A Kinder, Gentler Capitalism

bernie_madoff_newyorkFor generations, Toledo and Detroit have been under the economic umbrella of a single industry. We built Cars; this was Jeep country; up the road was The Motor City. For at least the past 20 years, the free market has provided ample signage that the end of the road coming. Now, the federal government is rescuing GM and Chrysler from themselves. Is this a bad thing? Does it mean the end of capitalism and the introduction of American Socialism?

Yes and no. On the one hand, no business should be “too big to fail.” Their very existence as such means we are hostages to their decisions (and we, in effect, insulate them from their own bad decisions). On the other hand, their failure is an opportunity for us to decide what kind of capitalism we want. A number of European countries have very competent and effective Social Democratic governments. For the past decade or more, America has been on the opposite side of the coin, toying with an economic system akin to Social Darwinism. 
Social Darwinism is the ethically bankrupt idea that Charles Darwin’s theory of natural selection should be applied to the way people organize their societies. In other words, survival of the fittest should be one of society’s the highest values. Those who have, get to keep it no matter how they got it. Those who have not, get to starve. 
In this country, Social Darwinism saw its full flowering during the Robber Baron era of J.P. Morgan, Andrew Carnegie and John D. Rockefeller. These men and their contemporaries used monopoly power, graft, bribery and private armies to prove they were “the fittest.” Americans like Social Darwinism in theory because it lets us imagine being at the top of the economic food chain, the next Rockefeller. We’re not so enamored with it in practice as we realize we’re more likely to be the next meal of this brand of capitalism. That’s the situation in which millions of 401-K investors, foreclosed homeowners, and unemployed workers now find themselves.
Now that we as taxpayers are essentially part owners of the economy, we have a short window of opportunity to decide what we want to do with it. Do we want a “Free Range” economy accountable to none but the stockholders and the board of directors? Or do we want something with more constrained by regulation and sized to prevent the excesses of businesses so big their failures can wreak havoc across the country? 
Elizabeth Warren, Professor of Law at Harvard Law School, and chair of the Congressional Oversight Panel created to oversee the U.S. banking bailout, suggests that America has always had boom/bust cycles. After the Great Depression, in order to smooth out the lows and still allow for adequate highs, we introduced financial regulations like the FDIC and Glass/Stiegel. Beginning in the 1980s, the deregulation movement began loosening the chains on the Robber Baron instincts of U.S. Corporations.
In the book and film, The Corporation: The Pathological Pursuit of Profit and Power, author Joel Bakan wonders: Since a corporation is defined as a legal person under U.S. law, what kind of person is it? To assess the “personality” of the corporate “person,” a checklist was employed, using diagnostic criteria of the World Health Organization and the ICD-9-CM, the standard diagnostic tool of psychiatrists and psychologists. The diagnosis was that the corporation is a highly anti-social personality: it is self-interested, inherently amoral, callous and deceitful; it breaches social and legal standards to get its way; it does not suffer from guilt. 
Sound familiar

Yes and no. On the one hand, no business should be “too big to fail.” Their very existence as such means we are hostages to their decisions (and we, in effect, insulate them from their own bad decisions). On the other hand, their failure is an opportunity for us to decide what kind of capitalism we want. A number of European countries have very competent and effective Social Democratic governments. For the past decade or more, America has been on the opposite side of the coin, toying with an economic system akin to Social Darwinism. 

Social Darwinism is the ethically bankrupt idea that Charles Darwin’s theory of natural selection should be applied to the way people organize their societies. In other words, survival of the fittest should be one of society’s the highest values. Those who have, get to keep it no matter how they got it. Those who have not, get to starve. 

In this country, Social Darwinism saw its full flowering during the Robber Baron era of J.P. Morgan, Andrew Carnegie and John D. Rockefeller. These men and their contemporaries twisted Darwin’s theory to justify price collusion, graft and child labor as a means to amass fantastic wealth. Americans like Social Darwinism in theory because it lets us imagine being at the top of the economic food chain, the next Rockefeller. We’re not so enamored with it in practice as we’re much more likely to be the next meal of this brand of capitalism. That’s the situation in which millions of 401-K investors, foreclosed homeowners, and unemployed workers now find themselves.

Now that we as taxpayers are essentially part owners of the economy, we have a short window of opportunity to decide what we want to do with it. Do we want a “Free Range” economy accountable to none but the stockholders and the board of directors? Or do we want something with more constrained by regulation and sized to prevent the excesses of businesses so big their failures can wreak havoc across the country? 

Elizabeth Warren, Professor of Law at Harvard Law School, and chair of the Troubled Asset Relief Program created to oversee the U.S. banking bailout, suggests that America has always had boom/bust cycles. After the Great Depression, in order to smooth out the lows and still allow for adequate highs, we introduced financial regulations like the FDIC and Glass/Stiegel. Beginning in the 1980s, the deregulation movement began loosening the chains on the Robber Baron instincts of U.S. Corporations.

In the book and film, The Corporation: The Pathological Pursuit of Profit and Power, author Joel Bakan wonders: Since a corporation is defined as a legal person under U.S. law, what kind of person is it? To assess the “personality” of the corporate “person,” a checklist was employed, using diagnostic criteria of the World Health Organization and the ICD-9-CM, the standard diagnostic tool of psychiatrists and psychologists. The diagnosis was that the corporation is a highly anti-social personality: it is self-interested, inherently amoral, callous and deceitful; it breaches social and legal standards to get its way; it does not suffer from guilt. 

Sound familiar?

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Hope

 

pandoras_boxPrometheus was a Titan who really liked humans. When he saw them shivering at night and eating raw meat, he knew they needed fire. But the gods did not allow man to have fire. They knew that man would misuse it. Prometheus was sure that the good man did with fire would outweigh the bad, so he stole fire from the gods and gave it to man. Zeus decided to punish Prometheus with trickery. He called Aphrodite to pose while Hephaestus made a clay figure of a woman. Then he brought the statue to life and named her Pandora. Then Zeus gave her a box and told her she was never to open it. Zeus then offered Pandora as a wife to Prometheus.

The Titan refused, sensing a trick. Zeus became angry and punished Prometheus. The Titan was chained to a rock. There, a vulture came daily to feed on his flesh. Prometheus’s brother, Epimetheus, accepted Pandora as his wife, and the couple settled down for a happy life. But Pandora always wondered what was in the box Zeus gave her. Finally she couldn’t hold her curiosity down anymore. She opened the box, and from it flew hate, anger, sickness, poverty, and every bad thing in the world. She slammed the lid down and managed to trap the final evil still in the box: hopelessness. So today, even when the going gets tough, we mere mortals still has hope.

At a recent Toledo Regional Chamber of Commerce marketing forum, about a dozen small business owners sat and discussed how to find and retain customers in this challenging economy. Sometimes, it seemed like the forces swirling around were like those unleashed from Pandora’s box.

During an informal chat afterward with Tim Villa of Data Research, Inc., he said, “It used to be that work came to us. All we had to do was sit there and write code. Now we have to drum up business. But the good thing is it gives us an opportunity to rethink and retool.”

It occurred to me that this is an American tradition—rethinking, retooling and reinventing during tough times. The Great Depression was a time when Toledo itself was reinvented. In 1932, Owens-Illinois produced plastic containers for the first time. Coming out of bankruptcy in 1936, Willys-Overland Motors, Inc. positioned itself to manufacture military Jeeps, the grandfathers of today’s Jeep Cherokees, Wranglers and Liberties. Owens Corning was founded in 1938 and is still a market leader in glass fiber technology.

Hard times force change. Almost nothing else seems to do the trick. 

Today, Lake Erie West is again reinventing itself. Clean and Alternative Energy Incubator at the University of Toledo has successfully spun off First Solar of Perrysburg, the nation’s largest producer of solar cells, Xunlight, Solar Fields (the Germans were so impressed, they bought in and renamed it Calyxo USA), Innovative Thin Films, and Advanced Distribution Generation. The University is now considering an alternative energy engineering school. Pilkington North America Inc., the Toledo-based unit of Japan’s Nippon Sheet Glass Co., has become a major supplier to First Solar, offsetting some of the business it lost in the traditional glass industry.

The world is watching Toledo. Wind energy companies and biofuels firms are eyeing the area as a base of operations because we are a logistical hot spot, a convergence of sea, rail, highway and air transport facilities with access to national and world markets. The reinvention of Toledo has already created thousands of local jobs. Of course, they don’t come close to replacing the tens of thousands of jobs already lost. Therein lies benefit of Pandora’s quick reflexes. The workforce and the resources mean little if we don’t have hope.

The Obama Vaccine

 

barack_obamaI like old movies. To me, they’re time capsules to different eras in history that can teach us a lot about where we’ve been. The downside of history is that it can often show us things we would rather not acknowledge. Ever see Broadway Melody of 1938 with Robert Taylor and Eleanor Powell? I watched it recently. There’s a scene where the newly discovered child actor, Judy Garland, sings a song that includes the word, “darkies.” 

As an African American, I’ve experienced these little shots (and a few big ones) all my life. My typical reaction includes a sharp and unpleasant adrenaline spike and a brief period of self-possession as I fight not to take ownership of the insult. As the Judy Garland number passed from the screen, I noticed that my usual response to a racist indignity was both briefer and less intense. The mental processing—my way of pushing back the darkness by adding light—included the name, “Obama.”

I didn’t consciously invoke the president’s name and it came somewhat as a surprise. But the real surprise was how it so effectively dissolved the fight-or-flight response that comes with exposure to bigotry. 

Here, in Lake Erie West, there are a lot of young people of color who also experience little shots in their lives (and unfortunately some big ones, too). If they’re anything like me, their psychic defenses also now include strong new reinforcements. President Barack Obama encourages these young people to stand taller and reach higher for their full potential (yes, we knew that) while deflecting the shots that can knock you down and make you not want to get up (this is really the important part). That’s a good thing for our region’s and our nation’s future economic prospects and for our quality of life. 

Racism is a communicable disease that carries mental, emotional and physical consequences for its casualties. Barack Obama can’t make the disease go away, but he has given us a powerful new vaccine to protect the potential victims.

The Business Case for Universal Healthcare

 

medical-billLike many of you, I’ve heard a lot of justifications for and arguments against Universal Healthcare. Proponents usually proffer the “we are our brother’s keeper” argument and the possibility of system-wide cost savings, while opponents generally site a lack of trust in government, in human nature, or both. 

Rarely have I heard an economic development argument on behalf of Universal Healthcare. Well, here goes. According to the American Public Health Association, there are almost 47 million uninsured Americans, including yours truly. If I develop a serious illness of suffer a serious injury, I’m ruined. Health care debt was sited as the primary reason for about half the personal bankruptcies in the United States, according to a 2005 Harvard Study (the ratio is almost certainly higher now). People who have no health insurance often have no primary care physician and put off needed medical attention until their condition worsens. And the total cost of lost work and lost productivity due to illness was estimated at $63 billion per year in 2003 dollars, according to the U.S. Occupational Safety and Health Administration.

The people scrambling to cope with our draconian health care system are the same people we need in order to restore our broken economy and move our region past the post-industrial era and into…well, we don’t quite know yet, and that’s the point. Who is going to take the risk to create innovative products and services for the 21st century if they know they’ll be saddled with an insurance system designed during World War II? Eye-popping health care insurance bills, with annual increases at or near double digits, are giant wet blankets on the entrepreneurial spirit.

Mega-employers across America are busy moving jobs and factories offshore. A friend of mine is a workplace safety consultant. She has had more than one job dismantling glass furnaces to be reassembled in China. Big business has moved on to new hunting grounds; they’re not going to fix this for us. We are no longer in the era of relatively full employment in large commercial and industrial workplaces where people had good employer-based health insurance and retired after 30 years with a good pension. If we want growth, we have to take health care off the table. We need a system designed for where we’re going, not one designed for where we’ve been.

Infrastructure

 

mar13-train1In the early 20th century, Toledo, Ohio was one of the nations key logistics hubs. Over the past 100 years, our investment in the infrastructure that moves goods and services through the region has not kept up with population shifts, market shifts or the competition. Now, in the early 21st century, we have an opportunity to address our deficiencies and re-enlist our natural advantages. Infrastructure investment is at the top of the list in President Obama’s economic stimulus plan. Are we prepared? What are the priorities? Are we making our voices heard?

Enter the Toledo Metropolitan Council of Governments, a quietly effective multi-jurisdictional planning agency breaking down the barriers to regional cooperation. They don’t get much attention, but that may be about to change. That’s because all federal money for transportation infrastructure that comes to this region has to be planned for by TMACOG. For example, funding for the Veterans’ Glass City Skyway came through development of TMACOG’s Long-Range Transportation Plan. 

TMACOG is also the author of, “On the Move: 2007-2035 Transportation Plan.” This is now the region’s official transportation plan, incorporating improvements and additions to roads, rail, shipping, airports, bridges, bike paths and more. When the process of creating the plan began, it was like many of its type, a wish list with financing as more dream than reality. Now, a window of opportunity could potentially bringing millions in economic stimulus dollars to our region. For that reason alone, we should review the plan. Much more, we should support it and press the federal government to fund it.

TMACOG members include governmental and non-governmental organizations in northwest Ohio and southeast Michigan: cities, counties, villages and townships, as well as schools and colleges, park districts, businesses and other groups concerned with quality of life in the region. In other words, it represents all of us in Lake Erie West. This is our shot at not only short-term construction money, but also long term infrastructure investment that could bolster our regional economy for generations. This opportunity is not likely to revisit us any time soon.