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. 


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

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. 

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.

9/11 Memorial Vandal Amanda Lickers Tied to Pipeline Opposition Organization Rising Tide Vermont

Amanda Lickers, leader of the protest that led to the uprooting of nearly 3,000 American flags planted to memorialize the victims of the September 11 attacks on the Middlebury Campus has worked with Vermont environmental organizations in the past familiar with her radical beliefs and tactics.

Amanda Lickers

Amanda Lickers

In an interview with the Addison Independent on Friday, Lickers claimed that she had been invited to the school by Associate Dean of Students for Student Activities & Orientation J.J. Boggs to lead a discussion on settler responsibility. But according to a former college official with knowledge of the protocol for bringing speakers to campus, this was not the case. That official says that “the Student Activities office assist student organizations in bringing speakers to campus, the staff do not initiate or invite speakers. The general procedure is that a student organization submits a request to the Middlebury College Activities Board (MCAB) Speakers Committee for review, and if approved it moves to Student Activities for a final review and contracting.”

Although Lickers is from Canada, she has worked in the past with environmental groups in Vermont. On August 2, Rising Tide Vermont, a grassroots organizations that claims to confront “the root causes of climate change”  and which has led the charge against the Vermont Gas Addison Natural Gas Project to build a pipeline between Burlington and Rutland posted a call on their Facebook page asking for help raising $1500 to bring Lickers to a rally held on August 17th and 18th. Continue reading