Film Review: "Inequality for All"

Robert Reich's 2013 film, "Inequality for All," takes on the issue of economic opportunity, which I consider to be foremost among the core issues surrounding our common life in 21st century America. Using a similar approach to "An Inconvenient Truth," Al Gore's 2006 film on climate change, Reich mixes clips of his public presentations, interviews with people affected by current economic trends, data presented with snazzy graphics, and personal reflections. For people who realize that something is seriously wrong with the American economy, but who are not sure what it is, Reich makes a clear, accessible case that political decisions have reinforced rather than mitigated four decades of dislocating economic change. On the other hand, if you believe today's problems are caused by a corrupt presidential administration funneling money to the health care industry--the actual theme of a current media blitz by the Koch Brothers' Americans for Prosperity group--you will probably not find anything Reich says convincing.

Reich is a professor of economic and social policy at the University of California, Berkeley, is a frequent commentator on public affairs programs, and has worked in several presidential administrations, most recently as Bill Clinton's Secretary of Labor. I first encountered him in The Work of Nations (1991), and a lot of those ideas reappear here. He sets out three goals for the film at the start: to describe what is happening; to explain why it is happening; and to determine whether the current degree of inequality has become too great. He jumps around among these three quickly, albeit engagingly, so you have either to pay close attention or else take notes (as I did) to be able to reconstruct the whole argument.

Reich's argument, in very brief:

1. What is happening: The problem is not inequality per se, but widespread loss of economic opportunity as inequality widens. The U.S. economy has grown a lot since 1978, but nearly all of those gains have been concentrated at the top levels of incomes, while the real income of the typical male worker has actually dropped. 1 percent of the population (knowledge/tech workers, CEOs and financial whizzes) now makes 23 percent of national income, a record high. Most of that income is invested, flowing all over the world without regard to where the investors happen to live. Down at the level where the rest of us are, companies have cut jobs and paid as little as possible in order to stay profitable and competitive; ordinary families have tried to keep up with these trends by moving moms out of the home and into the workforce, working longer hours, and borrowing against the value of their homes, but each of these tactics has played itself out.
2. Why it is happening: The most basic causes are globalization and technology, which mean that most production can be done more cheaply with fewer workers or moving operations overseas. New jobs pay less well on the whole. Opportunities for displaced workers to get better-paying jobs are limited by the government's declining investment in workforce education and training. (Here the U.S. response contrasts with western European countries and Japan, who are graduating a larger proportion of their youth from college.) Meanwhile, the government, which always sets the rules for the marketplace ("no such thing as a purely free market," claims Reich) has in the U.S. catalyzed this process by extensive deregulation. The new superrich have used their wealth to lobby for bailouts, subsidies and tax laws that entrench their wealth, abetted by court decisions that have struck down campaign finance and lobbying restrictions on free speech grounds.
3. Is this a problem?: Yes. Reich and his interviewees argue that economic opportunity is only created when the middle class has money to spend. (They pointedly take issue with conservative sanctification of rich "job-creators.") A president of a company that makes pillows points out that CEOs who make many times the salary of the average worker [331x according to the latest data] don't buy 331 times as many pillows, and calls for a "middle-out" economics instead of "trickle-down." He draws parallels between economic inequality now and that which preceded economic upheavals in the 1890s and 1920s. He further notes that the current round economic stress has brought characteristic political stresses: increased partisan polarization, middle class protest movements, and incidents of hate attacks. 

Reich concludes on a positive note, telling the final session of a class at Berkeley to "consider where we [in the United States] have been.... History is on the side of positive social change." I hope he's right. But I can think of ways that our currently bad situation can get horribly worse: frustration turning to widespread violence (Russia in 1917 or Germany in 1933), or else political quiescence and social stagnation thanks to successful smoke-blowing by empowered super PACs. 

MORE AT

"Inequality for All" website, http://inequalityforall.com/

"What the 1% Don't Want You to Know," Moyers & Company, 18 April 2014, http://billmoyers.com/episode/what-the-1-dont-want-you-to-know-2/ [discussing Capital in the 21st Century by Thomas Piketty with Paul Krugman]

Peter Fisher, "Basic Needs and the Minimum Wage," Iowa Policy Points, 10 April 2014, http://iowapolicypoints.org/2014/04/10/basic-needs-and-the-minimum-wage/

I have previously addressed inequality in "Is There a Natural Minimum Wage?", 15 March 2014, https://brucefnesmith.blogspot.com/b/post-preview?token=6_i3h0UBAAA.EJrIbUCcHdjx8sUmj232kw.IkRQAX4y8p8ZHblsIZ7smQ&postId=3005452853159856565&type=POST

No CR casino... now, what?

The Iowa Racing and Gaming Commission today voted to deny the application of Steve Gray's group to open a casino on 1st Avenue West in Cedar Rapids. The proposal had been given decisive approval in a referendum last year.

I have mixed feelings about this. I didn't like the location, straddling 1st Avenue between downtown and the Taylor Area. I didn't like the large and splashy building, which didn't blend with its surroundings and which would have been difficult to convert to any other use should the casino fail. I didn't like the plans to duplicate the restaurants and entertainment venues which already exist downtown. And the economic benefits of the casino were probably oversold. (Not to deny there would be some, but one commenter on Facebook today compared the adverse effects of the negative decision to those of the 2008 flood.)

At the same time, I am morally outraged [DISCLAIMER: shameless attempt at drama] at the commission's decision process. While I could only have approved had the commission used any or all of the above rationales in making their decision, they did not. The Gray group's application was rejected because studies show the Cedar Rapids casino would have drawn away ("cannibalized") customers from casinos in Riverside and Tama. Well, maybe it would have--Gray and Cedar Rapids city officials dispute those findings--but WHAT BUSINESS IS THAT OF THE STATE? Sorry, I'm yelling, but do businesses in any other line get this level of protection from competition? Restaurants don't. Colleges don't. Convenience stores don't. What is so special about casinos that they get this protection?

Now there's a big vacant area on the west side of the river. What happens now? I'm nobody's visionary, and certainly no entrepreneur, but I hope that whatever it is:
 (a) is something. A gaping hole west of downtown is not good.
 (b) serves to connect the Taylor Area to downtown.
 (c) is not gargantuan. It should fit into and contribute to a quality place.
 (d) creates economic opportunities for working class people.
 (e) is flood-proof.

Any ideas?

Interesting place for a college

We shall meet in the place that has no windows.

--GEORGE ORWELL, "1984"

We have two late teenagers in our family, which means we've been on a few college tours of late, specifically focused on small colleges in the Midwest. As has been remarked elsewhere, there is a certain similarity to these tours, and a certain similarity to the campuses themselves: parklike setting, mix of historic buildings and fancy new facilities, people walking purposefully about (assuming classes are in session).

Last weekend I took some students to a conference on a college campus very unlike any our boys have toured. Park University is located on the Missouri River in a suburb of Kansas City, Missouri. It has its share of attractive old buildings, and the site of an old observatory affords a nice view of the river and the Kansas farm fields on the other side.

But most of the college, including all the facilities we used for our conference, is underground, built out of limestone caves. We walked from the conference area to the dining room through this garage.

The rooms were modern, but retained the cave walls. Here's the entrance to one room...

...while in another room, Coe student Joel McGuire prepared for his presentation standing by the limestone.

They must have the ventilation issues figured out, though there were signs in the garage warning drivers not to idle their vehicles. And more signs than I'm used to seeing in the washrooms warning against putting paper towels in the toilets, so I wonder if plumbing is complicated as well?

My students found the setup intriguing, and I guess I did as well, though I don't find it attractive as a place to work. (Interestingly, if there's anything on Park's website about the unique aspects of their place, or its history, I am unable to find it.) Being able to see the outdoors is an important aspect of place for me: I don't even spend a lot of time in my own basement. I'm glad my office at Coe has a big window overlooking campus!

As Gracen Johnson says in her latest video, "We all know what great places are, not because they feel the same, but because they feel at all." Uniqueness is a plus, but there needs to be more to make a great place.

Who wouldn't want to live in The Shire?

One company's version of the Shire

(swiped from Hobbiton Facebook page)

My recent writings about prospects for our common life have inclined to a vision of caring communities with economic opportunity for all. Similarly, a lot of contemporary writing on neighborhoods, particularly but not limited to new urbanists, try to recapture the magic of the traditional small town with public spaces, vibrant local businesses and connections. On the other side, many people are complaining or at least concerned about aspects of contemporary American life that work against community: rising inequality, in which a few mega-gainers crowd out the rest of us; a national government preoccupied with ideological struggles and distant from local concerns; and social isolation from any real community. Comparing those negative aspects to the egalitarian, sociable and industrious society J.R.R. Tolkien portrays in The Hobbit, or--for a more urban setting--the wondrous shop of the caring entrepreneur Fezziwig in A Christmas Carol, makes it easy to identify what is amiss in the 21st century West.

Now I find there's an economic theory, albeit an obscure one, with a similarly blissful vision of community. Arthur W. Hunt III, who teaches communications studies at the University of Tennessee-Martin, defines distributism on the American Conservative blog as "a humane microcapitalism," looking for "an economy with the widest use of private productive property," with fondness for "the pastoral ideal of village and farm." Catholic writers Hilaire Belloc (The Servile State, 1912) and G.K. Chesterton (What's Wrong With the World, 1910) were founding distributists, reports Hunt, rejecting both state socialism and unrestrained industrial capitalism. He notes echoes of distributism in the works of Dorothy Day, Allen Tate, Wendell Berry and Alasdair MacIntyre, among others. In an extended passage, Hunt describes distributism at work in J.R.R. Tolkien's depiction of the Shire of Hobbiton in The Hobbit and the Lord of the Rings trilogy. He concludes by noting

the current growing sense that something is amiss in our current economic system... Certainly the young want more for themselves than the current market forces are holding out for them. Who wants to work for Wal-Mart at minimum wage?

A race around Google did not turn up a lot of scholarly sources on distributism: In The New Economics, Andrew Simms and David Boyle describe the distributists as "all but forgotten" (p. 21). But they do pop up on the occasional blog, and boast their very own online journal, The Distributist Review.

However obscure they might be, I'm pleased to have run across the distributists. It's very encouraging to see recognition on a conservative blog that "something is amiss in our current economic system." This recognition hasn't yet bubbled up into the Republican Party in Congress, or their associated battalion of SuperPACs, but we can hope that distributism might eventually be a more congenial way into the conversation than new urbanist or communitarian ideas seem to be. Certainly we need to hear from the right concerning the problems of our society.

 (Increasing concentration of wealth in the United States,

from http://www.stanford.edu/group/scspi/_images/facts/fact15.jpg)

But it's one thing to decry the increasing concentration of wealth in the West (especially in America); it's quite another to figure out how to address it. Simms and Boyle note that distributism "lacked practical policy solutions" (p. 20). What I've read about distributism amounts almost entirely to a wish for good outcomes. In a way, notwithstanding their stress on widespread property ownership, they remind me of the young Karl Marx. In the notes later published as Economic and Philosophic Manuscripts of 1844 Marx describes the plight of the worker as consisting of more than mere material deprivation; they are deprived of their very humanity because they have no control over their work or really very much of their lives (except, notably, eating, drinking and sex). Just as Marx saw most people thwarted by private property owners and their stooges in government, the distributists see most people thwarted by big business and big government. Somehow liberation from these malevolent forces--which in both approaches occurs more or less by magic--will restore humans' true nature and we'll be able to live happily and cooperatively together.

[Hunt notes that Tolkien in chapter 8 of  The Return of the King (Allen & Unwin, 1955) depicts even the fictional Shire as vulnerable to concentrated economic power. Here the solution actually is magic, or at least the breaking of a spell cast by the evil wizard Saruman. Once that's done, hobbit society is quickly set to rights.]

Which brings me to my biggest reservation about the distributist vision: In the absence of real solutions to the global economic system, it's tempting to make the national government  the sole target. "Tateofpa," a commenter on The Monkey Cage blog, responds to research on the overwhelming influence of moneyed elites on national politics by noting, The writer of this makes a compelling reason to keep more tax money closer to home then sending it to a group of people who are less responsive, to those who elected them. More money need should stay in the states, and more for local, because they are more responsive to those who elected them (Bartels, cited below). Big government certainly has a lot to answer for: destructive "urban renewal" programs, tax advantages for sprawling communities, dehumanizing welfare programs. And even defensible policies like the minimum wage, food stamps and unemployment assistance are temporary fixes and no substitute for developing a healthy economy.

I'm all for communities and neighborhoods stepping up. Maybe once I read Benjamin Barber's new book, If Mayors Ruled the World (Yale, 2013) I'll be even moreso. Even so, today more than ever we need national government, because the 21st century economy is too big for individuals or neighborhoods or even metropolitan regions to take on alone. A New York Times article this week reporting cities' attempts to address economic inequality was largely pessimistic in tone, because businesses operate at a global, not a municipal, scale (Lowrey). The reporter quotes economists Alan Berube of the Brookings Institution ("Cities just don't have the tax and trade policy and tools to rein back inequality in a significant way") and Edward Glaeser of Harvard ("Most localities are very restricted in the kinds of stuff they can do"). Cities are just as powerless against other problems that cross state lines, like environmental pollution or the cost and availability of medical care. Absent the magic to turn our world into the Shire, we need an empowered national government to provide a crucial check-and-balance to today's private economy. Capitalism doesn't get its human face unless something puts it there.

Unfortunately, the U.S. national government seems less and less capable of performing this vital function. I'm not ready to join Marx in calling the government the stooge of the ruling economic class, but I'm not sanguine that the political playing field is level, or that it is effectively balancing economic trends. The latest Supreme Court decision striking down limits on individual contributions to congressional campaigns (McCutchen v. FEC) is only a minor blow to democracy, but it comes on the heels of a series of court decisions on campaign finance that empower individuals and corporations with deep pockets at the expense of everyone else (Young). In her new book, Wal-Mart Wars: Moral Populism in the Twenty-First Century (New York University, 2013), Rebekah Peeples Massengill describes the enormous political power that comes with Wal-Mart's economic strength. An increasing pile of research has shown, as F. Scott Fitzgerald once said, that the rich are indeed different from you and me (Page et al.). If the rich can buy the debate, they've just about bought the politicians (Bartels).

Both the Shire and its urban alternative seem very far away. I'm decidedly not counseling despair. I'm just telling you what you probably already know anyway: the struggle for inclusive communities with opportunity for all is a difficult one. We need to choose our battles wisely, study the issues well, look for political leaders who still have general interests at heart and then hold them to their promises, and most of all plead our cause without relenting.

A COUPLE OLDER POSTS

"Gleanings from the New Urbanism," April 19, 2013
"Is Too Society," April 10, 2013

SOURCES AND FURTHER READING

Larry R. Bartels, "Rich People Rule!," The Monkey Cage, 8 April 2014, http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/08/rich-people-rule/

Arthur W. Hunt III, "Pope Francis Needs Distributism," American Conservative, 3 April 2014, http://www.theamericanconservative.com/articles/pope-francis-needs-distributism/.

Annie Lowrey, "Cities Advancing Inequality Fight," New York Times, 7 April 2014, A1, A3.

Benjamin I. Page, Larry M. Bartels and Jason Seawright, "Democracy and the Policy Preferences of Wealthy Americans," Perspectives on Politics 11:1 (March 2013): 51-74

Andrew Simms and David Boyle, The New Economics: A Bigger Picture. Routledge, 2009.

Rick Young, writer/producer/director. "Big Sky, Big Money." Frontline, 30 October 2012, http://www.pbs.org/wgbh/pages/frontline/big-sky-big-money/

What is a "stroad?"

I saw my country turned into a coast-to-coast strip mall

--GREG BROWN, "THE POET GAME"

My vote for neologism of the century goes to stroad, coined by Chuck Marohn of the Minnesota-based Strong Towns organization to mean "a street-road hybrid," combining commercial development with highway design. Typically accompanying suburban sprawl, it is congested, unsafe (for cars but especially for anything else) and ugly. Parking lots around big box stores and shopping plazas mean there is too much distance between things to do anything but drive from store to store. A street contains shops and houses in an urban setting; in Marohn's words, it is "a platform for creating and capturing value." A road is a "high-speed connection between two [locations]." A stroad tries to do both and accomplishes neither very well. The spread of development means the area is much less cost-efficient than a traditional downtown, and the government will never recoup enough tax revenue to pay for constructing and maintaining the stroad.

A decade or so ago Highway 965 north of Iowa City was a road. Thanks to energetic development in North Liberty, it is now a full-on stroad. In Cedar Rapids the epitome of a stroad is Collins Road NE between 1st Avenue and Council Street, but there are plenty of other examples, including 1st Avenue itself, Blairs Ferry and Edgewood Roads, and practically every major thoroughfare on the southwest side.

(A stroadish section of Center Point Rd NE, south of 42nd Street.

Five lanes, no sidewalk, large parking lots, curb cuts, 

buildings at odd angles to each other.)

 (Two views of 1st Avenue East, which is five lanes wide...

six at this intersection with College Drive.)

I mention Collins Road in particular, not just because it's awful, but because it is part of State Highway 100, which is soon to be extended around the west side of the city to meet up with U.S. 30. The existing Highway 100 is really three different roads:

1. west of Council Street is about a mile of highway with no commercial development, which will speed you on your way, but only as far as Edgewood Road;
2. the absurdly congested stretch from Council to 1st;
3. the most recently built section from 1st Avenue to State Highway 13, which is mostly within the City of Marion. There is some commercial development, but not nearly as much as on the oldest part, with the future direction undetermined and I imagine dependent on a lot of variables.

Stroads like Collins Road get that way, partly because that's how every other town in America is developing too, and partly because local governments have no incentive not to load up mostly state-financed highways with commercial development, which will add to the city's tax base.  (So, for instance, Marion has revenue-related motivation for developing its stretch of Highway 100 into a stroad if it can.) Marohn argues that there is a perverse incentive at work: the city gets the financial benefits of development but bears none of the cost, because state highways are built and maintained by the state. (The state is ponying up nearly $200 million to build the next Highway 100 extension; see Ford, cited below.)

From this week's Strong Towns Podcast.

If you're a local government, there's very little cost for doing that. You've got this highway, that's moving a lot of cars, and if you can get an access off of that... You're not paying for the highway, as a local government. You're not paying for the access--maybe a small, small part of it, but the majority is going to be paid by someone else. So what you're doing is essentially... co-opting the collective wealth that has been built out of that highway investment for your locality. That aligns with the interests of the private property owners that live along that, in the short-term. So everyone's mutual interest at the local level is to co-opt and mine the value off of that highway: increase the property value, increase the local tax base, etc., etc.

The logic of co-opting value from highways-someone-else-pays-for reaches an apotheosis of sorts in the opposition of the International Franchisee Association and shipping companies like FedEx to proposals to use tolls to fund maintenance of interstate highways. "People aren't going to stop at a McDonald's or a hotel if they have to get off the Interstate and pay a toll, then pay a toll to get back on," says franchisee lobbyist Jay B. Perron in Friday's New York Times (Nixon, cited below). This amounts to a claim by the shippers and fast-food restaurants to partial public subsidies for their businesses. Good deal for them if they can get it. Somewhere Adam Smith is laughing: He argued, in The Wealth of Nations, Book V, for toll-based financing to ensure highways are only built where they're economically viable; he was, of course, notably ambivalent about government's ability to plan rationally in the face of powerful political demands. From such as well-connected fast-food and shipping empires.

It's encouraging that proposals for the extension of Route 100 call for a limited access highway with exits at E Avenue, Ellis Road, F Avenue, and maybe one other. So we're not anticipating a lot of curb cuts, nor non-automotive traffic. Still the amount of development that is anticipated to be leveraged off this construction, particularly with the "standard development practice scenario," creates powerful, well-connected interests in a free and arguably unnecessary highway.

Can there be stroads without commercial development? 2nd and 3rd Avenues Southeast may also qualify as stroads, even though they have little to no commercial development above 10th Street. If they're not stroads they're a weird kind of something that deserves some derogatory neologism: three lanes of high-speed through traffic slashing through a residential neighborhood.

(Traffic on 3rd Avenue SE approaching Redmond Park. Three lanes, plus room for parking on either side puts a lot of distance between you and your "neighbors" across the street.)

As you can see from this picture of 2nd Avenue SE, the posted speed limit is 30, but only the self-disciplined drive that slowly when life presents us with a street disguised as a long stretch of open road. Tough luck for pedestrians trying to cross. (On a bicycle, I feel safe on 2nd Avenue but not on the similarly constructed 3rd Avenue. Maybe it's because 2nd stops at 15th and 13th Streets, and now ends at 12th? 3rd Avenue gives cars a clear shot all the way from 10th to 19th.)

The new Wellington Heights Neighborhood Plan proposes to convert 2nd and 3rd Avenues to two-way, one lane in each direction, with bike lanes on both sides at least on 3rd. I think this will do a lot to slow traffic through the neighborhood, which will in turn enhance "connectivity," or the feeling of living in a neighborhood. Will it at the same time negatively affect overall traffic flow in the city? Maybe not: The authors of the plan argue "actual traffic volumes are somewhat low" on 2nd and 3rd, such that these wide streets "are 'overdesigned' for their current and most likely future function in the local and regional transportation system" (p. 23).

Whether and how these construction plans proceed, we seem to be getting past the point in time when development was all about moving cars. That's a good sign. And if Cedar Rapids drivers can deal with redesigned streets through Wellington Heights, I can probably reconcile myself to extending Highway 100.

SOURCES

Tom Condon, "Farmington Avenue Has Become a 'Stroad,'" Hartford Courant, 15 January 2014, http://articles.courant.com/2014-01-15/news/hc-op-place-condon-farmington-avenue-0116-20140115_1_farmington-avenue-one-lane-bike-lane

"Corridor MPO" website, http://www.corridormpo.com/

George C. Ford, "Highway 100 Extension Funding Approved in 5-Year Road Plan," Cedar Rapids Gazette, 11 June 2013, http://thegazette.com/2013/06/11/highway-100-extension-funding-approved-in-5-year-road-plan/

Lee Hermiston, "Cedar Rapids Neighbors, Police Credit Communication for Decrease in Crime Statistics," Cedar Rapids Gazette, 3 April 2014, http://thegazette.com/2014/04/03/cedar-rapids-neighbors-police-credit-communication-for-decrease-in-crime-statistics/

Charles Marohn, "The Stroad," Strong Towns, 4 March 2013, http://www.strongtowns.org/journal/2013/3/4/the-stroad.html#.UzruH6K9ZPc

"Marohn on Transportation," Strong Towns Podcast 168, 27 March 2014, http://www.strongtowns.org/storage/podcasts/2014/032814_Burleson_Marohn_Part2.mp3

Ron Nixon, "Agreement on Interstate Repair Needs, but Not on How to Pay for Them," New York Times, 4 April 2014, A13, http://www.nytimes.com/2014/04/04/us/agreement-on-interstate-repair-needs-but-not-on-how-to-pay-for-them.html?ref=us