About Zach Drennen

Middlebury College '13

The Out of Control Wealth Redistribution of the Obama Era

More and more it seems as though a certain subset of Americans – most of them found on Fox News – like to complain about the redistribution of wealth in the United States. We live in an era, exclaim the talking heads, of redistribution and class warfare.

They are correct, and they are winning. Wealth redistribution is occurring on a scale not seen in the modern era – from people around the country who truly believe in the rewarding value of hard work to a tiny portion of the population who, although they work extremely hard, are rewarded not only for their work, but for your work, and your neighbor’s work; for the work of their children’s teachers and the person who sells their ties.

I was really struck yesterday by Joseph Williams’ piece in the Atlantic, chronicling his experience with working a retail job after losing his creative-class job at POLITICO due to what he admitted were some personal mistakes.

As a sales clerk at a sporting goods store earning nearly fifty percent more than the federal minimum wage, Williams was nevertheless forced to work under constant suspicion of theft, in a job where he was subject to pat downs upon leaving, scolded or arriving on time and not early, and expected to stay late without extra pay in order to save his company on cleaning costs:

Mop the floors in the bathroom, replace the toilet paper and scrub the toilets if necessary. Vacuum. Empty the garbage. Wipe down the glass front doors, every night, even if they don’t really need it. It was all part of the job, done after your shift has ended but without overtime pay.

And expected never, during any point of this, to sit down:

It didn’t matter if it was at the beginning of my shift, if the store was empty, or if my knees, back, and feet ached from hours of standing. Park your behind while on the clock, went the unspoken rule, and you might find it on a park bench scanning the want-ads for a new job.

Worse, Williams was kept at 30 hours or below because to employ him for more hours, the company would have had to spend extra money to provide him with health insurance and the other benefits that we like to think of as part of the bargain for which so many have fought and died throughout history: a world where hard work and dedication can lead to a life with a certain level of comfort.

The easiest defensive reaction to a piece like that, of course, is judgement against the writer: he made professional mistakes, pled guilty to a crime (one that I don’t mean to trivialize), and didn’t have skills that were applicable to the modern jobs market. And those are all valid criticisms.

But the story that runs through his narrative is the truth, not just for Williams but for millions of people throughout this country. It surfaces in a hapless laid off office manager in House of Cards, in horror tales from Black Friday, in empty-nest parents who return to the marketplace finding themselves left hopelessly behind. It popped up in an episode of the radio show “This American Life” last spring, where a reporter went to a county in Alabama with the highest rate of its citizens on disability benefits of any county in the nation.

Here, a reporter interviews a woman who previously worked in a fish plant and as a nurse’s aide before qualifying for disability payments:

Chana Joffe: In your dream world, if you could have a different job that you could do with your back, what would that be?

After 45 minutes, the woman was finally able to answer:

Ethel Thomas: You asked me a while back what would be the perfect job. I thought about it, and I said that the perfect job, it would be like I would sit at a desk like the Social Security people, and just weed out all the ones that come in and file for disability.

The reason for this career aspiration, it turns out, is not that Ethel Thomas has some deep-seeded need to protect the benefits she receives from others she deems unworthy, but that it is the only job of which she can conceive that would allow her to sit.

More and more, the economy is divided into two categories of jobs: the white-collar jobs where workers complain about sitting too much, and the service-sector jobs – at restaurants and in retail – where the workers are expected to stand and smile politely for the benefit of their customers.

This is not to say that there is not a need in the economy for these jobs, or that opportunities do not exist for some people to pull themselves out of impoverished communities like Hunt, Alabama in order to make it into the creative class, later to develop back pain from sitting too much. But we need to concede that not every member of the American economy has the means to pull themselves into such a job – there are too few slots, and if nobody worked in the service sector it would leave a hollowed out economy.

An economy composed entirely of people employed in investment banking would function just as poorly as an economy composed entirely of retail salesclerks (although I imagine the former would more quickly turn to cannibalism in order to survive). But often, in our political conversations we throw out decades of progress in the labor movement and treat the latter as though their lack of leverage qualifies them for less than human treatment.

Let us not forget who demands the conditions faced by many of these former middle-managers who found that their services had been turned obsolete by the internet, grandparents whose savings vanished in the financial crisis, or single parents trying to create a better life for their children. They are treated like thieves, called upon to replace laid-off custodial staff as an add on to the job for which they are paid, and kept below the threshold where they might have access to a safety net in pursuit of greater and greater profit. If the company that employs them fails to take these steps out of compassion or out of values held over from an era long past, they are set upon by private equity and cut to the bone, all in service of the higher equity prices and bigger dividends for the sacred shareholders. American workers produce the most they ever have for the lowest costs. But they rarely receive the reward. 

fig2_prodhhincome

The decision to squeeze every last drop of capital out of every single unit of labor is invariably made in the service of the shareholders of the company. But how many of the shares belong to people who work for that company, sweat for that company, smile for that company and how many to the people who drag around excel tables for the company that bought them?

I bet you ten thousand bucks that some of these guys are major Democratic donors, too

I bet you ten thousand bucks that some of these guys are major Democratic donors, too

This was not an accident. It is the result of a relentless push towards deregulation, towards increasingly opaque financial products, and a belief that all this serves to grease the economy. And it has, to the point where countless people slip and fall. You can argue that those people made the wrong choice in a capitalist society, and in some cases you may be correct. But in so doing – in arguing for a meaner, leaner economy, you also must argue for an economy where the wealth is concentrated a tiny minority from other people who want nothing more than to work, raise a family, and retire in comfort. You must argue for an economy that resist any effort against stagnation, where people who fulfill their end of the social contract nevertheless find themselves increasingly dependent on the scraps trickling down from above and where every dime diverted to dividends is torn from the skin on the backs of the workers who might once have earned it.

That is the true wealth redistribution of the Obama era, and to have any hope of fixing the economy we must first fix that. To do so is not socialism, but rather humanism: a belief in the dignity of life and of work. The modern economy should not exist as a binary between soul-crushing hours in dream-crushing professions and quality family time spent laboring in poverty – between the Scrooge of the world of Dickens and his struggling but cheerful factotum, Bob Cratchet. Real economic growth comes not in a vertical trickle like urine from the heavens, but in a horizontal flood buoyed by the contributions and confidence of all that if they paddle hard enough, they just might float. 

The State Department is Wrong, and so was I: Building the Keystone XL Pipeline Would Increase Greenhouse Gas Emissions

Three years ago, I first became interested in energy politics and policy when I wrote a column arguing that the opposition to the Keystone Pipeline was of questionable symbolic and practical value.

I was wrong.

As often happens when a college sophomore takes some 200-level economic classes, my argument rested on an incomplete understanding of global oil markets. “As oil supplies diminish, prices will eventually soar even higher,” my first Keystone column argued. So does the State Department’s final environmental impact statement, which argues that the pipeline will not produce increased carbon emissions because the oil sands will be developed either way, driven by high demand and rising oil prices. Their report relies on an assumed oil price of $130 per barrel in 2030, a number wildly higher than that called for by many financial experts. At $130/bbl, oil from tar sands would absolutely find its way to market – by rail, by truck, or concealed in the bodies of oil mules.

But the realities of the oil market have changed since the issue first started making headlines in the summer 2011. While we may live in a world of peak oil, that peak has shifted from supply to demand. There are more alternatives than ever to tar sands oil from Albert. Solar and wind are ever rising, cars go further on fewer gallons of oil – or run on batteries, and even within the market for fossil fuels, the revolution in shale oil has provided a marginally cleaner, marginally cheaper supply just south of the Canadian border. Increasing regulation, higher efficiency, and more alternatives have all led experts to predict that oil prices will not rise, but rather fall between now and 2030. Last summer, Deutsche Bank (not exactly a hippie publication) wrote that

The oil market is discounting that we are in a peak oil environment, and that demand efficiency and a stronger US dollar will offset geopolitical risk and inflation, leading to steady downward pressure on nominal prices … we have seen the all-time peak oil price…

Some have even predicted that oil will fall into the $70 range, a price at which even the State Department concedes that

Oil sands production is expected to be most sensitive to
increased transport costs in a range of prices around
$65 to $75 per barrel. Assuming prices fell in this
range, higher transportation costs could have a
substantial impact on oil sands production levels—
possibly in excess of the capacity of the proposed
Project.

Outside investors are more concerned about the effects of falling prices on the output and profitability of the tar sands projects. HSBC and Wood Mackenzie research has shown that many new projects of this type are profitable at prices above $85-105 per barrel, assuming they have an easy pathway to the market. Last summer, a group of investors including Boston Common Asset Management (BCAM) and Norwegian investment giant Storebrand wrote a letter to Statoil urging them to withdraw from several tar sands projects because

Even on a standalone basis, the economics of many oils sands projects are questionable given project execution risks,
transportation bottlenecks, and uncertainty about future oil prices. We also see additional threats in the negative externalities of oil sands projects: future carbon regulation, water scarcity, local environmental damage, and impairment to traditional livelihoods.

Proponents of the pipeline (or those who say it doesn’t matter either way) often argue that the pipeline merely will replace the inevitable rail and road transport of the product. But these alternatives are more expensive, lowering the effective price that oil suppliers can get by as much as $8 per barrel. By any understanding of the laws of supply and demand, when a commodity (or a good, or a service) will command a lower market value, its supply shrinks. This basic theory also assumes that the supply of tanker cars and trucks are entirely elastic – that the moment the oil is discovered, fleets spring into existence with its transport as their sole raison d’être. This, too, is overly simplistic: the State department’s own report finds that it would take until 2030 for alternative methods of transport to replace the capacity of the pipeline if President Obama does not approve its construction.

This is not to understate the many other issues with the pipeline. Chief among these is the right of landowners to determine what happens on their own property. The pipeline is wildly unpopular among Nebraska landowners, who worry that a spill could contaminate the Ogalla aquifer, the source of their livelihood and much of America’s agricultural dominance. When diluted bitumen spills into a water supply, the chemicals used to liquefy it separate out and it reverts to its original form, making it almost impossible to clean up. In terms of its impact on climate change, the State Department does not consider the refinement of petroleum coke, a byproduct of tar sands refinement that is both cheaper and dirtier than the cheapest and dirtiest coal, and is now being shipped to China in record amounts where it goes from the furnace of power plants straight into the atmosphere.

This past Saturday, hundreds of students from around the country including my former coeditor (and future boss), Middlebury’s own Hannah Bristol, zip-tied themselves to the fence around the White House in yet another protest demanding that the President refuse to allow the construction of the Keystone XL pipeline.

Those protests have held off a massive infrastructure for several years. It is time to kill it entirely. The evidence clearly suggests that regulatory uncertainty over the fate of the pipeline created by the forcefulness of the opposition to its construction has slowed the development of the Alberta tar sands. A refusal to allow the pipeline will mean that more of the asphalt-like substance that has to be heavily diluted with caustic chemicals to even resemble oil would stay locked away in the ground forever; that the forest and marsh the currently covers that fossil remnant of previous life might be preserved to serve as a habitat for animals and a sink for atmospheric carbon dioxide. The State Department’s report ignores this reality by resting its analysis on oil price benchmarks higher than anyone else paying attention to the oil market. But they concede that at lower prices – e.g. those predicted by other experts – stopping the Keystone XL pipeline will slow the development of Albertan Tar Sands and slow the rate of climate change. The time has come to put this issue to rest and move on to the next battle in the long war against the threat of man made global warming. 

Column 50

I spent most of my life wanting to be more alone: wanting to leave neighborhood pickup whiffle ball games early so that I could instead go read a book, wanting my own bedroom at home instead of sharing with my brother, wanting to leave home for college and, once here, waiting anxiously to have a single. No roommate for me; I just wanted to be alone.

nolanedited-600x375

That fantasy of seclusion is deeply carved into the American psyche, built into the narratives of every successful politician and every movie superhero. Even the Bible sends its protagonist to the wilderness for rebirth. We aspire to retreat into the backwoods when all else fails, and then to wall ourselves off in gated houses ringed by hedges when we succeed. While we work towards that lofty vision, we make do with white wires that plug music into our heads and lounges that have been converted into dorms because we don’t value the space that we provide as much as we value the contributions of a few more paying customers.

Even in our romantic efforts, such as they are at this place, we tend towards the solitary. There is no lonelier moment than the long walk home the day after a meaningless encounter, no deeper connection in a single drunken rendezvous with a stranger, where the conversation is scattered, not remembered, or entirely absent. We say that we would like to fix this, but we never take action to change.

We have become far too skilled at being alone together.

This is my fiftieth and final column for the Campus. While turning in my thesis last week might have seemed a more momentous occasion, these pieces stacked on top of each other would make a taller pile. In a little over a week I will ski down the Snow Bowl, pack my possessions into my car, and hope that it doesn’t break down on my way out of the state. I will finally have the option to be completely alone. I could call it soul-searching, or recharging, tell everyone that I need some space. But at long last, perhaps later than I might have hoped, I know that is not what I want.

We blaze trails not so that we might escape the world, but so that others might follow. Life is better with companionship. We are not born alone nor do we die that way; we are born into the embrace of our families and when we die they gather around to recount the happy moments of our lives, and the moments in between where we steal solitude from company are the moments most likely to later bear the tinge of regret.

As I move on into the next chapter, I do not regret the excesses of my time in college: the times that the night ended and the sun rose over the Green Mountains while my friends and I sat and talked about everything and nothing, the hours spent in Proctor over many tiny courses, or the morning classes that I blew off to head to make fresh tracks at the Snow Bowl. What I do regret are the times that I held back. I regret waiting until junior year to try out the sailing and debate teams. I regret waiting to join my social house and the Campus editorial staff until my senior spring, content for too long to contribute only this column. I regret valuing solitude and down time over team spirit and hard work.

The best friends that I have made here have been when I have taken a chance and given other people the chance to reject me flat out or welcome me into their circle. That may seem like an incredibly obvious point for a final column, but it is one that we only think about at orientation and I know too many people here with that same problem. Instead of complaining about hookup culture, ask somebody out the dinner, drinks or skiing. A shocking number of my male and female friends complain about the lack of dating at Middlebury. Too many seem to fear that the sheer act of asking reeks of desperation, but the regret of not acting far outlasts whatever embarrassment it might cause (especially if you don’t write about it in the Campus). Middlebury only changes when we do.

Some last shout-outs from my bully pulpit: Hannah — I was convinced that we would be at each other’s throats, but I have really looked forward to working with you every week to put this section together.  Kyle and Alex — you have done an amazing job this semester. Middlebury — fossil fuel divestment makes financial sense. Rachel and the SGA — please reconsider the community education requirement. Dining services — more taco days! To everyone who read “Apply Liberally” over the past four years — it’s been a pleasure. I leave you with the words of President Josiah Bartlett (D-Sorkinland):

What’s next? 

Illustration by Nolan Ellsworth

One Strike and You’re Bankrupt

The day that I was supposed to head home for winter break and the holidays, I put my foot down on the brake pedal of my car and it didn’t stop. It was a scary moment that could have resulted in serious damage, so I decided to take my car to the mechanic before braving the 300 mile journey to Western New York. Two days later and $1200 poorer, I finally made it home.

I didn’t buy that car. I never had to scrape together enough savings or make a monthly car payment. When he bought it new in 2002, my grandfather had — rightly — called it the last car that he would ever own. It was my first.

I don’t pay the insurance on that car, either. My parents cover the cost of that through their policy (and if they haven’t given that recent thought, this will be a very expensive column for me). I pay for the gas and the maintenance costs, and for small repairs. But when calamity strikes, my parents are still my first call. This does necessarily not make me lazy; when my parents wanted to buy their first house, they too called their parents, who probably never could have called on their own for such a favor. If the goal of each generation is to leave their children better off, then success is not something that happens overnight. It builds over years, through family, across generations. We benefit from the hard work and good fortune of those who came before.

Most people in the United States do not have this option. Their ancestors weren’t on the boat as early, or were denied the same opportunities, or were unlucky. If they run into car trouble around the holidays, they must take it out of the money that they might otherwise spend on Christmas presents for their kids, on family trips, or on visits to the dentist. Or they scrap their car and hope that a bus comes along. Millions of Americans live just one piece of misfortune away from utter financial ruin. Some of them may be lazy or unimaginative. Some of them might not have given their bootstraps a tug. But the vast majority are pulling with all of their might, and their fingers are getting sore, but they stay locked in poverty, struggling to make things work out somehow. Until one day their brake pedal sinks to the floor and it all falls apart.

In the alleged economic recovery of the last few years, the type of middle class jobs that come with the type of salary that allows for saving have largely been replaced by low-wage or minimum wage jobs. With a federal minimum wage stuck at $7.25 an hour, a worker who might need a car to get to their job every day would need to work for more than 160 hours — four full-time weeks — just to pay for those repairs. Ford could help by making more reliable cars, but the federal government can help by raising the minimum wage, which when adjusted for inflation is a third lower than its original level. Raising the minimum wage will not slow job growth, especially since many of the worker who would benefit work in service sector jobs that cannot move overseas. Instead, a raise in the wage would help to shift money from record corporate profits and executive compensation to the people who will immediately return that money to the economy. This is not because they lack in thrift, but because their daily needs exceed their daily income.

I have worked in a number of jobs throughout my time in college — landscaper, janitor, web designer, research assistant. For me this has always been a point of pride. I like to think of myself as financially independent and fiscally responsible. But this ignores some inconvenient realities. It ignores the nature of success and the nature of generational improvement. When you are one unexpected serious illness away from bankruptcy, or homelessness, or not being able to afford breakfast for your children — situations that plague millions of Americans — every day is a battle and every spin of the roulette wheel could be deadly. When you struggle to survive it is much more difficult to further your education or build a career. When you struggle to stay out of the ditch it is much more difficult to climb the slippery hill and look beyond it to the stars than if you started two thirds of the way up the slope, where the pitch starts to level. The American Dream is not a rocket ship, but rather a hard slog and the people just starting the trek do not deserve our scorn. They deserve our help.

Three Reasons Appointing Max Baucus Ambassador to China was Political Genius

Whoever in the West Wing dreamed up the idea of appointing Senator Max Baucus (D-MT) as Ambassador to China is probably patting themselves on the back today. The Chinese post has a history of providing a solution to various political headaches; no sane politician or elder statesman could pass on the opportunity to serve as America’s representative to the world’s most populous nation. In 2009, the Obama administration viewed Jon Hunstman as a dangerous rival for the presidency in 2012, so they appointed him to the position. Upon his return, he took flak from the conservative base for daring to serve a President they viewed as radical. The choice of Baucus might prove to be even more of a masterstroke: it allows the Democratic party to shore up not one, but two vulnerable Senate seats for 2014 and reduces the chance that the White House will be pigeonholed into dealing with tax reform that would provoke fits of rage from their base.

1. Making Montana less vulnerable in 2014

Appointing Baucus to a diplomatic post means that his vacant seat will be filled by somebody appointed by Montana Governor Steve Bullock, a Democrat. It appears likely that Bullock will choose Lieutenant Governor John Walsh, who will have a year to build his profile and fundraising network from Washington and have the opportunity to run as an incumbent Senator, which could dramatically improve his chances in a race that the Cook Political Report currently categorizes as leaning Republican.

2. Ending Baucus’ tax-reform plans

As a moderate senator from a state that swung to Romney by 14 points in the 2012 Presidential election with the ability to control the agenda in the Senate on tax reform, Baucus’ endorsement of lowered corporate tax rates and proposal to replace the current patchwork system of renewable energy tax credits with just two measures made some on the left nervous. Packing him off to China means that while his proposals are circulating through the media, the Senate Committee on Finance will now be chaired by Ron Wyden (D-OR), who is more in line with the party on taxation and less likely to accept compromises from the Republicans – or author them himself – that would make the White House uncomfortable.

3. Bolstering Mary Landrieu

Wyden’s impending departure to greener pastures on the Committee on Finance means that the chairmanship of the Energy and Natural Resources Committee will fall to Mary Landrieu (D-LA) who, despite her embrace of the Affordable Care Act and other Democratic priorities, is significantly more pro-drilling and oil development than Wyden. Landrieu wholeheartedly supports the Keystone XL pipeline, voted against cloture on the Lieberman-Warner Climate Security Act in 2008, and has a lifetime score from the League of Conservation Voters of 49 percent. Wyden, by contast, has a score of 89 percent. Landrieu’s assent to the chair of the committee will help increase her chances in a tough reelection battle in a deep-red state in the deep-red south by allowing her to point to the fact that she will have significantly more control over oil development in Louisiana than would a comparable freshman Republican, theoretically making her a much more valuable ally to the oil industry in the state.