Public Policy and Governance – Page 172

File Under “We Told You So”

The Guardian,among other publications, recently reported that Verizon “throttled” the presumably unlimited data of California firefighters while they were battling the blazes that were–and still are–engulfing communities in that state.

California firefighters’ ability to battle a huge wildfire was impeded by Verizon Wireless throttling their internet connection, in a moment advocates say demonstrates the high stakes of the battle over net neutrality.

Santa Clara county fire department had paid for what Verizon described as an “unlimited” data plan for various internet-connected devices, but the data flow was throttled to about 1/200th of the typical speed – unusably slow for any meaningful data transfer.

This restriction created problems for a command and control communications vehicle called OES 5262 as firefighters battled the Mendocino Complex fire, the largest wildfire in California’s history, in late July. The vehicle – essentially a fire engine that is fitted with computers and communications equipment – gets internet access via a device that uses a Verizon sim card. It is used as a hub to “track, organize and prioritize routing of resources around the state and country to the sites where they are needed the most”, according to the Santa Clara county fire chief, Anthony Bowden, in a lawsuit over net neutrality protections, first reported by Ars Technica.

Net Neutrality rules put in place under the Obama Administration would have protected the firefighters (or at least provided them with recourse), but those rules were repealed by Ajit Pai, Trump’s appointee to the FCC. Pai was a former executive at Verizon, and Verizon has been one of the “big telecom” companies lobbying for the repeal. Pai argued that the net neutrality rules would stifle innovation, and that they had been established on “hypothetical harms and hysterical prophecies of doom”.

With Pai at the helm, the FCC simply ignored massive numbers of emails arguing against repeal, and ignored as well a number of surveys that found more than 80% of Americans supporting Net Neutrality.

The July incident wasn’t the first time Verizon had throttled the firefighters’ data connection.

They had previously contacted Verizon in June when they were dealing with the Pawnee fire and December 2017 when they were battling a grass fire near Prado regional park.

According to emails included in court filings, in June 2018, the fire captain Justin Stockman contacted Verizon requesting that the data connection for a critical piece of communications equipment was unthrottled. A Verizon account manager responded by trying to upsell the fire department from a $37.99 plan to a $39.99 plan.

The Santa Clara fire department is part of a larger lawsuit against the Federal Communications Commission; the lawsuit seeks to overturn the repeal of net neutrality rules that prevent internet service providers from blocking, throttling and prioritizing customers on the basis of pay. The suit represents plaintiffs in twelve separate lawsuits that were consolidated into a single suit. Those lawsuits were filed by more than three dozen entities, including state attorneys general, consumer advocacy groups, and tech companies.

Probably the best explanation of Net Neutrality–and the consequences of its repeal–can be found by watching comedian John Oliver who has devoted two of his shows to the topic.

I guess it takes a comedian to explain why the loss of Net Neutrality is no laughing matter.

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Banking On The Postal Service

The Roosevelt Institute–named for FDR–has a project it calls “the next New Deal.” One of its recommendations takes a hard look at a proposal that has been floating around for a while–allowing the Post Office to offer banking services.

Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities, leaving marginalized Americans underserved and left behind in today’s economy. Without access to basic banking services, such as checking and savings accounts or small loans, consumers are vulnerable to a host of financial abuses. To foster a more inclusive and accessible economy and society for all communities in the U.S., the public provision of banking goods and services by the government is an important— and bold—option to consider. In a new report co-published with the Samuel DuBois Cook Center on Social Equity at Duke University, Thomas Herndon and Mark Paul argue for the public provision of household financial services.

Among the referenced “host of abuses” are payday lenders and other predatory operations, offering money to people who are desperate for cash to meet a pressing and/or unexpected need at obscene rates of interest.

Allowing the Post Office to offer banking services would make those services available in locations that bank branches no longer serve, and would allow people with very limited means to access basic financial tools that most of us take for granted: checking and savings accounts, check cashing services, and the ability to have direct deposit for Social Security and payroll checks. The Post Office would also lend money–at reasonable rates–via small loans, auto loans, and mortgages.

As I noted, adding banking to the services the Post Office currently provides has been proposed before. I always thought it was a good idea (although for some reason, the banks disagreed….)The Roosevelt proposal, however, adds an interesting argument to the case for Postal banking, one I had not previously encountered.

Roosevelt’s proposal for banking through the Postal Service argues that in addition to serving a growing public need, having a public bank would allow the federal government to monitor and manage the country’s online financial services marketplace.

This second component would serve as a powerful regulatory tool by allowing the government to condition sellers’ access to the marketplace based on certain consumer safety standards. Consumers could also rate and review sellers, fostering easier detection  of consumer abuses. A public banking option structured with these two components would create the financial infrastructure required for universal service, while also preventing consumer financial protection abuses through public-private competition.

If we had an administration and Congress that was operating in the public interest, this proposal would at the very least get serious consideration. But of course, we don’t have a functioning government right now, let alone people in public office to whom we might affix the label “statesmen.”

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This Won’t Pass–But It Should

In addition to her Corporate Accountability measure, discussed yesterday, Senator Elizabeth Warren has introduced an “anti-corruption” bill, based on the highly dubious theory that We the People are capable of learning from our mistakes.

Nothing about Warren’s Anti-Corruption and Public Integrity Act should trigger Congressional outrage, but I predict that the blowback will be fierce; the Act’s assault on money in politics is pretty much guaranteed to enrage the plutocrats who are used to buying Congressional votes for their policy preferences.

As Vox describes it,

Sen. Elizabeth Warren (D-MA) envisions a United States government in which presidential and vice presidential candidates must — by law — disclose eight years’ worth of tax returns and place any assets that could present a conflict of interest into a blind trust to be sold off (neither of which President Donald Trump has done).

Those two provisions are just the beginning.

Her proposed fix envisions a Washington where the president, vice president, Cabinet members, and congressional lawmakers have a lifetime ban on becoming lobbyists, and other federal workers have restrictions — albeit less severe — on entering lobbying firms. The act would also bar federal judges from owning individual stocks or accepting gifts or payments that could potentially influence the outcome of their rulings.

And in Warren’s plan — laid out in a new bill called the Anti-Corruption and Public Integrity Act— this would all be overseen by a new US Office of Public Integrity, which would go after violators and usher in a new era of ethics law enforcement.

The idea is to “isolate and quarantine the ability of big money to infect the decisions made every day by every branch of our government,” she said in a speech on Tuesday. That means all three branches: executive, legislative, and judicial.

The bill is designed to completely overhaul a system that has benefited politicians in both political parties. No more revolving door between Capitol Hill and K Street, no more hiding tax returns, no more benefitting from inside information affecting stock ownership… Here are some of the key provisions:

lifetime ban on lobbying for presidents, vice presidents, members of Congress, federal judges, and Cabinet secretaries.
Multi-year lobbying bans for federal employees (both Congressional staffers and employees of federal agencies). The span of time would be at least two years, and six years for corporate lobbyists.
Requiring the president and vice president to place assets that could present a conflict of interest —including real estate—in a blind trust and sell them off.
Requiring the IRS to release eight years’ worth of tax returns for all presidential and vice presidential candidates, as well as requiring them to release tax returns during each year in office. The IRS would also have to release two years’ worth of tax returns for members of Congress, and require them to release tax returns for each lawmaker’s year in office.
Banning members of Congress, Cabinet secretaries, federal judges, White House staff, senior congressional staff, and other officials from owning individual stocks while in office.
Changing the rulemaking process of federal agencies to severely restrict the ability of corporations or industry to delay or influence rulemaking.
Creating a new independent US Office of Public Integrity, which would enforce the nation’s ethics laws, and investigate any potential violations. The office would also try to strengthen open records laws, making records more easily accessible to the public and the press.

The Anti-Corruption and Public Integrity Act can be viewed as a companion, of sorts, to Warren’s Accountable Capitalism Act, described in more detail in yesterday’s post.

Elizabeth Warren is often labeled “left-wing,” a description that says more about how tribal our politics has become than it does about her policy proposals. (Efforts to protect consumers from predatory business practices and the American public from corruption are neither Left or Right–unless you categorize upholding the rule of law as “Left.”)

Each of these measures goes to the heart of the problem being addressed; neither “nibbles” around the edges of systems that have outlived whatever utility they may once have had. Their virtue is that they “blow up” and replace systems that have become corrupted.

That virtue, of course, is also their fatal flaw, and why neither is likely to pass.

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Stakeholders Versus Shareholders

Several people who regularly comment on this blog are extremely critical of capitalism. That’s understandable, given the distorted version currently practiced in the U.S., but I would caution that broad-brush diatribes against a market economy and calls to abolish the entire system are misplaced.

The culprits that have led to what we actually have–a “system” more accurately described as “corporatism” or “crony capitalism” are twofold: a lack of understanding of where markets work and where they don’t–and public policies based both on that misunderstanding and on the outsized influence of monied interests.

A good deal has been written about the lax enforcement of anti-trust laws, and the concentration of economic power, but there has been less attention paid to structural problems that provide perverse incentives.

Earlier this month, Elizabeth Warren introduced a bill intended to address those problems. Titled The Accountable Capitalism Act, Warren’s plan “starts from the premise that corporations that claim the legal rights of personhood should be legally required to accept the moral obligations of personhood.” Warren has described herself as a “huge” proponent of capitalism, whose goal is to make the system work properly for all stakeholders.

And “stakeholder” is the operative word.

Shareholder primacy—the belief that everything a corporation does must be for the benefit of shareholders (who should extract as much wealth from the company as possible) and no one else—is the dominant legal framework operating within firms today…. Ignoring the contributions of all stakeholders to corporate success, the shareholder primacy model has driven the deep-rooted economic inequality that we live with in America today.

The linked discussion from the Roosevelt Institute traces the origin of this focus on shareholders to the detriment of others who have important interests in the operation and health of the corporation.

Part of the problem is that in the U.S., states charter corporations. As any corporate lawyer will confirm, larger enterprises “shop” for states in which to incorporate by looking to see which states have laws that are most beneficial (i.e., least restrictive). States woo new businesses, and so corporate law has become a race to the bottom (which is Delaware).

Warren’s bill would require large corporations–those with revenues over one billion– to be chartered by the federal government.

Under current law, corporate boards are elected by, and represent, shareholders. The consequences are predictable:

Board members who want to hold onto their seats are going to do what they can to please short-term oriented shareholders. And chief executives are now largely compensated in ways that are tied to the price of shares, so they have an additional incentive to steer the board towards decisions that push up short-term share prices. The existing shareholder primacy model means that boards focus too much on increasing their share price. That’s why Goldman Sachs estimated that American corporations are on track to spend $1 trillion dollars in 2018 on stock buybacks,essentially propping up the entire stock market by repurchasing their own stock.

Stakeholder governance would recognize that many different groups contribute to a corporation’s success. Employees, customers, even the public, have a stake in that success along with the shareholders, and they all should play some role in the corporation’s decision-making, as they do in a number of other countries.

This means that employees have real representation on corporate boards, so that decision-making is shared among stakeholders, instead of shareholders electing all board members. Accountability to stakeholders also means that the board has to consider all of the company’s stakeholders when making decisions, including customers, suppliers, and the broader public.

The focus on shareholder returns to the exclusion of all else hasn’t always been a part of corporate behavior, as Vox points out. That single-minded focus has come to mean that

for executives to set aside shareholder profits in pursuit of some other goal like environmental protection, racial justice, community stability, or simple common decency would be a form of theft. If reformulating your product to be more addictive or less healthy increases sales, then it’s not only permissible but actually required to do so. If closing a profitable plant and outsourcing the work to a low-wage country could make your company even more profitable, then it’s the right thing to do.

There is nothing about market competition that requires government to allow rapacious business behaviors. For that matter, markets only work properly when government works properly– insuring a level playing field and requiring obedience to laws and regulations.

When government fails to work, capitalism devolves into what we see around us.

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Crimes and Misdemeanors

There are crimes, and then there are crimes.

Americans are currently fixated on the antics of a deranged President and the (almost daily) revelations of his closest associates’ corrupt and criminal behaviors. I’m certainly not immune, as anyone who regularly reads this blog can tell.

The problem is, while we are all distracted by the grade-B gangster movie taking place in and around the Oval Office, we’ve lost focus on what is surely the most egregious and damaging crime of all: the administration’s war on science and its sabotage of the fight against climate change, subjects I touched on yesterday.

We are already seeing the effects of our warming planet, but an irrational administration (populated with ex-lobbyists for fossil fuels and religious extremists who reject not only climate science but the theory of evolution) is intent upon rolling back even modest efforts to move America away from greenhouse-gas-producing energy sources.

A consortium of scientists and environmental organizations is trying to re-focus our attention on the urgent need to move to clean energy–and the imperative of addressing what is clearly the largest challenge we face. 350.org, the Sierra Club, the Union of Concerned Scientists, Jobs for Justice and several other organizations are sponsoring nationwide “Rising for Climate” demonstrations on September 8th.

Indiana’s march will begin at the Statehouse at 10:00 a.m. The announcement points up Indiana’s “contribution” to the problem.

We, the people, are running out of time. Join us on September 8, 2018 to demand our elected officials take urgent action on human-driven climate change, protecting our health, moving to 100% renewable energy and creating local, equitable jobs for our city, state, country and planet.

Indiana is home to five of the top 22 worst greenhouse gas and toxic super polluter coal plants in the nation. Indiana is the second largest source of industrial greenhouse-gas emissions in the United States and exceed those from 187 countries (more info at www.superpolluters.com). The time to act is now.

We rise in solidarity on Sept. 8 with communities across the globe. We march in advance and in support of the Global Climate Summit in San Francisco. Elected officials in Indiana, hear our message: take action now.

The time for empty declarations of intent and unreasonable transition timelines has closed. It is time to make Indiana fossil-free and create sustainable, equitable jobs!

The march will end at Christ Church Cathedral, and will be followed by a Community Forum beginning at 11:30 AM.

Will these marches change the retrograde policies being pursued by people in the pockets of fossil fuel interests? Of course not. What they will do, however, is what the Women’s March(es) did: focus voters’ attention on important issues, and send lawmakers the message that millions of Americans care deeply about the environment and will vote to punish a criminal unwillingness to protect it. Marches will encourage further activism. They will encourage people who care about the environment to run for office.

And they will promote solidarity, and encourage people who may feel that they are lonely voices for sanity, by providing evidence that they are not alone.

What’s the old saying? A journey of a thousand miles begins with one step?

If you can, take a step. Rise for Climate on September 8th.

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