Summing it up...

The original purpose of this blog was an exposition on how our society can transition to a more sustainable future.  As the quarter progressed, I felt more drawn to look at current events through the lens of what we were learning, regardless of how it related to this cultural shift. 

Particularly, I was drawn to issues of contention. Lance Armstrong and Wall Street. Obama and Romney. Trickle-down economics and the role of Walmart in sustainability.

As I look closer, however, I realize that many of these issues were illuminating of how change is stymied in our culture. Much of how our culture views these issues and people are often a reflection of a non-theistic religious fervor.  What I mean is that cultural issues of contention elicit a non-rational response, akin to “faith” which is often different from the observed reality.

Let me give a few examples.

Capitalism, instead of an socio-historical exercise in trial and error becomes an article of faith, with belief in infinite growth and the supremacy of markets being necessary tenants.

Lance Armstrong was a hero. A self made man, he represented to many a personification of the religion of the American dream. A belief is that if you work hard enough, you can achieve anything you put your mind to.

Yet, after his fall from grace, he has become a scapegoat of our own morally corrupt win-at-all-costs mentality.  Much like Wall Street investors, who despite their vilification, are a reflection of a consumptive and overleveraged society that we all inhabit.

In a different vein, climate change is another example of how we can reduce science to religion.  I come from a conservative region of a red state, and am often asked if I “believe” in global warming. Though climate change is a well supported synthesis of empirical observations, the language used in debate reduces it to a subjective article of faith.  Isn’t this strange? Does anyone ever ask you if you “believe” in plate tectonics? Or, if you have faith in Einstein’s theory of special relativity?

The interesting thing is that non-conservatives, even those who are culturally less religious, do this as well. I would consider myself liberal, or at least progressive. My recent blog post about Walmart’s efforts to be more green was helpful in illuminating that I, like many in the environmental movement, have been used to categorizing Walmart as an unredeemable evil of our society. 

Yet this certainty has been recently troubled by a closer examination of what Walmart is actually doing with its ambitious green initiatives. Could it be that I have it all wrong? How does my mental model, a “religious” conviction that Walmart is “evil” stand up to the fact that they are doing real environmental good?

Likewise, I am troubled by much environmentalism and progressive culture which seeks to scapegoat and blame Republicanism, Walmart and the 1% for our societal ills. Too often, it seems that we adopt the language of fundamentalism and seek to “scold” people into doing right. Even worse, our unspoken self-righteousness makes our ideas, however reasonable, untenable to those we want to affect.  

Take income inequality, an issue that I explored to some length in my blog “Horse and Sparrow Economics.” One of my classmates, Arlene Raub had a prescient and insightful blog about the relative wealth of Americans compared to the rest of the world. While we rightly protest wealth accumulation of the 1% of this nation, we nonetheless,  live in a world where 80% live on less than $10 a day. We are still the 1% of the world.  Likewise, I don’t think our calls for our oppressors to relent will hold water until we recognize our own role in the oppression of others.

As a person of faith, I am not here to disparage faith or subjective world views.  People are not rational, neither am I, and that is what makes life interesting. 

Rather, I feel that many of our deeply held social and political beliefs can take a form that is not unlike organized religion. Like organized religion, its not entirely rational, and it can take good or bad forms.

Gandhi said that we must be the change that we want to see in the world. Similarly our ideas will have true power when recognize that we are part of the problem and, in humility, change ourselves first.  That is the essence of true "religion" and the only then can we be credible change agents in a beautiful and damaged world worthy of redemption.

Big Promises, Low Prices

I was fascinated to read about Adam Werbach, an environmental activist who was recruited to work for Walmart in 2007.  Founder of the Sierra Student Coalition, he joined the retail giant to help them realize their ambitious environmental goals.

According to the article in Fast Company, many of his former friends and associates disowned him after his controversial decision, calling him a traitor, naïve, and even issuing veiled threats.

Though lacking the personal bile of Werbach's former associates, I can respect many people’s skepticism about Walmart’s sincerity. Despite reading its public goals to eliminate waste and source 100% renewable energy, I admit that I was dubious myself.  Yet, it is hard to deny that something has changed in Bentonville Arkansas.

For example, Walmart, which boasts the most extensive supply chain in the world, has increased its fleet fuel efficiency by 69% since it has launched its initiative.  It currently sources 28% of its electricity from renewable sources and has become the nation’s leading commercial buyer of solar energy. It also has kept 80.9 % of its waste out of landfills.

Using its unequaled retail influence, Walmart has created the Sustainability Consortium, which has developed a standardized framework, called Sustainability Measurement & Reporting System(SMRS). SMRS allows Walmart to rate each of its 100,000 suppliers on their environmental and social performance. This has the intention of greening the supply chain, and by affecting companies with revenues of $1.4 trillion, this is perhaps its most powerful tool for change.

Despite its bold environmental ambitions, its labor practices remain deplorable. I commend the thousands of Walmart employees who, at risk to their own jobs, protested the unfair labor practices of their company on Black Friday. It is my hope that this corporation can begin to see that true sustainability begins with treating employees with dignity.

The work of Werbach raises an interesting issue for those of us who may work in the murky moral landscape of corporate America.  How does one affect positive environmental and social change without becoming complicit in systemic injustice that some of these corporations cause? This is a valid criticism, and one that I have personally wondered myself.

To better understand this moral question, it was helpful for me to reframe the issue. 

United States’ federal and state governments have been sources of great inspiration and good for millions at home and abroad.  Yet, they also have caused and/or been complicit in much injustice as well.  It has sanctioned slavery, extermination of Native Americans, imperialism overseas, oppression of women stateside, and currently, while purporting love of liberty, possesses the largest prison population in the world.  This is the short list.

Yet, most of us see public service is an admirable goal, even though government through its time has caused great ill. It is understood that we have responsibility to be a part of the system that we want to change.

At this point, many of you will correctly state that much social change only took place in America’s history because of strong persistent agitation by those outside the system.  This is certainly true, yet history has also shown that policy and advocacy go hand in hand.  To change government or corporations, we need people in both arenas.

People like Werbach.

With estimated annual sales of $447 billion, Walmart is the largest retailer in the world. If Walmart were a country, its economy would be the 26^th largest in the world, bigger than Austria’s.

Walmart has an opportunity to make an unprecedented impact on the way the people shop. Its unequaled buying power and ability to pressure its suppliers make it potent agent for change, if it pointed in the right direction.

True sustainability has little hope of succeeding if its only adherents are coastal liberals who drive hybrid cars, support NPR and can afford to buy from Whole Foods. If sustainability has a future, it must be mainstream and affordable for the 200 million who shop at Walmart weekly. 

I commend Werbach and others for their commitment and courage, and I hope that they succeed.

Horse And Sparrow Economics

As concerns about the  federal budget deficit heighten, and the year’s end draws ever nearer, increasing talk has been of the looming fiscal cliff. 

Unless Congress can agree on a solution by the end of the year, $600 million in tax hikes and automatic spending cuts will be enacted, and likely push the country back into recession.

One particularly bitter struggle has been whether or not to expire the Bush Era Tax Cuts, which would restore top marginal income taxes to 39.6%.

To preface, as someone who pays virtually no income taxes (a real rate of about 2%), on a personal moral level, it is difficult to cast stones at those who object to seeing their marginal tax rates increase if the Bush era tax cuts expire. 

At this point, I should also clarify a point for the reader.  I recognize that these tax rates I am comparing are not the same things.  As most of you probably know, a marginal tax means that different tax rates are applied to successively higher levels of income, not overall income. Currently, for someone who makes $500,000 dollars a year, the rate would not be 35% over the entire amount. Rather, this highest tax rate is only be applied on the amount over $379,149, or approximately $120,851.

So, like poor  graduate students, the wealthy pay overall lower income taxes than their highest marginal rates, hence the term marginal.

Still, giving 39.6% of any part of one’s income seems offensive to many who have, presumably, worked hard to get their money.

But, for these budding Ayn Rand disciples, a little perspective is in order.

Historically, the marginal tax rate on upper incomes in the United States has been much higher than it is today. The Eisenhower administration saw rates as high as 91% on the highest wage earners.  In fact, it is interesting to note that taxes for the highest income bracket did not dip below 70% until 1982.

That being said, it stands to reason that the ones who suggest raising taxes on the rich are not rich themselves

Or are they?

Warren Buffett, the well know billionaire investor and heralded “Oracle of Omaha” made headlines last year when he reported that he paid an effective tax rate of 11%. This is because most of his income comes from investments, that are taxed a much lower rate.

He surprised a lot of people when he said that he thought the rich, like him, should be paying more.

President Obama, emboldened by this endorsement has suggested a Buffett Rule, which will raise taxes to 30% on all income over $ 2 million dollars.

Like efforts to expire Bush Era tax cuts, his plan has met some opposition.

The reluctance of Republican lawmakers, and some Democrats to raise taxes on the wealthy is based on a belief that increasing taxes on the rich will diminish disposable income for investment, which is needed for growth.

Without growth it is feared we will plummet back into economic recession.  This is the argument of supply side economics, which sees investment, rather than demand, as the primary driver of economic growth. 

This theory suggests that increased investment will fuel economic output, creating jobs that will benefit the middle and lower classes.

This is a compelling theory, and one that has seen much support from Ronald Reagan and other conservatives over the years. But, for it to be effective, one would have to see the lower and middle class getting richer too, particularly since the early 1980s, when large tax cuts on the wealthy were introduced.

The rich are definitely getting richer. In the last thirty years, the wealthiest 1 percent has doubled its share of national income, from 10% of the nation’s income to 20%. The top tenth of one percent has tripled its share, and the richest 400 Americans own more than the bottom 150 million put together.

For this same time period, however, median wages have failed to keep pace with such wealth gains, increasing only 11%.  

Part of the problem with this theory is that tax cuts don’t always equal investment, because saving, or leakages don't equal injections.  Also, though profits and productivity at many companies are soaring, gains in growth do not necessarily translate to higher wages or increased jobs.

It's worth noting that before supply side economics was coined “trickle down” economics, it had a different name.  

Coined in 1896, it was called “Horse and Sparrow Theory.”

If you feed a horse enough oats, some of it will “pass through” to the road, giving food for the sparrows. 

An apt and demonstrative analogy for much of the “trickle-down” rhetoric of the past thirty years,
and I will leave my commentary at that.

It's The Green Economy, Stupid

Like 1992, the economy is the central issue of this year’s presidential election.

Our country suffering from an economic recession, President Obama’s critics, most notably governor Romney, pounce in these troubled times. Blaming the president for America’s  7.8 percent

unemployment rate Governor Romney has claimed that he will produce over 12 million jobs over four years if he is elected to our nation’s highest office.  Like many candidates’ proposals, he’s big on promises and vague on the details.

For reasons I will expound on later, I am proponent of renewable energy and have been skeptical of Romney’s commitment to this type of job creation.

Nonetheless, as an objective type, I wanted to see for myself. Recently I scoured the Mitt Romney Program for Economic Recovery (don’t be too impressed, it’s only eight pages) for any mention of green job growth.  I didn’t find any, but I did find repeated calls for need of America’s “Energy Independence” and related jobs. 

Are you ready?

Mittens hopes to  “eliminate regulations destroying the coal industry, Approve Keystone XL pipeline, and streamline permitting for domestic exploration and energy development.”

Say it ain’t so.

Mitt Romney in fact has recently maligned Obama for the 90 billion dollar stimulus spent on Green Energy development and related job growth.  Implying that it was a give away, he has called for ending all subsidies to renewables. Citing the infamous Solyndra case as an example, he has said that the government should not be funding businesses.

These statements strike a chord with many who are anxious about the federal government’s record deficits.  The only problem for Romney is that they are not true.

For example, of the 90 billion “given away” to green energy, only 21 billion was spent on actual renewable energy, the rest was a mix of other green projects, including a 3 billion for “clean coal” projects.

Solyndra, which lost 528 million dollars, represents a small part of the DOE 1705 loan program.  Mitt Romney may become uncomfortable talking about it, but the overall success rate  of 1705 is higher than that of Bain capital’s. In fact, 1705 has had a 98% rate, compared to the 80% investment rate that Mitt’s company achieved.

Apart from Mitt Romney’s math, they call to question a fundamental difference in vision for the future between the President and his challenger.

We have been learning about balance sheets and their components: assets, liabilities and equity. Such knowledge is helpful when framing the debate for our energy future.

It is true that the United States has abundant coal, natural gas and oil.  It’s also true that we have considerable wind, solar and other renewable potential.  Seen strictly as energy produced and employment opportunities, both renewables and non-renewables could be seen as assets.

The similarities end when we look at the liabilities we incur from these respective energy sources.

Wind and solar, like all manufactured technologies have trade-offs that should be taken into account as we choose our energy future.

However, when compared to coal, oil and gas, which will make our planet hotter, poison the environment, harm people and ultimately be depleted, it is not a hard choice to make.

Obama is not perfect, and I hope that he can do more for clean energy over the next four years.  Nonetheless, given the alternative, I think that the choice is clear.