Senate Democrats have sent a letter to Governor Schwarzenegger asking him to reconsider his veto of the renewable energy standard and subsequent executive order. The strongly worded letter has about as much currency as the eleventy billion-dollar bill, but it does explain why the Governor’s hypocritical action is a bad deal for California.
Respectfully, an Executive Order does not have the force and effect of law. Additionally, such a proclamation will only cause confusion and uncertainty to California’s energy markets, jeopardizing California’s role as the world leader in renewable energy development and green jobs.
As you noted when you signed AB 32, the landmark “Global Warming Solutions Act of 2006,” administrative actions are no substitute for a statute that is permanent and enforceable.
Directing the California Air Resources Board to implement an RPS program is a fundamentally flawed approach. The CARB is not an energy agency; it is an air quality regulatory agency. There are numerous provisions of law which impair the CARB’s ability to implement a renewable portfolio standard. Assigning this new responsibility to the CARB will not result in new renewable energy being built soon–it will only lead to litigation, regulatory confusion, and delay.
In our view, it is essential to green businesses and the renewable energy investment community which bring jobs and capital into California, that California’s 33% RPS be statutorily established and not subject to the whims of changing administrations.
There’s only one reason that Schwarzenegger gave the CARB the ability to implement a renewable energy standard – so he can go on talk shows and crow that he’s instituted an environmental achievement. Except, as is explained here, it won’t. It will get tied up in court challenges and confusion, without a clear mandate for the standard or penalties thereto.
Schwarzenegger has responded to this by calling the Legislature’s bill “protectionist,” and saying that if we get water from the Colorado River, we should be able to get renewable energy from other states as well. The difference is that a commodity is not the same as a job. The twin goals of a renewable energy standard are to spur the usage of renewables as a means to lower greenhouse gas emissions, and to build a green-collar economy that will create millions of new jobs. Schwarzenegger would rather give those jobs away. And given the perilous state of the economy here in California, we simply cannot afford that.
Job losses in the public sector will prolong the economic pain in California through 2010 even as a recovery gets under way nationwide, two forecasters predict.
Jeff Michael, a forecaster at the University of the Pacific, said Tuesday that California’s recession will be over before the end of the year. But the cutbacks in state and local government, along with the continuing fallout from the mortgage meltdown, will make 2010 feel like another year of recession, Michael said in UOP’s latest quarterly forecast.
Similarly, the newest UCLA Anderson Forecast predicts a sluggish recovery because of the weak public sector. UCLA senior economist Jerry Nickelsburg is more optimistic than Michael about the housing market, and says California will outperform the U.S. economy starting in 2011.
Yet both economists say Californians can expect continued high unemployment for a couple more years or so. The unemployment rate is currently 11.9 percent in California and 11.8 percent in greater Sacramento.
And yet here is Arnold Schwarzenegger vetoing the only major bill that would produce any semblance of an economic recovery for California.
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This December, Wake Up Wal-Mart is going all out with our annual Holiday Campaign to awaken America’s largest retailer to its responsibilities. Here is a peek at our second TV ad for 2008’s holiday season:
Titled Wal-Mart: America Just Can’t Afford It Any Longer, the ad focuses on the hidden costs of shopping at Wal-Mart:
1) The tax burden Wal-Mart imposes on Americans by forcing its employees to rely on state resources for healthcare,
2) The lost wages of the legions of women who have had to take the company to court in order to receive equal pay, and
3) The devastating loss of American jobs as the retailer relocates its supply base to China.
What did we miss?
Is this ad going to convince your co-workers and neighbors not to patronize Wal-Mart this holiday season?
A new briefing paper from the Economic Policy Institute titled The China Trade Toll [PDF document] says that since China entered the World Trade Organization in 2001 our China trade policy “has had a devastating effect on U.S. workers and the domestic economy.”
The report shows that since 2001 California has lost 325,800 jobs (55,400 of these just in the last year) to China due to these policies. And since 2001 2.3 million jobs were lost nationally. According to the report even those workers able to find new jobs saw their wages drop an average of $8,146 per year. (These figures are only for jobs and income lost to China and do not include jobs and income lost to other countries.)
And, of course, this effect is not limited to the workers who lost their job. This also has an effect on works’ ability to ask for raises and imporvements in working conditions. From the report,
It is also critical to recognize that the indirect impact of trade on other workers is significant as well. Trade with less-developed countries has reduced the bargaining power of all workers in the U.S. economy who resemble the import-displaced in terms of education, credentials, and skills. Annual earnings for all workers without a four year college degree are roughly $1,400 lower today because of this competition…
Specific industries were affected more than others by our massive trade deficit with China. Computer and electronic product manufacturers were hit hardest, losing an eliminated 561,000 jobs in this period. Jobs lost to the deficit tended to be better-paying ones,
More than two-thirds of the jobs displaced by China trade deficits were in manufacturing, which tends to employ a higher-than-average share of workers with a high school degree or less (43.7% of workers displaced) and to provide those workers with good wages and benefits. More than half (55.6%) of the jobs displaced came from the top half of the U.S. wage distribution, and among this group a disproportionate share came from the top 10th of all U.S. wage earners. African Americans (230,000 jobs lost), Hispanics (339,000), and other ethnic groups (219,000) all suffered from the loss of jobs such as these that pay substantially more and offer better benefits than jobs in other industries.
Here is what is going on. First, China “pegs” its currency to the dollar instead of letting it follow market rates as the dollar does. So the dollar’s decline does not make it cost less to manufacture here, which would bring manufacturing jobs to the U.S. Next, China doesn’t allow workers to organize labor unions. So their workers are not really benefiting from all of this. Wages there are kept low, and prices grow ever higher due to the currency manipulation of “pegging” to the dollar. And finally, China imposes barriers on imported goods. So while they manufacture and sell to the rest of the world, they keep their own people from buying things made elsewhere.
As a result China exported $323 billion in goods to the U.S. in 2007, and purchased only $61 billion in goods from the U.S.
The report concludes,
The growing U.S. trade deficit with China has displaced huge numbers of jobs in the United States and has been a prime contributor to the crisis in manufacturing employment over the past six years. Moreover, the United States is piling up foreign debt, losing export capacity, and facing a more fragile macroeconomic environment.
And, the report points out that this isn’t particularly in the long-term interests of the Chinese people, either,
Is America’s loss China’s gain? The answer is most certainly no. China has become dependent on the U.S. consumer market for employment generation, has suppressed the purchasing power of its own middle class with a weak currency, and, most importantly, has held hundreds of billions of hard currency reserves in low-yielding, risky assets instead of investing them in public goods that could benefit Chinese households. Its vast purchases of foreign exchange reserves have stimulated the overheating of its domestic economy, and inflation in China has accelerated rapidly in the past year. Its repression of labor rights has suppressed wages, thereby artificially subsidizing exports.
Of course trade is good, when it is a two way street. If trade is fair, it benefits everyone involved. But this report shows that what the people who run American corporations call “free” trade is hurting our economy more than it is helping. Now that several years of these policies have passed we can measure the results, and the results have not been good for the American people.
Because of our country’s trade policies with China 325,800 jobs have been lost in California. Meanwhile China is allowed to manipulate their currency, prevent unions, and set up barriers that keep their people from buying goods we make here.
What this has meant is big corporations can get out of paying American workers a fair wage because they can get away with paying Chinese workers hardly anything, while a very few people at the top of the American and Chinese food chains pocket the difference entirely for themselves. If you consider the huge amounts that some of these individuals are pocking from this scheme — some receiving hundreds of millions of dollars each year — aren’t we at least benefiting from the taxes they pay? Unfortunately no, because of the tax policies of California and national Republican: low taxes for the rich, higher taxes for the rest of us, and borrowing to cover the resulting deficits. Here in California the Republicans are even blocking an effort to ask the super-rich to pay the same sales taxes that the rest of us pay on everything we buy when they buy yachts and private planes. But no, they don’t even have to pay that tax.
The result of these tax policies is that while we lose jobs,and the remaining workers get pay cuts, we also lose out on government services like schools, fire protection, police, roads, mass transit and everything else our government does for us. And that’s not all. Because of these tax policies the state and national governments are borrowing huge amounts, and we have to pay that back with interest.
All of this — the China trade policies, the tax policies, the massive borrowing — come from the influence that money buys in our political system. The minute someone is able to use some money to gain an advantage, of course they use that to get even more money, which lets them buy an even bigger advantage, and the cycle continues.
You can easily see the effects of the money with the massive ad campaigns around California’s elections and ballot initiatives — and the resulting budget gridlock as a few corporate-connected Republicans block every effort to ask the rich and connected to pay their share.
We are in a stranglehold situation. A very few wealthy people are exporting our jobs and pocketing the money they would have paid as wages and benefits. They are not even paying taxes on the ill-gotten gains, which forces our state and national governments to borrow. And they are getting away with it because they are able to use some of that money to further influence our political system.
Here’s the thing. They’re not even using their own money to purchase this influence. Since they have control of the resources of large corporations, they are using the money from those corporations to fund the system of influence, which directs much larger amounts of cash back to themselves.
I think the way to stop this is to prevent any use of corporate money for anything other than operating the corporation. I’ll share some ideas on that in later posts.
Somewhere along the line, the Grover Norquists of the world have convinced Americans that everything can be done better and cheaper outside of the frame of the government. Unfortunately, that’s really not so. Look at the numerous debacles with Public-Private Partnerships, and what do you see? Cost overruns, shoddy worksmanship, and a poor record on worker’s rights. Now, that’s not universally true, but it’s about time these “collaborations” get more scrutiny than just the passing “ooooh, that sounds cheap!” Thankfully, that was done recently, and let’s just say, outsourcing doesn’t always work out:
According to a 2006 report by the independent California Research Bureau, outsourcing IT work cost 50 percent more than doing the work in-house.
California has struggled with IT strategy and oversight for more than a decade. In 2002, lawmakers shut down the state’s technology office when they learned that Elias Cortez, director of the Department of Information Technology, had approved a $95 million contract with Oracle Corp. without competition.
According to the SEIU report, costs are continuing to skyrocket. Since 2003, the number of IT contracts has risen from about 1,800 in 2003-04 to 5,500 in 2007-08.
The total value of personal service contracts has jumped from $28 million to $340 million in the first eight months of the current fiscal year. Meanwhile, the value of consultant contracts increased from $40 million to $120 million.
“It’s costing the state tens, if not hundreds, of millions of dollars every year,” said Daniel Rounds, a SEIU official who compiled the union study. (SacBee 3/12/08)
Just because something is cheap, my dear Arnold, doesn’t mean it’s a good value.
Since the days of Reagan, America has been chasing a Theory.
Since the Clinton era, and the rise of NAFTA and Global Free Trade, our “Corporate Leaders” have been conducting an unprecedented Social Experiment.
The Experiment: Economic Darwinism
The Test Subjects in this Experiment: none other than American Workers and our “more competitive” counterparts, overseas.
Supply-siders have argued that Economic Growth comes from empowering Corporate Interests to become “More Productive”, by whatever means necessary. Be it “Tax-Give-aways to the Wealthy”, or “Job-Give-aways to Poor Foreigners”, well that’s just fine with them, long is it results in Corporate Growth.
Supply-siders are happy to trade away American Dignity for the sake of short-term Profits: “American Workers just need some retraining. They just need to apply themselves.”
“We just need to learn to Adapt” … (to Global Markets?)
That’s the Theory, that’s the Spin. What are the Results of this on-going plan to outsource the American Dream?
So what is Supply Side Economics, and how did these Theorists manage to trump the classical Keynesian school of thought? (John Maynard Keynes Theories ushered in the Middle Class Boom of the last century, by the way.)
Supply-side economics is better known to some as “Reaganomics”, or the “trickle-down” policy espoused by former U.S. president Ronald Reagan. He popularized the controversial idea that greater tax cuts for investors and entrepreneurs provides incentives to save and invest and produce economic benefits that trickle down into the overall economy. In this article, we summarize the basic theory behind supply-side economics.
The Argument That Supply Creates Its Own Demand
In economics we review the supply and demand curves. The left-hand chart below illustrates a simplified macroeconomic equilibrium: aggregate demand and aggregate supply intersect to determine overall output and price levels. (In this example, output may be gross domestic product and the price level may be the Consumer Price Index.) The right-hand chart illustrates the supply-side premise: an increase in supply (i.e. production of goods and services) will increase output and lower prices.
Supply-side actually goes further and claims that demand is largely irrelevant. It says that over-production and under-production are not really sustainable phenomena. Supply-siders argue that when companies temporarily “over-produce”, excess inventory will be created, prices will subsequently fall and consumers will increase their purchases to offset the excess supply
Supply-side economics has a colorful history. Some economists view supply-side as a half-baked economic theory – economist and New York Times columnist Paul Krugman even called its founders “cranks” in a book dedicated to attacking the theory (“Peddling Prosperity”)…
Indeed Paul Krugman had some very interesting things to say about Global Trade and Outsourcing today. The USA has just passed a new threshold on imports:
But recently we crossed an important watershed: we now import more manufactured goods from the third world than from other advanced economies. That is, a majority of our industrial trade is now with countries that are much poorer than we are and that pay their workers much lower wages.
Let’s talk for a moment about the economics.
Trade between high-wage countries tends to be a modest win for all, or almost all, concerned. When a free-trade pact made it possible to integrate the U.S. and Canadian auto industries in the 1960s, each country’s industry concentrated on producing a narrower range of products at larger scale. The result was an all-round, broadly shared rise in productivity and wages.
By contrast, trade between countries at very different levels of economic development tends to create large classes of losers as well as winners.
Although the outsourcing of some high-tech jobs to India has made headlines, on balance, highly educated workers in the United States benefit from higher wages and expanded job opportunities because of trade. For example, ThinkPad notebook computers are now made by a Chinese company, Lenovo, but a lot of Lenovo’s research and development is conducted in North Carolina.
But workers with less formal education either see their jobs shipped overseas or find their wages driven down by the ripple effect as other workers with similar qualifications crowd into their industries and look for employment to replace the jobs they lost to foreign competition. And lower prices at Wal-Mart aren’t sufficient compensation.
The trouble now is that these effects may no longer be as modest as they were, because imports of manufactured goods from the third world have grown dramatically – from just 2.5 percent of G.D.P. in 1990to 6 percent in 2006.
And the biggest growth in imports has come from countries with very low wages. The original “newly industrializing economies” exporting manufactured goods – South Korea, Taiwan, Hong Kong and Singapore – paid wages that were about 25 percent of U.S. levels in 1990. Since then, however, the sources of our imports have shifted to Mexico, where wages are only 11 percent of the U.S. level, and China, where they’re only about 3 percent or 4 percent.
… The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.
As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.
Krugman seems worried about the effect of NAFTA, and the continuing trend for more Outsourcing. And Krugman seems to be advocating the same kind of Social Safety Net and Worker Dignity, that John Edwards has been calling for too. In short, Smart Trade and Fair Trade (high wage for high wage) seem to be among this progressive thinker’s priorities too.
CNN’s Wolf Blitzer asked a very straight-forward Question at a recent Presidential Candidate Debate:
Wolf Blitzer: Ross Perot was fiercely against NAFTA, knowing what we know now, was Ross Perot right?
In 1993, the Clinton White House and an army of corporate lobbyists were selling NAFTA as a way to aid Mexican and American workers.
Perot, on the other hand, was predicting that because the deal included no basic labor standards, it would preserve a huge “wage differential between the United States and Mexico” that would result in “the giant sucking sound” of American jobs heading south of the border. Corporations, he said, would “close the factories in the U.S. [and] move the factories to Mexico [to] take advantage of the cheap labor.”
The historical record is clear. The Carnegie Endowment for International Peace reports, “Real wages for most Mexicans today are lower than when NAFTA took effect.” Post-NAFTA, companies looking to exploit those low wages relocated factories to Mexico. According to the Economic Policy Institute, the net effect of NAFTA was the elimination of 1 million American jobs.
Well according to Carnegie, it looks like NAFTA was a Lose-Lose deal for BOTH the High-Wage Workers of America, and the Low-Wage Workers of Mexico!
So much for Supply-side Global Competition, raising ALL Boats!(which was one of Reagan’s favorite lines, by the way)
John Edwards is just NOT Talking about “raising all boats” — he’s providing the Smart Plans that will ACTUALLY help the “Middle Class Rise” and restore Dignity for ALL Workers.
“Smart Trade” policy makes use of our greatest assets, our Intelligence and our Innovation. (These have always been the keys to real Adaptive Changes in eras past!)
Let me tell you, if a CEO thinks the right thing to do is to ship American jobs overseas, to destroy families and communities, then I challenge him to go and look those workers in the eye and have the guts to tell them to their face that they can’t compete. I’ve stood with these workers all across America – and let me tell you, they can compete, because they are the best workers in the world.
NAFTA was written by insiders in all three countries, and it served their interests – not the interests of regular workers. It included unprecedented rights for corporate investors, but no labor or environmental protections in its core text. And over the past 15 years, we have seen growing income inequality in the U.S., Mexico and Canada.
Well enough is enough. Americans have paid the price long enough. We need to change our fundamental approach to trade. We need to make American values the foundation of our trade deals, and we need to put workers back at their core.
We can and we must change this. I believe we need to follow three principles to make sure globalization works for everyone.
(1st) trade deals must benefit workers, not just big multinational corporations.
Today, our trade agreements are negotiated behind closed doors. The multinationals get their say, but when one goes to Congress it gets an up or down vote – no amendments are allowed. No wonder that corporations get unique protections, while workers don’t benefit. That’s wrong.
Imagine trade policies that actually put American workers first.
We need fair rules for workers, and we need strong protections for labor and the environment and against currency manipulation. If a deal is good for middle-class families, it’s good for America; if it’s not, it’s not.
(2nd) our trade policies should also lift up workers around the world.
This struggle over fair trade is about more that just what’s at stake for America’s workers – it’s also about what’s at stake for workers in every country. Making sure that workers around the globe are treated fairly and share in trade gains is the right thing to do morally, it’s the right thing to do economically, and it will make us much safer and more secure.
That’s what strong labor standards are all about. Making sure that workers have the right to organize and earn a fair wage will not only prevent a “race to the bottom” on labor rights – it will also help build a global middle class that shares in the gains from trade and creates markets for U.S. exports.
(3rd) we need to address more than just our trade policies in order to restore fairness and opportunity to workers.
I talked earlier about some of the adverse effects of globalization – stagnant wages and rising inequality.
To help regular Americans get ahead and stay ahead, we need to make sure our children get a quality education and have the chance to go to college.
We need to raise the minimum wage, strengthen unions, and help families build assets.
And the most important thing we can do to provide security to our workers is to guarantee universal health care in this country. I am proud to be the first major candidate to come out with a plan for universal health care.
We also need to invest resources to ensure that our country keeps its competitive edge in the world.
We need to create the jobs of the future right here in America and make sure our workers have the skills they need to fill them. We need to make the Research and Experimentation Tax Credit permanent, invest in life sciences and biomedical research, strengthen math and science education, and create a new energy economy.
We need a new era in trade policy. We need “smart trade” policies that American workers can say yes to – trade policies that do more than pay lip service to their needs and that actually make sure prosperity is shared. Trade policies that are as innovative as the American people. And when I’m president, those are the trade policies we will have.
And let me be clear: we will make sure that these policies are in place before we pass a single new trade deal.
In my first year in office, I will spend time working with Congress to get our trade policies straight — policies which ensure that Americans workers finally begin to see benefits from the global economy. And then, when we negotiate new trade deals it won’t just be big multinational corporations whose interests are served – it will also be the interests of American workers, America’s communities, and our global environment.
Sounds like Edwards “gets this globalization problem”, doesn’t it! Globalization involves so much more than empowering the Supply-side of the Equation (the big multinational corporations) — it also involves empowering the Demand-side too(ie. the workers and the consumers who actually make Economies tick)!
Edwards see the root of the problem, as Ross Perot correctly identified — it’s the “wage differential” between countries.
This is the root of the “competitive advantage” for all the ‘Wal-Marts’ of the World. But it is also the source of “Lose-Lose economic insecurity” for Workers on both sides of so many global Trade Deals! (even for Workers in other countries)
Here’s a few more examples showing that Edwards ‘gets it’:
Questioner: If you go into a store nowadays, everything is Made in China, and Japan. What can be done so that some of the stuff we buy is made in the good old U.S.A?
“If you’re talking about ‘low wage jobs’, which is the kind of goods you’re talking about — that’s the reason they’re ‘being made somewhere else’ — because people are working for a fraction of what people work for in the United States of America.
What we have to do is:
Have Trade Agreements that are Fair.
Have Country of Origin labeling.
And then in the United States looking forward,
we got have the most educated, most innovative work force on the planet.
It’s absolutely crucial!
I saw what happened when the mill closed …
and all of a sudden their job’s gone —
it does something to a man or woman’s dignity when that happens
It’s not just money — it’s about self respect!
We need a President of the United States who understands that — who feels it!
These were really good men and women who worked in that mill with my Dad, who I think are worth every bit as much as any President of the United States, and they deserve to be treated with dignity and respect. And they deserve a chance when they are hit by Trade and Jobs going somewhere else. And we need a President who will stand up for them. That’s what we need.”
If the American people aren’t smart enough, or brave enough, or quick enough to Adapt, and break out of this well worn track — called Free Trade and Outsourcing — well the raw forces of Global Competition, will ultimately destroy all memories of the American Dream, that our Constitution inspires!
Beware of Economic Darwinism — brought to you by Right Wing Priorities!
This subtle transfer of power primarily to an elite ruling class is well underway! The Losers in this Experiment are the hard working American Workers (and the desperate workers in other countries too).
To Supply-siders, such “wage-workers” are simply a cost of production, that must be minimized above all else.
To these “Free Traders”, Human Dignity has very little to do with it — it’s just Business!
How it’s transforming whole industries and changing the way we work
Globalization has been brutal to midwestern manufacturers …
U.S. workers suddenly face a grave new threat, with even highly educated tech and service professionals having to compete against legions of hungry college grads in India, China, and the Philippineswilling to work twice as hard for one-fifth the pay.
Workers’ fears have some grounding in fact. The prime motive of most corporate bean counters jumping on the offshoring bandwagon has been to take advantage of such “labor arbitrage” — the huge wage gap between industrialized and developing nations. And without doubt, big layoffs often accompany big outsourcing deals.
The changes can be harsh and deep. But a more enlightened, strategic view of global sourcing is starting to emerge as managers get a better fix on its potential. The new buzzword is “transformational outsourcing.” Many executives are discovering offshoring is really about corporate growth …
“This isn’t about labor cost,” says Daniel Marovitz, technology managing director for Deutsche Bank’s global businesses. “The issue is that if you don’t do it, you won’t survive.” …
The “transforming of whole industries” is underway … and the Captains of Industry have begun to re-frame their Supply-side Theories in terms of essential “Global Survival”!
I’m reminded of the great wit of John Edwards, to capture this insane chase, and re-frame the argument right back on these unchecked Corporate Interests:
It doesn’t say life, liberty and the pursuit of endless corporate profit in the Declaration of Independence.