Well Short &qu...