Infinitely Depressing, If True

Adam Gopnik recently wrote an essay in the New Yorker that has continued to nag at me–not because he is wrong, but because I’m very much afraid that he’s right.

Here are the pertinent paragraphs:

What we have, uniquely in America, is a political class, and an entire political party, devoted to the idea that any money spent on public goods is money misplaced, not because the state goods might not be good but because they would distract us from the larger principle that no ultimate good can be found in the state. Ride a fast train to Washington today and you’ll start thinking about national health insurance tomorrow.

The ideology of individual autonomy is, for good or ill, so powerful that it demands cars where trains would save lives, just as it places assault weapons in private hands, despite the toll they take in human lives. Trains have to be resisted, even if it means more pollution and massive inefficiency and falling ever further behind in the amenities of life—what Olmsted called our “commonplace civilization.”

Part of this, of course, is the ancient—and yet, for most Americans, oddly beclouded—reality that the constitutional system is rigged for rural interests over urban ones. The Senate was designed to make this happen, even before we had big cities, and no matter how many people they contain or what efficient engines of prosperity they are. Mass transit goes begging while farm subsidies flourish.

But the bias against the common good goes deeper, into the very cortex of the imagination. This was exemplified by New Jersey Governor Chris Christie’s decision, a few short years ago, to cancel the planned train tunnel under the Hudson. No good reason could be found for this—most of the money would have been supplied by the federal government, it was obviously in the long-term interests of the people of New Jersey, and it was exactly the kind of wise thing that, a hundred years ago, allowed the region to blossom. Christie was making what was purely a gesture toward the national Republican Party, in the same spirit as supporting a right-to-life amendment. We won’t build a tunnel for trains we obviously need because, if we did, people would use it and then think better of the people who built it. That is the logic in a nutshell, and logic it seems to be, until you get to its end, when it becomes an absurdity. As Paul Krugman wrote, correctly, about the rail-tunnel follies, “in general, the politicians who make the loudest noise about taking care of future generations, taking the long view, etc., are the ones who are in fact most irresponsible about public investments.”

I remember thinking, when Christie made this decision, that he was simply crazy. In a sane world, refusing to provide demonstrably needed infrastructure–especially when it is virtually cost-free for one’s state to do so and when it will also generate desperately needed jobs–makes no sense at all.

But that assumes that, in a sane world, there is such a thing as the common good.

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No Wonder Nobody Votes

As if we didn’t know.

The Washington Post recently ran an article documenting what virtually every sentient American knows: thanks to gerrymandering and residential “sorting,” elections at every level are increasingly uncompetitive–when they are contested at all.

Here’s the lede

Fewer state legislative elections were hotly contested between Democrats and Republicans in 2014 than at any time in the last 40 years, according to a new study that offered more evidence of a historically polarized electorate.

The analysis of election results from last year found less than 5 percent of the U.S. population lives in a state House or state Senate district where the two leading candidates finished within 5 percentage points of each other.

At the same time, the number of races that don’t even draw competition is on the rise. Nearly a third of voters lived in state Senate districts in which only one candidate ran, while more than 40 percent lived in state House districts with only one option. Those numbers are far higher than four decades ago, when less than a quarter of residents lived in one-candidate districts.

The question, of course, is: what do we do about it?

There are no “good guys” here–both parties aggressively seek advantage, and when in a position to call the shots, both can be counted on to draw a map as favorable as computing power can devise.

It’s common–even fashionable–to berate citizens who don’t vote. But let’s be fair: why take time out of your day to visit a polling place if there are no contests?

It won’t solve the whole problem, but the first step to re-engaging voters must be to remove redistricting from the partisan political process. Here in Indiana, Common Cause and the League of Women Voters are devoting themselves to getting that done. (They are holding a forum at the Indiana Historical Society on June 6th, devoted to the issue.)

It’s an uphill battle, but it’s one we all need to join.

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American Opinion and Climate Change

“Thoughtful and informed”? Really? When was the last time you heard someone not wearing a tinfoil hat describing the American public as “thoughtful and informed”?

And yet…

Jon Krosnick is a professor at Stanford who studies Americans’ attitudes about hot-button issues. He’s surveyed opinions about climate change since 1995. As he points out, on most issues, voters are pretty evenly split;  so anything a candidate says will annoy about as many people as it pleases. There’s no net benefit. But that isn’t true of green points of view.

Many Americans, including people in Washington, do not realize how one-sided the public is on this. If they did, they would change their approach. I’ve been to Capitol Hill to talk to legislators and they’ve said: “You’re doing national surveys. I don’t think the people in my state feel that way.” So we’ve started looking at states and haven’t found a single state where a majority of residents are skeptical, but legislators think they are. West Virginia, Oklahoma, Texas — even in those states, large majorities are expressing green points of view….

What we’ve found is about 80% of Americans — I never see 80% of Americans agreeing on anything when it comes to other issues, so this is very unusual — believe the federal government should limit greenhouse gas emissions by businesses and in particular by public utilities.

Krosnick did say that Fox News viewers tend to be an exception to this majority consensus–and noted that it is impossible to know whether that is because Fox misinforms its  audience, or because the audience is composed of individuals who choose to watch Fox in order to have pre-existing beliefs confirmed.

The next time James Inhofe throws a snowball in the Senate chambers to “prove” climate change is a myth, someone should tell him that a “thoughtful and informed” public has moved on. A long time ago.

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Spending? Or Investing?

What happens when we fail to recognize the difference between spending and investing?

That question was triggered by a recent column by New York Times columnist Joe Nocera. Nocera was writing about corporate activists and a pending proxy battle between one such group and the DuPont Company, and most of his column dealt with the specifics of that situation. What struck me, however, was the following paragraph, in which he quotes an observation by a corporate lawyer named Martin Lipton. Lipton’s observations have implications that go well beyond a single corporate proxy dispute.

“Activism has caused companies to cut R & D, capital investment, and most significantly, employment,” he said. “It forces companies to lay off employees to meet quarterly earnings.”

“It is,” he concluded, “a disaster for the country.”

Lipton’s focus on employment is important, and has obvious implications for the health of the economy. But even more important, in my view, is the equally undeniable fact that the current fixation on generating an immediate shareholder return has resulted in corporate management diverting monies from investments that will pay dividends in the future in order to satisfy shareholder demands in the present.

Nor is it only corporate America that has become so shortsighted. The U.S. Congress is dominated by slash-and-burn “conservatives” who refuse to invest in critical infrastructure, preferring instead to indulge ideology and/or reward donors by reducing taxes on the wealthy (already at historic lows) still further. The recent slashing of Amtrak’s budget–even in the wake of a horrific derailment–is but one recent example.

I put quotation marks around conservative in the preceding paragraph, because I am old enough to remember when “fiscally conservative” described policymakers who believed in paying for programs—and wars—when they were authorized, rather than financing them “off budget” or putting them on the national credit card. ( We may criticize “tax and spend,” but it’s surely preferable to “borrow and spend.”)

Genuine fiscal conservatives also understood the difference between capital and operating expenditures and the importance of investing in the nation’s future.

Drawing parallels between individual households and the federal budget can be misleading, because there are significant differences between behaviors that are personally prudent and those appropriate to government. Nevertheless, to use a household example, your home mortgage is an investment; your new suit isn’t. Most of us would have very different opinions of two families carrying the same level of debt—in one case a mortgage and in the other a credit card balance from a shopping spree. And most of us would be very critical of a homeowner who chose not to repair the leaky roof so that he could use the money for a vacation instead.

Allowing assets to deteriorate while we indulge more immediate political appetites is hardly “fiscally conservative.”

When businesses fail to invest in necessary equipment, when they cut back on research and development, they risk obsolescence and loss of market share. They lose their competitive edge. That’s bad news for them.

When government fails to invest in infrastructure—bridges, roads, railroads, the electrical grid, new energy technologies, basic medical and scientific research—that’s bad news for us. We all suffer the consequences, because the whole nation’s economic performance is dependent upon the adequacy and accessibility of that infrastructure.

I believe it was Eric Hoffer, the longshoreman-philosopher, who said a nation should ultimately be judged not by what it builds, but by its ability to maintain what it has built.

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The Age of the Bankster

Remember Mr. Potter, the banker in “It’s a Wonderful Life”? He wasn’t exactly a paragon. In fact, it wouldn’t surprise me to learn that his character reflected how people of that era viewed their local banks and bankers.

Potter-like or not, however, bankers used to live in their communities and tended to have a pretty accurate picture of their needs, not to mention the credit-worthiness of the merchants and working folks who made up those communities.  (I grew up in a small Indiana town, and remember our local bank president with some affection; if I was overdrawn, he’d just call my father, who would transfer some money into my account. No embarrassing surprises, no fees. Just a parental lecture.)

So this report is troubling.

Here’s a statistic that ought to alarm anyone interested in rebuilding local economies and redirecting the flow of capital away from Wall Street and toward more productive ends: Over the last seven years, one of every four community banks has disappeared. We have 1,971 fewer of these small, local financial institutions today than at the beginning of 2008. Some 500 failed outright, with the Federal Deposit Insurance Corporation (FDIC) stepping in to pay their depositors. Most of the rest were acquired and absorbed into bigger banks….

In 1995, megabanks—giant banks with more than $100 billion in assets (in 2010 dollars)—controlled 17 percent of all banking assets.

By 2005, their share had reached 41 percent. Today, it is a staggering 59 percent. Meanwhile, the share of the market held by community banks and credit unions—local institutions with less than $1 billion in assets—plummeted from 27 percent to 11 percent. You can watch this transformation unfold in our 90-second video, which shows how four massive banks—Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—have come to dominate the sector, each growing larger than all of the nation’s community banks put together.

Whatever one’s opinion of the bank shenanigans that precipitated the Great Recession, of “too big to fail,” or Dodd-Frank–whether or not you agree with Elizabeth Warren about the need for additional financial regulation–concentrations of power of this magnitude are cause for concern.

When that power is concentrated in large national banks removed from community relationships and concerns, the result is more foreclosures and fewer small business loans.

But perhaps the most important reason to treat the decline of community banks as a national crisis is that, while megabanks devote much of their capacity to activities that enrich their own bottom line, very often at the expense of the broader economy, local banks are doing the real work of financing businesses and other productive investments that create jobs and improve our well-being….

 While credit unions and small and mid-sized banks account for only 24 percent of all banking assets, they supply 60 percent of lending for small businesses.

The inverse is true of megabanks: they control 59 percent of the industry’s asset, but provide only 23 percent of small business loans. Given how much ground these giant banks have gained over local banks in the last seven years, it’s not hard to understand why small business lending has continued to shrink even as the economy has recovered.

Sometimes, bigger is better. Sometimes, it most definitely is not.

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