Highlights from Fred Pearce and Joe Romm

Fred Pearce – notes from With Speed & Violence, references are to the Kindle page number

“Concern about our raw materials casts a dark shadow over mankind,” he wrote, in an early outburst of twentieth century environmental concern. “Our descendants surely will censure us for having squandered their just birthright.” His great fear was that oil supplies would dry up, and he predicted that the United States might pump its last barrel as early as 1935. He advocated energy efficiency and proposed the development of renewable energy, such as wind and solar power. He sat on a government commission that made Sweden one of the first countries to develop hydroelectric power. Many Swedes today see Arrhenius as an environmental pioneer and praise his efforts to promote new forms of energy. He would have been bemused by this appreciation. For one thing, he never made the connection between his work on the greenhouse effect and his later nightmares about disappearing fossil fuels. He knew from early on that burning coal and oil generated greenhouse gases that would build up in the air. But he rather liked the idea, writing 345

The only man to take the prospect of greenhouse warming seriously was a British military engineer and amateur meteorologist, Guy Callendar. In a lecture at the Royal Meteorological Society in 1938, he said that the few existing measurements of carbon dioxide levels in the atmosphere suggested a 6 percent increase since 1900, that this must be due to fossil fuel burning, and that the implication was that warming was “actually occurring at the present time.” Like Arrhenius, Callendar thought this on balance rather a good thing. And like Arrhenius, he saw his findings pretty much ignored. 359

The implications of Keeling’s curve were profound. “By early 1962,” he later wrote, “it was possible to deduce that approximately half of the CO2 from fossil fuel burning was accumulating in the air,” with the rest absorbed by nature. By the late 1960s he had noticed that the annual cycling of carbon dioxide was growing more intense. And the spring downturn in atmospheric levels was beginning earlier in the year—strong evidence that the slow annual increase in average levels was raising temperatures and creating an earlier spring. 377

But by the end of the decade, President Jimmy Carter’s Global 2000 Report on the environment had identified global warming as an urgent new issue, and the National Academy of Sciences had begun the first modern study of the problem. 393

Climate models developed by the U.S. government’s space agency, NASA, estimate that Earth is now absorbing nearly one watt more than it releases per 10.8 square feet of its surface. This is a significant amount. You could run a 60-watt light bulb off the excess energy supplied to the area of the planet that a modest house occupies. 427

the handful of “rogue” climate models that keep turning up tipping points that could tumble the world into much worse shape than what is currently predicted by the mainstream. One scientist told me in the corridors of a conference in early 2005: “By ignoring these outliers, IPCC has failed for ten years to investigate the possible effects of more extreme climate change.” 527

Those who do not believe that global warming is a real and dangerous threat should visit places like Choluteca and talk to people like Lidia. It may not convince them that climate change is making superhurricanes and megafloods. But it will show them the forces of nature untamed and the human havoc caused when weather breaks its normal shackles. For hundreds of millions of people, these issues are no longer a matter for computer modeling or debate in the corridors of Congress or future forecasts. They are about real lives and deaths. The question is not: Can we prove that events like Mitch are caused by climate change? It is: Can we afford to take the chance that they are? 556

The heat is intensifying the hydrological cycle. Globally, average annual rainfall increased by up to 10 percent during the twentieth century, because warming has increased evaporation. Locally, the trends are even stronger. The floods that inundated Mozambique in 2000 occurred because maximum daily rainfall there had risen by 50 percent. In the eastern U.S., the proportion of rain falling in heavy downpours has increased by a quarter. In Britain, winter rain falls in intense downpours twice as often as it did in the 1960s. There are similar patterns in Australia, South Africa, Japan, and Scandinavia. Even the Asian monsoon has become more intense but less predictable. At the same time, dry areas in continental interiors have become drier, causing deserts to spread. The year 1998 was the first in a run of years of intense drought that stretched from the American West through the Mediterranean to Central Asia. 575

A mild-mannered man not given to hyperbole, Steffen nonetheless takes a hard-nosed approach to climate change. “Abrupt change seems to be the norm, not the exception,” he says. We have been lured into a false sense of security by the relatively quiet climatic era during which our modern complex civilizations have grown and flourished. It may also have left us unexpectedly vulnerable as we stumble into a new era of abrupt change. We have also been blind, he says, to the extent of the damage we are doing to our planetary home. We often see our impact as limited to individual parts of the system: to trashed rainforests, polluted oceans, and even raised air temperatures. We rarely notice that by doing all these things at once, we are undermining the basic planetary systems. Something, Steffen says, is going to give: “The planet may have an Achilles heel. And if it does, we badly need to know about it.” Without that knowledge and the will to act, he says, the Anthropocene may well end in tears. A report from the U.S. National Academy of Sciences in 2002, under the chairmanship of Richard Alley, of Penn State University—a glaciologist with the slightly manic appearance of an ex-hippie, who has become a regular on Capitol Hill for his ability to talk climate science in plain language—sounded a similar warning. “Recent scientific evidence shows that major and widespread climate changes have occurred with startling speed,” the report began. “The new paradigm of an abruptly changing climate system has been well established by research over the last decade, but this new thinking is little known and scarcely appreciated in the wider community of natural and social scientists and policymakers.” Or, Alley might have added, among the citizens of this threatened planet. 598

that, as Alley puts it, “roughly half of the entire warming between the ice ages and the postglacial world took place in only a decade.” The world warmed by at least 9 degrees—the IPCC’s prediction for the next century or so—within ten years. This beggars belief. But Alley and his co-researchers are adamant that the ice cores show this happened. 619

Steffen says. The glacial state seems to have been anchored at carbon dioxide levels of around 190 ppm, while the interglacial state, which the modern world occupied until the Industrial Revolution, was anchored at about 280 ppm. The rapid flip between the two states must have involved a reallocation of about 220 billion tons of carbon between the oceans, land, and the atmosphere. Carbon was buried in the oceans during the glaciations and reappeared afterward. Nobody knows quite how or why. But the operation of the hair-trigger jump to a much warmer state raises critical questions for the Anthropocene. In the past two centuries, humanity has injected about another 220 billion tons of carbon into the atmosphere, pushing carbon dioxide levels up by a third, from the stable interglacial level of 280 ppm to the present 380 ppm. The figure continues to rise by about 20 ppm a decade. So the big question is how Earth will respond. Conventional thinking among climate scientists from Arrhenius on predicts that rising emissions of carbon dioxide will produce a steady rise in atmospheric concentrations and an equally steady rise in temperatures. That’s still the IPCC story. But Steffen takes a different view: “If the ice age seemed to gravitate between two steady states, maybe in future we will gravitate to a third steady state.” Nature might, he concedes, fulfill the expectations of climate skeptics and push back down toward 280 ppm; but if it was going to do that, we 638

would already see evidence of it. And we don’t. Other scientists, including Alley, are not convinced by Steffen’s sense of order in the system. Sitting in his departmental office, Alley likens the climate system to “a drunk—generally quiet when left alone, but unpredictable when roused.” When he is writing scientific papers or committee reports, his language is not so vivid. He talks of a “chaotic system” vulnerable to “forcings” from changes in solar radiation or greenhouse gases. “Abrupt climate change always could occur,” he says. But “the existence of forcings greatly increases the number of possible mechanisms [for] abrupt change”; and “the more rapid the forcings, the more likely it is that the resulting change will be abrupt on the timescale of human economies or global ecosystems.” 648

Jack Kohler is attempting a “mass balance” of the ice of Svalbard. He reckons that 20 million acre-feet melts and runs off into the ocean each year now. Another 3 million acre-feet is lost from icebergs slumping into the sea from 620 miles of ice cliffs. At most, half of this loss is being replaced with new snow. That is an annual net loss of around 11 million acre-feet—a staggering volume for a small cluster of islands, and probably second in the Arctic only to the loss from the huge ice sheet covering Greenland. And there is more to come, Kohler says. Many of Svalbard’s glaciers and ice caps are close to the freezing point and “very sensitive to quite small changes” in temperature. Boreholes drilled into the permafrost show a staggering 0.7°F warming in the past decade. A few more tenths of a degree could be catastrophic, he says. 692

The Kangerdlugssuaq glacier, in eastern Greenland, which drains 4 percent of the ice sheet, was flowing into the sea three times faster in the summer of 2005 than when last measured in 1988. At an inch a minute, its movement was visible to the naked eye. Meanwhile, its snout has retreated by three miles in four years. This familiar pattern of faster flow, thinning ice, and rapid retreat of the ice front has also shown at the nearby Helheim glacier, where Ian Howat, of the University of California in Santa Cruz, concludes that “thinning has reached a critical point and begun drastically changing the glacier’s dynamics.” 905

After Larsen B disappeared, it was “as if the cork had been removed from a bottle of champagne,” says the French glaciologist Eric Rignot, who works at NASA’s Jet Propulsion Laboratory, in California. The glaciers that once discharged their ice onto the Larsen B shelf are now flowing into the sea eight times faster than they did before the shelf collapsed. Similar acceleration has happened after other ice sheet collapses. And that faster discharge of ice from land into the ocean is raising sea levels. With the Ross Sea being the main outlet for several of the largest glaciers on the West Antarctic ice sheet, which contains enough ice to raise sea levels by six yards, the stakes are 961

As recently as 2001, the IPCC reported a scientific consensus that it was “very unlikely” that Antarctica would produce any significant rise in sea levels during the twenty-first century. Few glaciologists are repeating that claim with any confidence now. Most would agree with Alley that “major changes are taking place in the Antarctic, on much shorter time scales than previously anticipated.” The British Antarctic Survey now employs a mathematician full time to apply chaos and complexity theory to the fate of the continent’s ice—a topic once considered to be of the utmost simplicity. The BAS is using the language of fractals, phase space, and bifurcations to work out what might happen next to the ice sheets of the Antarctic Peninsula and the glaciers of Pine Island Bay. Its scientists have seen Larsen B shatter in three days; they believe they are seeing the soft underbelly of the West Antarctic ice sheet ripped open before their eyes. What next? 1050

The world’s sea levels have been largely stable for the past 5,000 years, since the main phase of melting of ice sheets after the end of the last ice age abated. Some residual ice loss continued to raise sea levels at less than one hundredth of an inch a year. But around 1900, the rise began to increase. At first, this was most likely owing to the melting of glaciers after the little ice age ended, in the mid-nineteenth century. That should have diminished during the twentieth century. But instead it has accelerated in the past fifty years, to around 0.08 inches a year. About half of this increase is probably due to the process known to physicists as thermal expansion. And the rest is probably due to the resumed melting of the world’s glaciers and ice caps, doubtless largely a result of man-made climate change. The first signs of a further acceleration emerged in the early 1990s, when satellite data suggested a sudden rise of 0.11 inches a year. Since 1999, it may have risen further, to 0.14 inches. At the time of this writing, these figures had failed to gain much attention, because glaciologists remained worried about their reliability. Some think there may be a problem calibrating the satellite data; others that it may simply be a natural fluctuation. But, with every year that passes, more researchers are concluding that we are seeing the first effects of the dramatic changes apparently under way on the ice sheets of Greenland and Antarctica. The planet has a history of startling sea level rise that cannot be explained by the conventional models used by glaciologists to predict future change. Consider events toward the end of the last ice age. Around 20,000 years ago, at what glaciologists call the “glacial maximum,” so much water was tied up in ice on land that sea levels were around 400 feet lower than they are today. Then a thaw began. Sea levels initially rose by around 0.4 inches a year. That is four or five times faster than today, but within the traditional expectations of glaciologists. Then something happened. About 14,500 years ago, the tides went haywire. Within 400 years, sea levels rose by 65 feet. That’s an average rate of just over a yard every twenty years. It is worth thinking about those numbers. If such a rise happened today, you could say “toodle-oo” to Tuvalu by 2010; most of Bangladesh would be under water by 2020; millions of people on the Nile Delta would be looking for new homes by 2025; London would need a new Thames Barrier immediately. New Orleans? Well, forget New Orleans, and Florida, and most of the rest of the U.S. seaboard, too. Lagos, Karachi, Sydney, New York, Tokyo, Bangkok: you name your coastal megacity, and it would be abandoned by midcentury. It sounds unbelievable, but we know the rise happened. The evidence is in tidemarks on ancient cliffs and in the remains of coral that can live only close to sea level. How could such a thing have happened? It required the transfer into the oceans of about 13 billion acre-feet of ice every year throughout the 400-year period. 1086

On the face of it, either the West Antarctic ice sheet, or the Greenland ice sheets, or both, succumbed at temperatures close to our own. We can expect that temperatures will rise by about 3 to 5 degrees within the coming century. That, says Hansen, would make them as high as they were 3 million years ago, before the era of ice ages started. What were sea levels then? About 25 yards higher than today, plus or minus 10 yards, he says. A first guess is that we will very soon have set the world on a course for reaching such levels again. The models of glaciologists suggest that, if this happens, it will take thousands of years. Jim Hansen doesn’t believe it. “I’m a modeler, too, but I rate data higher than models,” he says. He already sees evidence of the start of runaway melting in Greenland and Antarctica, and anticipates that “sea levels might rise by a couple of yards this century, and several more the next century.” Some see this prognosis as alarmist. Where, they say, is the evidence of big sea level rises so far? Hansen says that much of the extra melting has been camouflaged by increased snowfall on the ice sheets: “Because of this, sea level changes slowly at first, but as global warming gets larger, as summer melt extends higher up the ice sheet, and as buttressing ice shelves melt away, multiple positive feedbacks come into play, and the nonlinear disintegration wins the competition, hands down.” The world’s ice sheets are “a ticking time bomb,” he says. There is no reason why the events of 14,000 years ago should not be repeated in the twenty-first century. “The current planetary energy imbalance is now pouring energy into the Earth system at a rate sufficient to fuel rapid deglaciation.” Hansen’s hunch is that an increasing amount of global warming will be harnessed to melting the ice sheets. That could slow the heating of the atmosphere, but at the price of faster-rising sea levels. Within a few decades, vast armadas of icebergs could be breaking off the Greenland ice sheet, making shipping lanes impassable and cooling ocean surfaces like the ice in a gin and tonic. Sea level rise, he concludes, is “the big global issue.” He believes it will transcend all others in the coming century. It is easy to forget the 1114

The Amazon rainforest is the largest living reservoir of carbon dioxide on the land surface of Earth. Its trees contain some 77 billion tons of carbon, and its soils perhaps as much again. That is about twenty years’ worth of man-made emissions from burning fossil fuels. The rainforest is also an engine of the world’s climate system, recycling both heat and moisture. More than half of the raindrops that fall on the forest canopy never reach the ground; instead they evaporate back into the air to produce more rain downwind. The forest needs the rain, but the rain also needs the forest. 1136

Until recently, many ecologists have thought of the Amazon rainforest much as their glaciologist colleagues conceived of the Greenland ice sheet: as big and extremely stable. The Greenland ice maintained the climate that kept the ice securely frozen, while the Amazon rainforest maintained the rains that watered the forest. But, just as with the Greenland ice sheet, the idea that the Amazon is stable has taken a knock: some researchers believe that it is in reality a very dynamic place, and that the entire ecosystem may be close to a tipping point beyond which it will suffer runaway destruction in an orgy of fire and drought. Nobody is quite sure what would happen if the Amazon rainforest disappeared. It would certainly give an extra kick to climate change by releasing its stores of carbon dioxide. It would most likely diminish rainfall in Brazil. It might also change weather systems right across the Northern Hemisphere. One man who is trying to find out how unstable the Amazon rainforest might be is Dan Nepstad, a forest ecologist nominally attached to the Woods Hole Research Center, in Massachusetts, but based for more than two decades in the Amazon. He doesn’t just watch the forest: he conducts large experiments within it. In 2001, Nepstad began creating a man-made drought in a small patch of jungle in the Tapajos National Forest, outside the river port of Santarem. Although in most years much of the Amazon has rain virtually every day, Tapajos is on the eastern fringe of the rainforest proper, where weather cycles can shut down the rains for months. The forest here is, to some extent, adapted to drought. But there are limits, and Nepstad has been trying to find out where they lie. He has covered the 2.5-acre plot with more than 5,000 transparent plastic panels, which let in the sunlight but divert the rain into wooden gutters that drain to canals and a moat. Meanwhile, high above the forest canopy, he has erected gantries linked by catwalks, so that he can study the trees in detail as the artificial drought progresses. 1145

The forest, it turns out, can handle two years of drought without great trouble. The trees extend their roots deeper to find water and slow their metabolism to conserve water. But after that, the trees start dying. Beginning with the tallest, they come crashing down, releasing carbon to the air as they rot, and exposing the forest floor to the drying sun. By the third year, the plot was storing only about 2 tons of carbon, whereas a neighboring control plot, on which rain continued to fall, held close to 8 tons. The “lock was broken” on a corner of one of the planet’s great carbon stores. The study shows that the Amazon is “headed in a terrible direction,” wrote the ecologist Deborah Clark, of the University of Missouri, discussing the findings in Science. “Given that droughts in the Amazon are projected to increase in several climate models, the implications for these rich ecosystems are grim.” Everywhere in the jungle, drought is followed by fire. So, in early 2005, Nepstad started an even more audacious experiment. He set fire to another stretch of forest with kerosene torches. “We want to know if recurring fire may threaten the very existence of the forest,” he says. The initial findings were not good: the fires crept low along the forest floor, and no huge flames burst through the canopy. The fire may even have been invisible to the satellites that keep a constant watch overhead. But many trees died nonetheless, as their bark scorched and the flow of sap from their roots was stanched. Nepstad’s experiments are part of a huge international effort to monitor the health of the Amazon, called the Large-scale Biosphere- Atmosphere Experiment in Amazonia. From planes and satellites and gantries above the jungle, researchers from a dozen countries have been sniffing the forest’s breath and assessing its survival strategies. The current estimate is that fires in the forest are releasing some 200 million tons of carbon a year—far more than is absorbed by the growing forest. The Amazon has become a significant source of carbon dioxide, adding to global warming. More worrying still, the experiment is discovering a drying trend across the Amazon that leaves it ever more vulnerable to fires. Nepstad’s work suggests that beyond a certain point, the forest will be unable to recover from the fires, and will begin a process of rapid drying that he calls the “savannization” of the Amazon. And even as he concluded his drought experiment, nature seemed to replicate it. The rains failed across the Amazon through 2005, killing trees, triggering fires, and reducing the ability of the forest to recycle moisture in future—thus increasing the risk of future drought. Nepstad’s experiments suggest that the rainforest is close to the edge—to permanent drought, rampant burning, savannization, or worse. In the final weeks of 2005, the rains returned. The forest may recover this time. But if future climate change causes significant drying that lasts from one year to the next, feedbacks in the forest could realize Nepstad’s worst fears. The 2005 drought was caused by extremely warm temperatures in the tropical Atlantic—the same high temperatures that are believed to have caused the record-breaking hurricane season that year. The rising air that triggered the hurricanes eventually came back to earth, suppressing the formation of storm clouds over the Amazon. And, as I discovered at Britain’s Hadley Centre for Climate Prediction, that is precisely what climate modelers are forecasting for future decades. 1161

The Hadley Centre’s global climate model is generally regarded as one of the world’s top three. And it predicts that business-as-usual increases in industrial carbon dioxide emissions worldwide in the coming decades will generate warmer sea temperatures, subjecting the Amazon to repeated droughts, and thus creating “threshold conditions” beyond which fires will take hold. The Amazon rainforest will be dead before the end of the century. Not partly dead, or sick, but dead and gone. “The region will be able to support only shrubs or grass at most,” said a study published by the Hadley Centre in 2005. Not all models agree about that. But the Hadley model is the best at reproducing the current relationship between ocean temperatures and Amazon rainfall, so it has a good chance of being right about the future, too. Nepstad himself predicts that a “megafire event” will spread across the region. As areas in the more vulnerable eastern rainforest die, they will cease to recycle moisture back into the atmosphere to provide rainfall downwind. A wave of aridity will travel west, creating the conditions for fire to rip through the heart of the jungle. With the trees gone, the thin soils will bake in the sun. Rainforest could literally turn to desert. The Hadley forecast includes a graph of the Amazon’s forest’s future carbon. It predicts that the store of a steady 77 billion tons over the past half century will shrink to 44 billion tons by 2050 and 16.5 billion tons by the end of the century. That, it calculates, would be enough to increase the expected rate of warming worldwide by at least 50 percent. The Amazon rainforest does not just create rain for itself. By one calculation, approaching 6 trillion tons of water evaporates from the jungle each year, and about half of that moisture is exported from the Amazon basin. Some travels into the Andes, where it creates clouds that swathe some mountains so tightly that their surfaces have never been seen by satellite. Some blows south to water the pampas of Argentina, some east toward South Africa, and some north toward the Caribbean. The forest is a vital rainmaking machine for most of South America. As much as half of Argentina’s rain may begin as evaporation from the Amazon. But the benefits of the great Amazonian hydrological engine extend much further, and are not restricted to rainfall. The moisture also carries energy. A lot of solar energy is used to evaporate moisture from the forest canopy. This is one reason why forests stay cooler than the surrounding plains. And when the moisture condenses to form new clouds, that energy is released into the air. It powers weather systems and high-level winds known as jets far into the Northern Hemisphere. Nicola Gedney and Paul Valdes, two young climate researchers at the University of Reading, have calculated that this process ultimately drives winter storms across the North Atlantic toward Europe. “There is a relatively direct physical link between changes over the deforested region and the climate of the North Atlantic and western Europe,” they say. If the rainforest expires, the hydrological engine, too, is likely to falter, and the link will be cut. 1187

Rieley estimates that during the El Niño event of 1997 and 1998, as Palangkaraya disappeared for months beneath smoke, the smoldering swamps lost more than half a yard of peat layer, and released somewhere between 880 million and 2.8 billion tons of carbon into the atmosphere: the equivalent of up to 40 percent of all emissions from burning fossil fuels worldwide that year. 1240

The next episode in the story of the amazing disappearing carbon sink came in the summer of 2003, when Europe suffered a massive heat wave. Temperatures averaged 10°F above normal during July. In France, the mercury soared above 104°F. With the high temperatures accompanied by less than half the usual rainfall, Europe’s beech trees and cornfields, grasslands and pine forests, were expiring. Philippe Ciais, a Paris-based environmental scientist, followed events. He was a key player in CarboEurope, a project begun a couple of years earlier to measure Europe’s carbon sink. It was launched in the aftermath of the purported discovery of the large North American carbon sink. European politicians, like their U.S. counterparts, were keen to discover if nature was helping them meet their own Kyoto Protocol targets. Ciais’s initial assessment was that, thanks to warmer temperatures, higher carbon dioxide levels in the air, and a longer growing season, Europe’s ecosystems were absorbing up to 12 percent of its man-made emissions. But in 2003, the carbon sink blew a fuse. During July and August that year, when Europe’s ecosystems would normally have been in full bloom and soaking up carbon dioxide at their fastest, around 550 million tons of carbon escaped from western European forests and fields. This was roughly equivalent to twice Europe’s emissions from burning fossil fuels during those two months. All the carbon absorbed in recent years was being dumped back into the atmosphere in double-quick time. The rapid exhaling of the continent’s ecosystems was “unprecedented in the last century,” said Ciais. But he judged that it was likely to be repeated “as future droughts turn temperate ecosystems from carbon sinks into carbon sources.” 1284

nightmare future strapped to a runaway greenhouse effect. And it soon emerged that Europe’s carbon crisis was part of a more general story of summer stress across the Northern Hemisphere. Ning Zeng, of the University of Maryland, found an area of drought stretching from the Mediterranean to Afghanistan. It had lasted from 1998 to 2002, and had eliminated a natural carbon sink across the region that had averaged 770 million tons a year over the previous two decades. Alon Angert, of the University of California at Berkeley, explained the big picture. Through the 1980s and into the early 1990s, the “CO2 fertilization effect” had been working rather well, with increased photosynthesis in the Northern Hemisphere soaking up ever more carbon dioxide. But sometime around 1993 that had tailed off, probably because of droughts and higher temperatures. And since the mid-1990s, the carbon sink had been in sharp decline. From the Mediterranean to central Asia, and even in the high latitudes of Siberia and northern Europe, the added uptake of carbon by plants in the early spring was canceled out by the heat and water stress of hotter, drier summers. The findings, Angert said, dashed widespread expectations of a continuing “greening trend” in which warm summers would speed plant growth and moderate climate change. Instead, “excess heating is driving the dieback of forests, accelerating soil carbon loss and transforming the land from a sink to a source of carbon to the atmosphere.” And further north, beyond the tree line, where some of the fastest warming rates in the world are currently being experienced, fear is growing about the carbon stored in the thick layers of permanently frozen soil known as permafrost. The carbon comprises thousands of years’ accumulation of dead lichen, moss, and other vegetation that never had a chance to rot before it froze. David Lawrence, of the NCAR, reported in 2005 that he expected the top 3 yards of permafrost across most of the Arctic to melt during the twenty-first century. This will leave a trail of buckled highways, toppled buildings, broken pipelines, and bemused reindeer; it will also unfreeze tens and perhaps hundreds of billions of tons of carbon. As the thawed vegetation finally rots, most of its carbon will return to the atmosphere as carbon dioxide. In those bogs and lakes where there is very little oxygen, most of the carbon will be converted into methane—which, as we will see in the next chapter, is an even more potent greenhouse gas. 1297

die altogether. Especially in higher latitudes, warmer and wetter conditions will sometimes mean that trees grow faster and farther north than before—at least where plagues of insects don’t get them first. Right now, the best guess is that, on average, forests are still absorbing more carbon dioxide than they release. Up to a fifth of the carbon dioxide emitted by burning fossil fuels may still be being absorbed by soils and forests. But the sink is diminishing, not rising as many anticipated. And many believe that the sink is doomed as we face more and more years like 1998 and 2003. One of those who fear the worst is Peter Cox, a top young British climate modeler who left the Hadley Centre to spend more time investigating the carbon cycle at the Centre for Ecology and Hydrology, at Winfrith, in Dorset. He believes he is on the trail of the disappearing carbon sink, and is prepared to put a date on when it will disappear. “Basically, we are seeing two competing things going on,” he says. “Plants absorb carbon dioxide as they grow through photosynthesis; but they give back the carbon dioxide as they die and their wood, leaves, and roots decompose. The speed of both processes is increasing.” First, the extra carbon dioxide in the atmosphere encourages photosynthesis to speed up. So plants grow faster and absorb more carbon dioxide. But that extra carbon dioxide is also warming the climate. And the warming encourages the processes that break down plant material and release carbon dioxide back into the air. Because it takes a couple of decades for the extra carbon dioxide to bring about warmer temperatures, w

we have seen the fertilization effect first. Now the process of decay is starting to catch up. The processes do not involve plants alone. Soils have their own processes of inhaling and exhaling carbon. And they, too, will switch from being a net sink to a net source—eventually releasing what carbon they have absorbed in recent decades. Ultimately, “you can’t have the one without the other,” Cox says. “If you breathe in, eventually you have to breathe out.” And soon, most of the rainforests and soils of the world will be breathing out, pouring their stored carbon back into the air. If the climate gets drier and more fires occur, then the release of the carbon dioxide will happen even more quickly. But it will happen anyway. The entire land biosphere—the forests and soils and pastures and bogs—has been slowing the pace of global warming for some decades. Soon the biosphere will start to speed it up. The day the biosphere turns from sink to source will be another tipping point in Earth’s system. Once under way, the process, like collapsing ice sheets, will be unstoppable. Potentially, hundreds of billions of tons of carbon in the biosphere could be destabilized, says Pep Canadell, a carbon-cycle researcher for the Australian government research agency CSIRO. Nobody is quite sure when the tipping point might occur. “It is possible,” says Cox, “that the 2003 surge of carbon dioxide into the atmosphere is the first evidence.” But while some parts of the biosphere may now be irrevocably stuck as carbon sources, the entire system is likely to take a few decades to switch. But of course, much will probably depend on how fast we allow temperatures to rise. Cox suggests that 2040 is probably when the biosphere will start taking its revenge on us for relying on its accommodating nature. He calculates that by the end of the century, the biosphere could be adding as much as 8 billion tons of carbon to the atmosphere each year. That is roughly the amount coming each year from burning fossil fuels today, and probably enough to add an extra 2 or 3°F to global temperatures—degrees that are not yet included in the IPCC forecasts. 1316

thick layers of frozen peat containing tens of billions of tons of carbon. The entire western Siberian peat bog covers approaching 400,000 square miles—an area as big as France and Germany combined. Since its formation, the moss and lichen growing at its surface have been slowly absorbing massive amounts of carbon from the atmosphere. Because the region is so cold, the vegetation only partially decomposes, forming an ever-thickening frozen mass of peat beneath the bog. Perhaps a quarter of all the carbon absorbed by soils and vegetation on the land surface of Earth since the last ice age is right here. The concern now is that as the bog begins to thaw, the peat will decompose and release its carbon. Unlike the tropical swamps of Borneo, which are degrading as they dry out, and producing carbon dioxide, the Siberian bogs will degrade in the wet as the permafrost melts. In fetid swamps and lakes devoid of oxygen, that will produce methane. Methane is a powerful and fast-acting greenhouse gas, potentially a hundred times more potent than carbon dioxide. Released quickly enough in such quantities, it would create an atmospheric tsunami, swamping the planet in warmth. But we have to change tense here. For “would create,” read “is creating.” 1365

a young Siberian ecologist called Sergei Kirpotin, of Tomsk State University, in the heart of Siberia. A collaborator of his at Oxford University had suggested me as a Western outlet for what Kirpotin in his e-mail called an “urgent message for the world.” He had recently undertaken an expedition across thousands of miles of the empty western Siberian peatlands between the bleak windswept towns of Khatany-Mansiysk, Pangody, and Novy Urengoi. Nobody, barring a few reindeer herders, lives out here. It was an area that Kirpotin and his colleagues had visited several times in the past fifteen years, observing the apparently unchanging geography and biology of the tundra. This time they had found a huge change. “We had never seen anything like it, and had not expected it,” he said. Huge areas of frozen peat bog were suddenly melting. The former soft, spongy surface of lichens and moss was turning into a landscape of lakes that stretched unbroken for hundreds of miles. He described it as an “ecological landslide that is probably irreversible and is undoubtedly connected to climate warming.” Most of the lakes had formed, he said, since his previous visit, three years before. There was clearly a huge danger that the melting peatland would begin to generate methane. I had come across Russian scientists before who had been left out in the tundra too long with their crackpot theories. But Kirpotin did not fit that category. He had only recently been appointed vice-rector of his university. And the more I checked it, the more likely his story seemed. Larry Smith, of the University of California at Los Angeles, told me that the western Siberian peat bog was warming faster than almost any other place on the planet. Every year, he said, the spring melt was starting earlier and the rainfall was increasing, making the whole landscape wetter. Others were finding big methane emissions in the region. Katey Walter, of the University of Alaska in Fairbanks, had told a meeting of the U.S. Arctic Research Consortium just a few weeks before about “hot spots” of methane releases from lakes in eastern Siberia that were “unlike anything that has been observed before.” Peat on the bottom of lakes was converting to methane and bubbling to the surface so fast that it kept the lakes from freezing over in winter. And Euan Nisbet, of London’s Royal Holloway College, who oversees a big international methane-monitoring program that includes Siberia, said his estimate was that methane releases from the western Siberian peat bog were up to 100,000 tons a day, which meant a warming effect on the planet greater than that of all the U.S.’s man-made emissions. “This huge methane flux depends on temperature,” he said. “If peatlands become wetter with warming and permafrost degradation, methane release from peatlands to the atmosphere will dramatically increase.” So I wrote up Kirpotin’s story for New Scientist magazine, emphasizing the methane angle. It went around the world. The London Guardian reproduced much of it the day after the story was released, under the front-page banner headline “Warming hits ‘tipping point.’” In Dr. Strangelove, one nuclear device dropped on Siberia unleashed a thousand more. Here, in the real world of melting Arctic permafrost, one degree of global warming could unleash enough methane to raise temperatures several more degrees. I had visited western Siberia a few years before, traveling with Western forest and oil-industry scientists to Noyabr’sk, a large oil town on the south side of the great peat bog. On a series of helicopter rides, I had seen thousands of square miles of still-intact swamp sitting on top of permafrost. The landscape was terribly scarred by human activity: divided into fragments by oil pipelines, roads, pylons, and seismic-survey routes; smeared with spilled oil; littered with abandoned drums, pipes, cables, and the remains of old gulags and half-built railways; and shrouded in black smoke from gas flares. The reindeer had fled, and the bears had been hunted almost… 1375

unlikely. They are simply part of the natural flux of chemicals into and out of the atmosphere. Though if evidence emerged that they were emitting more methane than before, as a result of warming, that would be a big worry. And that is precisely what seems to be happening with peat bogs in the Arctic permafrost. There is a critical line around the edge of the Arctic that marks the zone of maximum impact from global warming. It is a front line of climate change, marking the melting-point isotherm, where the average year-round temperature is 32°F, the melting point of ice. To the north of this line lie ice and snow, frozen soil and Arctic tundra. To the south lie rivers and lakes and fertile soils where trees grow. The line runs through the heart of Siberia and Alaska—where huge blocks of frozen soil, stable for thousands of years, are now melting—and across Canada, skirting the southern shore of Hudson Bay, through the southern tip of Greenland, and over northern Scandinavia. 1432

produce a constant and extremely accurate readout of the flux of methane coming off the mire. There is a regular loss of methane from the bog now, says Christensen. Some of the gas seeps out of the boggy soil, some bubbles up through the pond water, and some is brought to the surface by plants. The figures sound small: an average of 0.0002 ounces of methane is released per 10 square feet of mire per hour. But scaled up, this packs a greenhouse punch. Combining the flux data with satellite images that show the changing vegetation on the Stordalen mire, Christensen estimates that in the past thirty years, methane emissions have risen by 30 percent and increased this small bog’s contribution to global warming by 50 percent. There is nothing unusual about Stordalen. It was not chosen to give dramatic results. Monitoring began back when researchers were intent only on tracking what they believed to be unchanging processes. Other local mires are faring far worse as the melting-point isotherm moves north. Out in the nearby birch forest, the Katterjokk bog has gone in just five years from being an area largely underlain by permafrost to being an ice-free zone. Rather, Stordalen looks to be typical of bogs across northern Scandinavia and right round the melting-point isotherm. Individually they are only a pinprick on climate change, but taken together they threaten an eruption. Back in the warmth of the Abisko library, Christensen found a study showing that half the bog permafrost in the north of Finland has disappeared since 1975. The rest will be gone by 2030. Christensen himself has coordinated a study of methane emissions from peatlands at sites right around the Arctic, using temporarily deployed equipment for measuring gas fluxes. North of the melting-point isotherm, the study shows little change. Little methane bubbles out of the tundra in northeastern Greenland, for instance, where the average temperature is still around 14°F. But, he says, “as temperatures rise, methane emissions grow exponentially.” The highest emissions are in western Siberia and Alaska, where big temperature rises are taking place. 1464

Larry Smith, of UCLA, estimates that the northern peat bogs of Siberia, Canada, Scandinavia, and Alaska could contain 500 billion tons of carbon altogether, or one third of all the carbon in all the world’s soils. If all that carbon were released as carbon dioxide, it would add something like 5°F to average temperatures around the world. But if most of it were released as methane instead, it could provide a much bigger short-term kick. How much bigger would depend on how fast the methane was released, because after a decade or so, methane decomposes to carbon dioxide. If the methane all came out at once, it could raise temperatures worldwide by tens of degrees. That may be an unlikely scenario. Even so, the odds must be that melting along the melting-point isotherm is destined to have a major impact on the twenty-first-century climate. From Stordalen to Pangody, these bogs are primed. 1490

future generations can expect the oceans’ biological pump to decline as the world warms. The story of the oceans’ exchanges of carbon dioxide with the atmosphere may turn out to be rather like that of the carbon sink on land. In the short term, the extra carbon dioxide in the air has fertilized the biological pump and encouraged greater uptake. But in the longer term, warmer oceans are likely to weaken the biological pump and release large amounts of carbon dioxide into the air. Is something of the sort likely? Very much so, said Paul Falkowski, of Rutgers University, in New Jersey, in a long review of the carbon cycle in Science. “If our current understanding of the ocean carbon cycle is borne out, the sink strength of the ocean will weaken, leaving a larger fraction of anthropogenically produced carbon dioxide in the atmosphere.” With tens of millions of tons of carbon moving back and forth between the atmosphere and the oceans each year, it would take only a small change to turn the oceans from a carbon sink into a potentially very large carbon source. This may already be happening. In 2003, the NASA scientist Watson Gregg published satellite measurements suggesting that the biological productivity of the oceans may have fallen by 6 percent since the 1980s. It could be part of a natural cycle, he said, but it could also be an early sign that 1514

So far, since the beginning of the Industrial Revolution, the oceans have absorbed from the atmosphere something like 130 billion tons of carbon resulting from human activities. While much of it has fallen to the seabed, a considerable amount remains dissolved in ocean waters—with a singular and rather remarkable effect: it is making the oceans more acid. 1524

Acidity, measured as the amount of hydrogen ions in the water, is already up by 30 percent. To put it another way, the pH has dropped by 0.1 points, from 8.2 to about 8.1. If the oceans continue to absorb large amounts of the atmosphere’s excess carbon dioxide, acidification will have more than tripled by the second half of this century, badly damaging ocean ecosystems. The most vulnerable oceans are probably the remote waters of the Southern Ocean and the South Pacific. They are distant from land, and so are already short of carbonate—in particular a form known as aragonite, which seems to be the most critical. 1530

“Corals could be rare on the tropical and sub-tropic reefs such as the Great Barrier Reef by 2050,” warned a report from Britain’s Royal Society. “This will have major ramifications for hundreds of thousands of other species that dwell in the reefs and the people that depend on them.” Other species may suffocate or die for want of energy. High-energy marine creatures like squid need lots of oxygen, but the heavy concentrations of carbon dioxide will make it harder for them to extract oxygen from seawater. 1534

It was Earth’s biggest fart ever. Fifty-five million years ago, more than a trillion tons of methane burst from the ocean, sending temperatures soaring by up to 18°F extinguishing two thirds of the species in the ocean depths, and causing a major evolutionary shock at the surface. The story, while from long ago, is a reminder that methane lurks in prodigious quantities in many parts of the planet—not just in frozen bogs—and that one day it could be liberated in catastrophic quantities. The first whiff of this prehistoric megafart was unearthed in 1991, from a hole drilled about a mile into a submarine ridge just off Antarctica. Examining the different layers of the ancient sediment removed from the hole, the geologists James Kennett, of the University of California at Santa Barbara, and Lowell Stott, of the University of Southern California in Los Angeles, found evidence of a sudden mass extinction of organisms living on the sea floor 55 million years ago. They had apparently disappeared from the ocean within a few hundred years—perhaps less. Kennett and Stott soon discovered that other researchers had detected evidence of similar extinctions from the same era, in Caribbean and European marine sediments. This was clearly a global event—one of the largest extinctions in the history of the planet. What happened? Looking at the chemistry of fossils in the drilled sediment, the two geologists found some intriguing clues. There was, for instance, a sudden change in the ratio of two oxygen isotopes, known as oxygen-18 and oxygen-16. The ratio in the natural environment is very sensitive to temperature, and this isotopic “signature” in sediments and ice cores is a widely used indicator of past temperatures. Kennett and Stott concluded that after rising gradually for several million years, ocean temperatures had soared much more dramatically about 55 million years ago. The change happened at the same time as the extinctions. The sediments also revealed a second isotopic shift, this time between isotopes of carbon. Earth’s organic matter suddenly contained a lot more carbon-12. From somewhere, trillions of tons of the stuff had been released into the environment. Clearly a greenhouse gas, either carbon dioxide or methane, had caused both changes. The problem was finding a likely source with sufficient capacity to do the job. Jerry Dickens, a biochemist at James Cook University, in Townsville, Australia, set himself the task of working out where this carbon-12 might have come from. The first suggestion was carbon dioxide in volcanic eruptions, which are a rich source of carbon-12 in the modern atmosphere. But, says Dickens, that would have required volcanic eruptions at an annual rate a hundred times the average over the past billion years. Fossil fuels like coal, oil, and natural gas were possible sources. But they are mostly buried out of harm’s way, sealed in rocks. Given that there were no creatures digging them up and burning them at the time, that, too, seemed implausible. The same was true for methane from swamps and wetlands like those found today in Borneo and Siberia. About three times as many of them existed then, but even so, they could not have delivered the amount of carbon-12 required. Only one last source—big enough and accessible enough to unleash a climatic eruption—was left. That, Dickens suggested, had to be the vast stores of methane that geologists have recently been discovering frozen in sediment beneath the oceans: methane clathrates. 1551

“Right now, most everybody seems to accept that the release of methane clathrates is the only plausible explanation for what happened 55 million years ago,” says Dickens. His chronology goes like this. For several million years, the world was warming, probably because of extraterrestrial influences such as the sun. The warming gradually heated sediments on the seabed until the clathrates started to shatter and release methane. Perhaps it happened in stages, with warming releasing methane that caused further global warming that released more methane. But at any rate, over a few centuries, or at most a few thousand years, trillions of tons of methane were eventually released into the atmosphere—enough to cause the observed global shift in carbon isotopes and a large and long-lasting hike in temperatures. “The world just went into chaos,” as Dickens puts it. Life on Earth was transformed almost as much as by the asteroid hit 10 million years before that wiped out the dinosaurs. Once the methane releases had ended, the planet’s ecosystems gradually absorbed the remainder of the great fart, the climate recovered its equilibrium, and the oceans settled down again. But the evolutionary consequences of that long-ago event have lasted to this day. By the time the climate had recovered, many land and ocean species had become extinct, while others evolved and flourished. “At the same time as the great warming, there was a major evolution and dispersal of new kinds of mammals,” says Chris Beard, a paleontologist at the Carnegie Museum of Natural History, in Pittsburgh. It was “the dawn of the age of mammals.” Among those on the evolutionary move were all kinds of ungulates—including the ancestors of horses, zebras, rhinos, camels, and cattle—and primates. And among the new primates evolving in the balmy conditions were the omomyids, the ancestors of simians, who in turn spawned humans. 1588

there is a second and much faster route downward for the heat. The U.S. naval researcher Warren Wood has discovered that seabed sediments often contain cracks that extend into the frozen clathrate zone. Warm water takes no time to penetrate the cracks and can quickly unleash the methane. As Richard Alley said of the crevasses inside ice caps, “Cracks change everything.” Methane is only the third most important greenhouse gas, after water vapor and carbon dioxide. But, says Euan Nisbet, “arguably it is the most likely to cause catastrophic change.” This is “because the amount needed to change climate is smaller than for carbon dioxide, and because the amount of the gas available, in soils and especially methane clathrates, is so large.” Methane has clearly had catastrophic effects in the past. In the dangerous world of sudden and unstoppable climate change, methane is the gunslinger. 1683

It is rather like using a central heating system to warm a house. We have to heat all the water in all the radiators before the full effect of heating air in the house is felt. Likewise, the full impact of global warming will be felt in Earth’s atmosphere only after the oceans have been warmed. 1712

The best guess is that about 1°F—representing about 0.8 watts per 10.8 square feet—is currently lopped off the temperature of the atmosphere by the task of warming the oceans. That is warming “in the pipeline,” says Hansen. Whenever we manage to stabilize greenhouse gases in the atmosphere, there will still be that extra degree to come. Half of it, Hansen reckons, will happen within thirty to forty years of stabilization, and the rest over subsequent decades or perhaps centuries. 1714

On average, the planet’s albedo is 30 percent—which means that 30 percent of the sunlight reaching the surface is reflected back into space, and 70 percent is absorbed. But that is just an average. In the Arctic, the albedo can rise above 90 percent, while over cloudless oceans, it can be less than 20 percent. 1727

of the Northern Hemisphere, the vast expanses of white were enough to increase the planet’s albedo from 30 to 33 percent. And that was enough to reduce solar heating of Earth’s surface by an average of 4 watts per 10.8 square feet. It was responsible for two thirds of the cooling that created the glaciation itself. And just as more ice raised Earth’s albedo and cooled the planet back then, so less ice will lower its albedo and warm the planet today. According to the albedo expert Veerabhadran Ramanathan, of the Scripps Institution of Oceanography, if the planet’s albedo dropped by just a tenth from today’s level, to 27 percent, the effect would be comparable to a fivefold increase in atmospheric concentrations of carbon dioxide.” To underline the importance of the issue, Ramanathan is organizing a Global Albedo Project to probe the albedo of the planet’s clouds and aerosols. Lightweight robotic aircraft began flying from the Maldives, in the Indian Ocean, in early 2006. The project could prove as important as Charles Keeling’s measurements of carbon dioxide in the air. 1730

And such is the power of the warming feedbacks that it is coming with ever-greater speed. As lakes crack open, rivers reawaken, and the ice and snow disappear, the landscape is suddenly able to trap heat. The “cold trap” of reflective white ice is sprung, and temperatures can rise by 18°F in a single day. No sooner have the snowsuits come off than travelers are sweltering in shirtsleeves. Stuart Chapin, of the Institute of Arctic Biology, in Fairbanks, says that the extra ice-free days of a typical Alaskan summer have so far been enough to add 3 watts per 10.8 square feet to the average annual warming there. As a result, he says, the Arctic is already absorbing three times as much extra heat as most of the rest of the planet. And there are other positive feedbacks at work in the Arctic tundra. In many places, trees and shrubs are advancing north, taking advantage of warmer air and less icy soils. Trees are darker than tundra plants. And because snow usually falls swiftly off their branches, they provide a dark surface to the sun earlier than does the treeless tundra. Chapin estimates that where trees replace tundra, they absorb and transfer to the atmosphere about an extra 5 watts per 10.8 square feet. 1740

presumption being that that will cool the planet. But in Arctic regions, the effect will usually be the reverse, because although new trees will indeed absorb carbon dioxide, they will also warm the planet by absorbing more solar radiation than the tundra they replace. 1752

Richard Betts, of Britain’s Hadley Centre, says that in most places in the Arctic, the warming will win. In northern Canada, he estimates, the warming effect of a darker landscape will be more than twice the cooling effect from the absorption of carbon dioxide. And in the frozen wastes of eastern Siberia, where trees grow even more slowly, the warming effect will be five times as great. Every tree planted will hasten the spring, hasten the Arctic thaw, and hasten global warming. 1755

If carbon dioxide in the atmosphere doubled from its pre-industrial levels, the graph suggested, global warming would rise far above the widely accepted prediction of 2.7 to 8.1°F. The real warming could be 18°F or even higher. Surely some mistake? Too much wine at lunch? No. This was for real. Till now, climate modelers have graphed the likely effect of doubling carbon dioxide levels using what is known in the trade as a bell graph: the best estimate—about 5°—falls in the middle, and probabilities fall symmetrically on either side. So the chance that the real warming will be 8.1°, for instance, is the same as that it will be 2.7°. But the graph of likely warming that James Murphy, of the Hadley Centre, was displaying on an overhead screen that morning looked very different. The middle point of the prediction was much the same as everybody else’s. But rather than being bell-shaped, the graph was highly skewed, with a long “tail” at the top end of the temperature range. It showed a very real chance that warming from a doubling of carbon dioxide would reach 10, 14, 18, or even 21°F. Carbon dioxide is widely expected to reach double its pre-industrial levels within a century if we carry on burning coal and oil in what economists call a business-as-usual scenario. But nobody has seriously tried to work out what 18 degrees of extra warming would mean for the planet or for human civilization. It would certainly be cataclysmic. Let’s be clear. Murphy was not making a firm prediction of climatic Armageddon. But neither was this a Hollywood movie. The high temperatures on the display, he said, “may not be the most likely, but they cannot be discounted.” Nor was Murphy alone with his tail. The meeting also saw a projection by David Stainforth, of Oxford University, that suggested a plausible warming of 21°F. Six months later, this new generation of scarily skewed distributions started turning up in the scientific journals. Unless 1762

So what is going on? For one thing, modelers have for the first time been systematically checking their models for the full range of uncertainty about the sensitivity of the climate system to feedbacks that might be triggered by greenhouse gases. Assessing those efforts for the IPCC was the main task of the Exeter meeting. And what has emerged very strongly is that clouds, which have always been seen as one of the weakest links in the models, are even more of a wild card than anyone had imagined. The old presumption that clouds will not change very much as the world warms is being turned on its head. There may be more clouds. Or fewer. And their climatic impact could alter. It is far from clear whether more clouds would damp down the greenhouse effect, as previously thought, or intensify it. Being mostly of an age to remember 1970s Joni Mitchell songs, the climate scientists in Exeter mused over coffee that they had “looked at clouds from both sides now.” And they didn’t like what they saw. 1778

suppressed globally by aerosols? “We are dealing with a coiled spring, with temperatures being held back by aerosols,” says Susan Solomon, chief scientist for the IPCC. “If you shut off aerosols today, temperatures would increase rapidly, but we don’t yet know exactly how much, because we don’t know how coiled the spring is.” The best guess until recently was that aerosols were holding back a quarter of the warming, or about 0.36°F. In other words, a greenhouse warming of 1.4 degrees since pre-industrial times has been reduced by aerosols to a current warming of 1 degree. But critics say this calculation is little more than a guess, and the first efforts at a more direct measurement of radiation changes caused by aerosols suggest that the spring may be much more tightly coiled. 1854

aerosols could be disguising not a quarter but a half to three quarters of the present greenhouse effect. “They are giving us a false sense of security,” he said. Past calculations of the cooling effect of aerosols, he said, had been inferred by comparing the warming predicted by climate models with actual warming. The aerosol cooling effect was reckoned as the warming that had “gone missing.” But as the modeler Stephen Schwartz, of the Brookhaven National Laboratory, put it on another occasion, “that approach assumes that we know that the climate model is accurate, which of course is what needs to be tested.” After dinner in Dahlem—over a few Heinekens, as I remember—Peter Cox, a hard-thinking, hard-drinking climate modeler then at the Met Office in England, did some back-of-the-coaster calculations about what Crutzen’s conjecture might mean for future climate. He became rather absorbed. A couple of bottles later, he had come to the conclusion that, if Crutzen was right, the true warming effect of doubling carbon dioxide could be more than twice as high as existing estimates, at 12 to 18°F. The following morning, his more sober colleagues registered agreement. I went home and wrote a story for New Scientist, quoting Cox’s numbers and the workshop’s conclusion that the findings had “dramatic consequences for estimates of future climate change.” I was rather excited by it, but the story decidedly failed to interest the rest of the world. Later Cox, his Hadley Centre colleague Chris Jones, and Meinrat Andreae, of the Max Planck Institute for Chemistry, in Mainz, tested the guesses in more detail, and reached the same conclusions that Cox had on his coaster. They did it by running climate models that assumed either a low greenhouse warming moderated by a small cooling from aerosols, or a bigger greenhouse warming held back by a bigger aerosol cooling. They reported in Nature that the “best fit” involved a warming from doubling greenhouse gases that, without the moderating effect of aerosols, would be “in excess of” 10.8 degrees and “may be as high as” 18 degrees. “Such an enormous increase in temperatures would be greater than the temperature changes from the previous ice age to the present,” wrote the three researchers. “It is so far outside the range covered by our experience and scientific understanding that we cannot with any confidence predict the consequences for the Earth.” Still the world didn’t take much notice. I asked Andreae about this strange indifference. “It’s always amazing,” he e-mailed me, “how many people don’t see how important this issue is for the future development of the climate system.” The discussion at the Dahlem meeting had rather changed his worldview, he said. “Before the Dahlem meeting, I was becoming kind of climate complacent, in the sense that I was convinced of coming global warming, but felt that it was going to be a couple of degrees and we could deal with that. Also, I felt that the aerosols were doing us a favor in slowing and reducing warming. But after it, I came to realize that the aerosols brake will come off global warming, and also that the aerosol cooling introduces a great uncertainty about climate sensitivity. I’m now in a situation where, as a human being, I hope that I’m wrong as a scientist. If we are right with our current assessment, there are really dire times ahead.” Models are only models, of course. But whatever the precise scale of the current aerosol effect, it would be quite wrong to imagine that it can carry on protecting us from the worst as global warming gathers momentum. That is because aerosols and greenhouse gases have very different life spans in the atmosphere. Aerosols stay for only a few days before they are washed to the ground in rain. By contrast, carbon dioxide has a life span of a century or more. If, for the sake of argument, we stuck with current emission levels of both aerosols and carbon dioxide, the aerosol levels in the air would stay the same. There would be no… 1866

The truth seems to be this. A cloud of soot—whether from a forest fire, a cooking stove, or an industrial boiler—shields Earth from the sun’s rays, thus cooling the ground beneath. But it also absorbs some of that radiation and converts it to heat, which it radiates into the surrounding air. So soot cools the ground but warms the air. The ground doesn’t move, but the air does. The cooling effect, though intense, is mostly located near the pollution source; while the warming effect, though less intense, extends much farther. 1908

soot in global climate. Jim Hansen suggests that it could be responsible for up to a quarter of warming over parts of the Northern Hemisphere. He believes that soot may be the third most important man-made contributor to the greenhouse effect, behind carbon dioxide and methane, and that controlling it offers one of the cheapest, most effective, and quickest ways of curbing global warming. Even so, in those parts of the world where it is produced in large quantities, it is undoubtedly cooling the land. Those parts of the world are mainly in Asia. And now there is a new concern. Could aerosol emissions in India and China turn off the Asian monsoon? 1912

India’s “brown haze.” Its heart is over the northern Indian plain, one of the world’s most densely populated areas, which suffers near-constant smog during the winter months. This is a giant version of the old pea-soup smog that used to hit London in the days when the city was heated by coal fires. As I complete this chapter, Delhi’s air is reportedly worse than ever, with thick smog preventing flights from its airport. But the haze spreads more widely, shrouding the whole of India and beyond. The term “brown haze” was coined by scientists during the first investigation of the phenomenon. In 1999, some two hundred scientists taking part in the Indian Ocean Experiment (INDOEX) assembled in the Maldives for a three-month blitz of measuring the air over India and the Indian Ocean from aircraft and ships. The results were a surprise, even to those who had planned the project. Every winter, from November to April, a pall of smog more than a mile thick occupied a huge area south of the Himalayas, stretching from Nepal through India and Pakistan, out over the Arabian Sea and the Bay of Bengal, and even south of the equator as far as the Seychelles and the Chagos Islands. It covered 4 million square miles, an area seven times the size of India. “To find thick brown smog 13,000 feet up in the Himalayas, and over the coral islands of the Maldives, was a shock,” says Paul Crutzen, one of the masterminds of the project. Crutzen, who won a Nobel Prize for predicting a dramatic thinning of the ozone layer fifteen years before it happened, said the haze had a similar potential to cause “unpleasant environmental surprise” in India and beyond. The haze could, he said, have “very major consequences” for the atmosphere. The INDOEX findings proved controversial 1925

a hundred days of monsoon rains to water the crops that feed a billion people. 1968

When Yun Qian and Dale Kaiser, of the U.S. government’s Northwest National Laboratory, in Richmond, Washington, studied the records of Chinese meteorological sunshine recorders over the past fifty years, they found a decline in sunshine since 1980 of 5 or 6 percent in the most polluted south and east of the country. And this decline is lowering temperatures. While global warming is evident across much of China, daytime temperatures in the most polluted regions have fallen by about 1°F. That, in turn, is altering rainfall patterns. In the south of the country, the monsoon rains are becoming stronger, with flooding in the great southern river, the Yangtze; whereas farther north, in the catchment of the Yellow River, there is now less rainfall. Chinese records, which are among the most meticulous in the world, suggest that this shift is the biggest alteration in the country’s rainfall patterns in a thousand years. To some extent, links between the rainfall trends and the increasing brown haze are conjecture. But when climate models are programmed to include a strong Asian brown haze, many of them produce extra rainfall in southern China, coupled with near-permanent droughts in the north. So if the models are right, while the haze lingers, these major calamities are set to continue. Meinrat Andreae estimates that about 8 billion tons of biomass is burned in the tropics each year—approaching 1 ton for every inhabitant of Earth. All of it produces aerosols that billow into the air. Asian countries, with their huge populations, have the worst smog. But parts of Africa and the Brazilian Amazon are also shrouded when farmers clear land for crops by burning grasslands and forests. Hundreds of thousands of fires burn across the Brazilian Amazon each year, covering the area with billowing dense smoke. During the weeks of burning, the amount of sunshine reaching the ground typically drops by 16 percent. In Zambia, studies have found a 22 percent drop in sunlight as the savannah is burned. The changes are “causing all sorts of havoc with the atmospheric circulation,” says Dale Kaiser, of the Northwest National Laboratory, who is the author of the Amazon study. Over the Amazon, he says, the smoke causes cooling and suppresses the formation of raindrops. That both reduces rainfall and keeps the aerosols in the air longer. Meanwhile, the buildup of water vapor results in the upper atmosphere’s becoming wetter, according to Daniel Rosenfeld, of the Hebrew University, who flew research planes through the smoke over the Amazon. It eventually forms a few extremely intense thunderstorms, known in the trade as “hot towers,” which cause hailstorms. Hail falls in the Amazon only when fires have been burning. Some of these changes could have impacts far beyond the regions where the smoke forms. Condensation in Amazon hot towers releases very large amounts of heat into the upper atmosphere, influencing jet streams and other wind patterns across the tropics and beyond. And more water vapor may reach the stratosphere, where it could increase ozone destruction. Meanwhile, modeling studies supervised by Jim Hansen suggest that soot emissions over India and China may trigger drought in the African Sahel and even warming in western Canada—though exactly how remains unclear. These impacts are, of course, only the predictions of climate models. It is hard to prove whether they reflect events in the real world. But the models are based on real physical processes in the atmosphere. So at the least, they suggest the potential for a worldwide climatic change from the effect of aerosol emissions in the tropics. Cooking stoves in India, it seems, could have global consequences. 1973

just one chemical is responsible for cleaning most of the pollution out of the atmosphere. 2003

The chemical in question is called hydroxyl. Its molecules are made up of one atom of oxygen and one atom of hydrogen. They are created when ultraviolet radiation bombards common gases such as ozone and water vapor. But it is the most ephemeral of chemicals. Almost as soon as it is created, it reacts with some other molecule, mostly some polluting substance, and is gone again. It has an average lifetime of about a second. Because it comes and goes so fast, it is also rather rare, with an average concentration in the atmosphere of less than one part per trillion. You could pack every last molecule of the stuff into the Great Pyramid of Egypt and still have room for two more atmospheres’ worth. Yet it is crucial to life on Earth. For hydroxyl is, more or less literally, the atmosphere’s detergent. It transforms all manner of gaseous pollutants so that they become soluble in water and wash away in the rain. The process is called oxidation. To take one example, hydroxyl converts sulfur dioxide, which would otherwise clog up the air for months, to acid rain, which soon falls to the ground. Much the same happens to carbon monoxide and methane (both of which are oxidized to carbon dioxide), nitrogen oxide, and many others. The one major pollutant it doesn’t neutralize is carbon dioxide, which, partly as a result, has a much longer lifetime in the atmosphere than most other pollutants. Concentrations of hydroxyl are generally much higher in the warm air over the tropics, where ultraviolet radiation is most intense, but are close to nonexistent in the Arctic, where, despite ozone holes, there is usually little ultraviolet around to make more hydroxyl. As a result, “toxic chemicals that might survive for only a few days in the tropics will last for a year or more in Arctic air,” says Frank Wania, of the University of Toronto. That is one reason, he says, why pollutants like acid hazes and pesticides accumulate in the Arctic, poisoning polar bears and much else. Hydroxyl has a hard life keeping up with our polluting gases, especially since it is destroyed in the process of oxidizing them. Fears that the atmosphere’s janitor could be overworked and in trouble go back a few years. But because the chemical is so transient and rare, it is virtually impossible to measure hydroxyl concentrations directly. All the estimates are indirect, based on measuring chemicals with which it reacts. So when Joel Levine, a NASA chemist, suggested back in the 1980s that hydroxyl in the air could have declined by 25 percent over the previous thirty years, his argument didn’t make much headway, because he couldn’t prove it. There was no chance of his producing something definitive like the Keeling curve on carbon dioxide. In 2001, a brief forecast in the IPCC report of a possible 20 percent decline in hydroxyl by 2100, because of excess demands placed on it by a rising tide of pollution, met much the same fate. So did a report the same year by Ronald Prinn, a leading atmospheric chemist from the Massachusetts Institute of Technology, of a possible decline in global hydroxyl levels during the 1990s. But we should be concerned. Hydroxyl spends more energy oxidizing one chemical than any other. That chemical is carbon monoxide. Emitted mostly from forest fires, fossil fuel burning, and small domestic stoves, it has for many years been the Cinderella pollutant. Dangerous to humans in confined spaces, it has been largely ignored as an environmental pollutant threat. The biggest concern has been that it oxidizes to carbon dioxide. But its concentration in the air tripled worldwide during the twentieth century. That suggests a bottleneck that could be the prelude to a wider breakdown of the cleaning service. 2004

Sasha Madronich, of the National Center for Atmospheric Research, in Boulder, Colorado is one of the few researchers who have attempted to model how hydroxyl might respond to changing pollution levels. He says that the atmospheric cleaning service could have a breaking point: “Under high pollution, the chemistry of the atmosphere becomes chaotic and extremely unpredictable. Beyond certain threshold values, hydroxyl can decrease catastrophically.” Many urban areas, he says, “are already sufficiently polluted that hydroxyl levels are locally suppressed.” This is partly because the sheer volume of pollution consumes all the available hydroxyl, but also because the smog itself prevents ultraviolet radiation from penetrating into the air to create more. “The oxidation processes that should clean the air virtually shut down in smog-bound cities like Athens and Mexico City,” he says. It takes a breath of fresh air from the countryside to revive them. “If, in future, large parts of the atmosphere are as polluted as these cities are today, then we could anticipate the collapse of hydroxyl on a global scale.” With large areas of Asia becoming submerged beneath a cloud of brown haze every year, it may be that the atmosphere is approaching just such a crisis. Nobody knows. But the doomsday scenario may require another element. If the cleanup chemical is under pressure from too much dirt, the worst thing to happen would be a decline in supply of the chemical. So the critical question may be: What might reduce the amount of hydroxyl produced by the atmosphere? Clearly smog is a problem, because it reduces ultraviolet radiation in the lower atmosphere. But a thicker ozone layer, nature’s protective filter against ultraviolet, could have the same effect. And the world is currently working quite hard to repair the damaged ozone layer and make it thicker. Our efforts to solve one environmental problem could exacerbate another. The worry is that over the past thirty years or so, we have been living on borrowed time with hydroxyl. Pollutants like CFCs have thinned the ozone layer, and so let more ultraviolet radiation into the lower atmosphere. And while that is bad for marine ecosystems, and probably causes more skin cancers, it has ensured a beefed-up supply of hydroxyl to cleanse the air of many other pollutants. Arguably, it has helped the planetary cleaning service keep on top of a rising tide of pollution. Over the next half century, we should succeed in healing the ozone layer once again. There are good ecological, human-health, and even climatic reasons for doing this. But it could have a downside for hydroxyl. So here is the doomsday scenario. If we repair the ozone layer, we will reduce hydroxyl production to the levels of the mid-twentieth century. But we will be doing it at a time when the demands on hydroxyl’s services are considerably higher than they were then. That could be the moment when Madronich’s threshold is crossed, and oxidation processes in the atmosphere go into sharp decline. I have no data, no models, and no peer- reviewed papers to justify this scenario. It is just that: a scenario and not a prediction. But it is plausible speculation. It could conceivably happen. 2032

For more than a decade, Schlesinger has been making Broecker’s case that a shutdown of the ocean conveyor could be closer than mainstream climate modelers think. Some critics feel that he just doesn’t know when to give up and move on. But he has stuck with it, criticizing the IPCC and its models for systematically eliminating a range of quite possible doomsday scenarios from consideration. “The trouble with trying to reach a consensus is that all the interesting ideas get eliminated,” he said at the conference. Science by committee ends up throwing away the good stuff—like the idea of the conveyor’s shutting down. But in Exeter, Schlesinger was back in vogue. He had been invited to present his model findings that a global warming of just 3.6°F would melt the Greenland ice sheet fast enough to swamp the ocean with freshwater and shut down the conveyor. The risk, he said, was “unacceptably large.” Although he had been saying much the same for a decade, he was now considered mainstream enough to be invited across the Atlantic to expound his ideas at a conference organized by the British government. And he was no longer alone. Later in the day, Peter Challenor, of the British National Oceanography Centre, in Southampton, said he had shortened his own odds about the likelihood of a conveyor shutdown from one in thirty to one in three. He guessed that a 3-degree warming of Greenland would do it. Given how fast Greenland is currently warming, that seems a near certainty. 2363

whatever the skepticism about some of Broecker’s grander claims, the conveyor may already be in deep trouble. Since the mid-1960s, says Ruth Curry, of the Woods Hole Oceanographic Institution, the waters of the far North Atlantic off Greenland—where Wadhams’s chimneys deliver water to the ocean floor and maintain Broecker’s conveyor—have become decidedly fresher. In fact, much of the change happened back in the 1960s, when some 8 billion acre-feet of freshwater gushed out of the Arctic through the Fram Strait. Oceanographers called the event the Great Salinity Anomaly. To this day, nobody is quite sure why it happened. It could have been ice breaking off the great Greenland ice sheet, or sea ice caught up in unusual circulation patterns, or increased flow from the great Siberian rivers like the Ob and the Yenisey. Luckily, most of the freshwater rapidly headed south into the North Atlantic proper. Only 3 billion acre-feet remained. Curry’s studies of the phenomenon, published in Science in June 2005, concluded that 7 billion acre-feet would have been enough to “substantially reduce” the conveyor, and double that “could essentially shut it down.” So it was a close call. With the region’s water still substantially fresher than it was at the start of the 1960s, the conveyor remains on the critical list. Another single slug of freshwater anytime soon could be disastrous. In the coming decades, some combination of increased rainfall, increased runoff from the land surrounding the Arctic, and faster rates of ice melting could turn off the conveyor. And there would be no turning back, because models suggest that it would not easily switch back on. “A shift in the ocean conveyor, once initiated, is essentially irreversible over a time period of many decades to centuries,” as Broecker’s colleague Peter deMenocal puts it. “It would permanently alter the climatic norms for some of the most densely populated and highly developed regions of the world.” As I prepared to submit this book to the publisher, new research dramatically underlined the risks and fears for the conveyor. Harry Bryden, of the National Oceanography Centre, had strung measuring buoys in a line across the Atlantic, from the Canary Islands to the Bahamas, and found that the flow of water north from the Gulf Stream into the North Atlantic had faltered by 30 percent since the mid-1990s. Less warm water was going north at the surface, and less cold water was coming back south along the ocean floor. This weakening of two critical features of the conveyor was, so far as anyone knew, an unprecedented event. Probing further, Bryden found that the “deep water” from the Labrador Sea west of Greenland still seemed to be flowing south. But the volume of deep water coming south from the Greenland Sea, the site of Wadhams’s chimneys, had collapsed to half its former level. The implication was clear: the disappearing chimneys that Wadhams had watched with such despair were indeed hobbling the ocean circulation. Broecker seemed on the verge of being proved right that the ocean conveyor was at a threshold because of global warming. None of this demonstrated that Broecker’s bleaker predictions of what would happen if the conveyor shut down were about to come true—that “London would experience the winter cold that now grips Irkutsk in Siberia.” Something more like the little ice ages was the worst that most climate modelers feared. But there did seem to be a real possibility that many of Broecker’s ideas were about 2375

first years of the twenty-first century, around 30 percent was. “The climate models predict increased drying over most land areas,” he says. “Our analyses suggest that this may already have begun.” That seems to be a common view. Mark Cane, a specialist in Pacific weather at Lamont-Doherty, says scarily: “The medieval warm period a thousand years ago was a very small forcing compared to what is going on with global warming now. But it was still strong enough to cause a 300- to 400-year drought in the western U.S. That could be an analogue for what will happen under anthropogenic warming. If the mechanisms we think work hold true, then we’ll get big droughts in the West again.” The Garden of Eden it is not. 2785

Ed Cook, a leading tree-ring expert at Lamont-Doherty: “If warming over the tropical Pacific promotes drought over the western U.S….any trend toward warmer temperatures could lead to a serious long-term increase in aridity over western North America.” Martin Hoerling, of the National Oceanic and Atmospheric Administration, thinks that such a process is already under way. He blames the increasing droughtiness of the tropics on a persistent ocean warming in the Pacific that, he says, is “unsurpassed during the twentieth century.” The pattern of dryness is beginning to look less like a local, short-term aberration and more like a long-term trend, he says, and he predicts that global warming “may be a harbinger of future severe and extensive droughts.” It won’t happen everywhere, of course. Climate models predict that a warmer world will, on average, have more moisture in the atmosphere, and that, in general, the wet places will get wetter and the dry places will get drier. They predict that areas of uplift, where rising air will trigger storm clouds and abundant rain, will see the uplift become more intense. But areas of sinking air, which are the traditional desert lands of the world, will see more-intense sinking and drying. In many parts of the world, this “hyperweather” is likely to set competing forces against each other. Stronger storms will blow off the oceans, and monsoon-type rains may begin again in some places. But the rain-bearing winds will often be confronted by intensifying arid zones of descending air in the continental interiors. It is not obvious which force will win, and where. Will the Sahara Desert expand and intensify, as drought theorists argue? Or will North Africa be reclaimed by a revived African monsoon? Megadrought or Garden of Eden? Nobody can answer that question yet. Perhaps the greatest likelihood is that in many places, from the Sahara to the American West and Arabia, there will be more and longer droughts, interspersed with brief but devastating outbreaks of intense storms and floods. 2792

The Amazon is one of the wettest places on Earth, and certainly the most biologically diverse, with perhaps half of the world’s species beneath its canopy. 2810

The red dust clouds can grow almost 2 miles high as they approach America. They cause spectacular sunrises over Miami, before falling in the rains of the Caribbean and the Amazon. And there have been a lot of good sunrises in recent decades. The amount of dust crossing the Atlantic grew fivefold between the wet 1960s and the dry 1980s. 2820

Chad’s loss is the Americas’ gain, says Hans Joachim Schellnhuber, a German physicist turned Earth-system scientist, who, as director of Britain’s Tyndall Climate Centre, in Norwich, has made a study of the unlikely connection. “Bizarre as it may seem, the arid, barren Sahara fertilizes the Amazon rainforest. This process has been going on for thousands of years, and is one reason why the Amazon basin teems with life.” The two unique habitats are on a kind of seesaw, he says. When the Sahara is dry, as it has been for much of the past quarter century, its dust crosses the Atlantic in huge quantities and fertilizes the Amazon, making the rainforest superabundant. When the Sahara is wet, the dust storms subside and the Amazon goes hungry. That the Sahara seems to have only two basic modes, wet and dry, suggests that there may be two distinct modes in the Amazon, too. The last big change in the Sahara came 5,500 years ago, when the region lurched from wet to dry, probably within a few decades. As yet we know little about how the Amazon changed at that time. But if Schellnhuber is right, the Sahara’s loss at that time may have been the Amazon’s gain. There may have been a major change for the better in the rainforests. In the twenty-first century, the seesaw could be on the move again. There are hints that the Sahara may become wetter, says Schellnhuber. And if the wetting turns to greening, and the vegetation feedback kicks in, the whole of North Africa could change dramatically. That would be good news for the Sahara, of course. But it might be bad news for the Amazon, which already seems to be close to its own tipping point, as the climate dries and rainforests give up their carbon. 2831

he believes he is on the path to proving that the true triggers and drivers and Achilles heels and thresholds and tipping points for the world’s climate lie in the tropics. 2856

Richard Alley, a career member of the “polar school,” is an admirer of the senior from Gassaway. He told me with a smile: “Lonnie is a legend, and he may well turn out to be right.” Whether he is right or not, Thompson’s ice cores and the data he has painstakingly extracted from them are the lifeblood of an emerging debate between the polar and tropical schools—a debate that might not be happening at all without him. Thompson is a loner. He has always avoided the big organizations and funding bodies that dominate so much climate science. Sometimes that has been out of necessity; now he sees it as a virtue. It has given him the freedom to do and think things his way. With his researcher wife, Ellen Mosley-Thompson, he set up a small team at the Byrd Polar Research Institute, part of Ohio State University. “We started small and we try to be self-contained,” he says. “That makes us flexible. We don’t have to stand in line for analysis of cores, or for supplies. And we have our own workshops to make everything.” The Thompsons build their own lightweight drills and photovoltaic generators, because these are the only means of getting the right gear by horseback onto the high slopes of the world’s tallest mountains. And they have their own four automatic mass spectrometers, working 24 hours a day 365 days a year to analyze the samples brought back from around the world. Thompson doesn’t even trust the big science institutions to look after his ice cores when he’s gone. With the prize money that has come his way in recent years, he has created a trust fund to keep the freezers going in perpetuity. 2859

he says, from the revival of El Niños in the Pacific around 5,500 years ago to the decades of drought that finished off the pre-Columbian Moche empire; from the first record in the tropics of the little ice age to the recent isotopic signature of global warming. Here and elsewhere across the tropics, he has also found a dust “spike” in the ice that shows that dust storms were sweeping across the tropics 4,200 years ago—evidence, it seems, of a sudden near-global megadrought. 2880

The zone of maximum sun in the tropics is also the zone of maximum rainfall, which in the highest mountains means the zone of maximum snow. Up there, he says, it has always been cold enough for glaciers to form. So temperature is not an issue. What the high valleys have often lacked is moisture to feed the growth of glaciers. The sun brought the moisture, and with it the snow and the glaciers. Many would argue that all the natural variability in climate that Thompson is uncovering offers a soothing reminder that the planet and human society are no strangers to climate change. Not Lonnie. His analysis is uncovering invisible thresholds in the climate system, he says. Cross them, and the whole system goes into a spin, with dramatic cooling or warming, great droughts and the El Niño flip, turned full on or full off for centuries at a time. Should we not be just as concerned that carbon dioxide might send us above a threshold? If that happens, he says, “we won’t get gradual climate change, as projected; we will instead get abrupt change.” 2896

Across Peru, a quarter of the ice surface has disappeared in thirty years. Elsewhere in the Andes, Bolivia’s Chacaltaya lost two thirds of its ice in the 1990s, and Venezuela has lost four of its six glaciers since 1975. In Africa, where 80 percent of the ice on Mount Kilimanjaro has melted away in ninety years, Mount Kenya has lost seven of its eighteen glaciers since 1900; and most of the ice on the Rwenzori Mountains between Uganda and Congo has gone, too. Across the Indian Ocean, on New Guinea, the West Meren glacier vanished altogether in the late 1990s, and its neighbor Carstensz has shrunk by 80 percent in sixty years. Thompson has seen the same trends in the Himalayas and Tibet. Glacial retreat, he says, “is happening at virtually all the tropical glaciers.” In some places, there may be local factors. Occasionally, declining snowfall will do the damage. But he insists that while snowfall in high altitudes may be critical to getting a glacier started, it is rarely critical to the glacier’s demise, which starts lower down the slopes. Globally, he says, there can be no explanation for the universal disappearance of glaciers other than global warming. Thompson believes that he has only begun to explore the potential of his ice cores to answer questions about the tropics. He wants to take cores from ice still attached to the Nevado del Ruiz volcano, in northern Colombia. The mountain exploded in 1985, engulfing 20,000 people in a landslide of ash. “I think we could get a record of how often that volcano erupts,” he says, apparently oblivious of the risk for researchers in such an expedition. He believes that the ice of Quelccaya can offer a history of fires and drought in the nearby Amazon. And he is looking at dust from China that has collected in ice in Alaska. It is already providing a history of pesticide use in China, and may eventually reveal whether dust out of Asia, as well as that from the Sahara, could have fertilized the soils of the Americas. Thompson believes that by uncovering the secret climate history of the tropics, he is helping to strip climatology of an unhealthy fixation with what happens close to the homes of the researchers—in the North Atlantic: “An important reason why we think that Greenland and those places are so important is because so much research has been done there—and that is mainly because it is more convenient than going to Tibet or Patagonia.” He believes that that fixation is diverting researchers from where the real climatic action is—in the tropics, in the world of El Niño and the Asian monsoon and megadroughts and the dramatic feedbacks that dried up the Sahara, which he sees as “at least as important as anything Wally Broecker has cooked up on the North Atlantic.” To Thompson, it has always seemed obvious that “the global climate is driven from the tropics.” Most of the surface of Earth is in the tropics, he says. “It is where the majority of the heat reaches Earth, and from where it is distributed around the globe. It is where the great climate systems like the monsoon and El Niño are based.” He argues that truly global cli- matic events can start only where heat and moisture can be delivered both north and south around the globe. There may be feedbacks operating in the North Atlantic or around Antarctica. But the big drivers must be in the tropics. 2908

This underlined the idea that six years is the natural length of the cycle—and made the post-1976 period, during which El Niño has developed a return period averaging 3.5 years, appear increasingly unusual. This sense that El Niño may have changed in some fundamental way in the past thirty years has been reinforced by another change. The earliest records of the El Niño phenomenon are from the Pacific shores of South America, where a cold ocean current normally works its way north, bringing waters rich in nutrients that sustain one of the world’s largest fisheries, off Peru. But during El Niños, the flood of warm water from the west overrides this cold current for a while, and the fish disappear. That has been the classic pattern. But since 1976, the underlying state has changed. The cold current has been pushed to ever-greater depths, even during normal times. The ocean system appears to have become stuck in a quasi-El Niño state. What lies behind these recent changes? Some say that El Niño is simply on a short-lived, exuberant joyride. They point out that there have always been decades when it is unusually quiet or busy or just plain weird. But Schrag thinks this is unlikely to explain recent events. Publishing his Sulawesi findings, he said: “In 1982–83 we experience the most severe El Niño of the 20th century. According to previous records you wouldn’t expect another that powerful for a hundred years. But 15 years later, in 1997–98, we have one even larger.” And since then, in 2002 and 2004, there have been two more significant El Niños—not as large as those before, but turning up with ever-greater frequency. Kevin Trenberth, the head of climate analysis at NCAR, was one of the first researchers to claim that the Pacific entered an unusual state after 1976. He believes that the recent spate of strong and frequent El Niños could well be due to the hand of man. It looks as if global warming, which gathered real pace only in the 1970s, is generating so much warming in the tropical Pacific that the old flywheel pattern in which occasional El Niños distribute the heat that accumulates around Indonesia is not sufficient to handle the amount of energy in the system. 3052

Mojib Latif, at the Max Planck Institute for Meteorology, in Hamburg, developed the first global climate model that was detailed enough to reproduce El Niño. His model predicts that the average climate in the twenty-first century will be more like the typical El Niño conditions of the twentieth century. Cold La Niña events will still happen occasionally, and may even be more intense. But they will become the breakout events. 3069

Niño. Strong El Niños often seem to switch off the Asian monsoon. British imperial scientists discovered more than a century ago that most of the great Indian famines coincided with marked climatic fluctuations in the Pacific. El Niños seemed to draw heat away from Asia, and so to drain the monsoon’s strength. But the argument has become a little academic in the past thirty years, because El Niño has intensified without any widespread weakening of the Asian monsoon. The break in the old link has been both a scientific surprise and a humanitarian godsend. But nobody knows what has caused it and whether it will last. If the Pacific climate system does what many predict, and in the twenty-first century leans heavily toward a permanent El Niño–like state, and if the monsoon resumes its former relationship, then the rains may soon fail 3114

the haze’s biggest impact is on the radiation balance between the land surface and the air aloft—a vital parameter in determining the strength of the monsoon. The fear is that the haze may break the seasonal heating cycles between land and ocean, and turn off the monsoon. It hasn’t yet, but it may. And, valuable though reconstructed histories of the Asian monsoon may be, it is unlikely that they will ever be able to provide a firm prognosis for the monsoon. 3147

Temperatures in Burgundy that year were almost 11°F above the long-term average. And if Yiou’s formula was accurate, the highest previous temperature had been just 7° above the average. That happened in 1523, in a warm interlude during the little ice age. “The 2003 heat wave was far outside the range of normal climate,” says Allen. It was not impossible that it could have happened without global warming, but it was very improbable. “Our best estimates suggest the risk of such a heat wave has increased between four- and sixfold as a result of climate change.” Many scientists continue to argue about how we might recognize “dangerous” climate change, he told me. “Well, for the thousands of victims in Europe in the summer of 2003, it is clear we have already passed that threshold.” And the big heat is only just beginning. Allen says that by mid- century, if current warming trends persist, the extreme temperatures experienced in 2003 in Europe could occur on average once every two years. Richard Betts, of Britain’s Hadley Centre, says that for people living in cities, the risks are even greater. They are already feeling the worst of climate change, because they also suffer the “urban heat island effect.” During heat waves, the concrete, bricks, and asphalt of buildings and roads hold on to heat much better than does the natural landscape in the countryside. In the typically windless, anticyclonic conditions of a European heat wave, the effect is even more marked. 3177

In the American West, there were huge, century-long droughts during the medieval warm period. Even Broecker, who holds that the little ice age was global, admits that the evidence of a global medieval warm period is “spotty and circumstantial.” But there is a good case for saying that over the millennium until the mid-twentieth century, most climate change concerned the redistribution of heat and moisture around the globe rather than big changes in overall heating. Only recently has there been a major additional “forcing,” caused by the introduction of hundreds of billions of tons of greenhouse gases into the atmosphere. Recent warming may be the first global warming since the closure of the ice age itself. 3269

The subtext of the climate skeptics’ assault on Mann’s hockey stick has always been that if the current warming is shown not to be unique, then somehow the case that man-made global warming is happening evaporates. But this is a spurious argument. Briffa is not alone in arguing precisely the opposite. If it was indeed very warm globally in the medieval warm period, that is truly worrying, he says. “Greater long-term [natural] climatic variability implies a greater sensitivity of climate to forcing, whether from the sun or greenhouse gases. So greater past climate variations imply greater future climate change.” 3276

Catarina, even formed was startling enough. What caused the greatest shock was that it developed very close to a zone of ocean pinpointed a few years before by Britain’s Hadley Centre modelers as a likely new focus for hurricane formation in a warmer greenhouse world. But they had predicted that the waters there wouldn’t be up to the task till 2070. Many saw Catarina as a further sign that global warming was making its presence felt in the hurricane world rather ahead of schedule. 3350

Emanuel has concluded that, on average, storms are lasting 60 percent longer and generating wind speeds 15 percent higher than they did back in the 1950s. The damage done by a hurricane is proportional not to the wind speed but to the wind speed cubed. And Emanuel’s results suggest that the destructive power of a typical hurricane has increased by an alarming 70 percent. “Global tropical cyclone activity is responding in a rather large way to global warming,” he says. 3365

Peter Webster and Judy Curry, of the Georgia Institute of Technology, and Greg Holland, of NCAR, concluded that while there had been no overall increase in the number of hurricanes worldwide, the frequency of the strongest storms—categories 4 and 5—had almost doubled since the early 1970s. They now made up 35 percent of the total, compared with 20 percent just three decades before. The trend, the researchers said, was global, and they agreed with Emanuel that it was clearly connected to the worldwide rise in sea surface temperatures. That made it extremely unlikely that natural cycles, which are relatively short-term and confined to single ocean basins, were causing the trend. “We can say with confidence that the trends in sea surface temperatures and hurricane intensity are connected to climate change,” Curry declared. 3369

“Water vapor levels in parts of the lower stratosphere have doubled in the past sixty years,” he says. No hole formed in the Arctic ozone layer in 2005, because the sun did not rise when the air was at its coldest. But the spring of 2005 nonetheless saw the largest Arctic ozone loss in forty years of record-keeping. More than a third of the ozone disappeared, and losses reached 70 percent in some places. Air masses with reduced ozone levels spread south across Scandinavia and Britain, and even as far south as Italy for a few days. One year soon, the sun will rise when temperatures are still cold enough for major runaway ozone destruction. And when it does, millions of people may be living beneath. This will be another unexpected consequence of global warming. 3466

Shindell’s dramatic discovery of the stratospheric feedback suggests that the natural processes of temperature amplification are much stronger than those in most existing climate models. His newly discovered feedback seems set to continue, driving up temperatures in Arctic regions beyond the levels previously forecast. That additional warming is likely to unleash other feedbacks that will melt ice, raise sea levels, release greenhouse gases trapped in permafrost and beneath the ocean bed, and perhaps cause trouble for the ocean conveyor. Relieved? I don’t think 3663

“The danger zone is not something we are going to reach in the middle of this century,” Allen says. “We are in it now.” The 35,000 Europeans who died in the heat wave of 2003 were victims of an event that would almost certainly not have happened without the insidious increase in background temperatures that turned a warm summer into a killer. 3727

We don’t yet know how sensitive the climate system is. Current estimates suggest that to stack the odds in favor of staying below a 3.6-degree warming, we probably need to keep concentrations of man-made greenhouse gases below the heating equivalent of 450 parts per million of carbon dioxide. In practice, that probably means keeping carbon dioxide levels themselves below about 400 ppm. Let’s call this the “safety-first” option. 3735

Currently, we pour about 8.2 billion tons of carbon into the atmosphere annually. Of this, a bit over 40 percent is quickly taken up by the oceans and by vegetation on land. The rest stays in the air, where its life expectancy is more than a century. So, for practical purposes, we are adding about 4.4 billion tons of carbon dioxide a year to the atmosphere. Even at current rates of emissions, that means that we will be above our 935- billion-ton safety-first target before 2020; and assuming that emissions continue to rise at the current rate, we will be there in less than a decade. Frankly, barring some global economic meltdown, there is now very little prospect of not exceeding 935 billion tons. If we had acted quickly after 1992, we could have done it. But the world failed. 3746

There is already about 1 degree of warming “in the pipeline” that we can no longer prevent. But if we are feeling lucky—and with a nod to both round numbers and political reality—we might allow ourselves a ceiling of a trillion tons. Some would call that a “realistic” target, though others would brand it a foolish bet on a climate system we know little about. The “trillion-ton challenge” is still a tough call. Literally, whatever target we set will require drastic cuts in emissions. Nature will probably continue to remove a certain amount of our emissions. But experts on the carbon cycle say that we must reduce emissions to around a quarter of today’s levels before nature can remove what we add each year. Only then will atmospheric levels stabilize; only then will climate start to stabilize. The quicker we can do it, the lower the level at which carbon concentrations in the air will flatten out. Reaching the safety-first target of 935 billion tons of carbon dioxide would require an immediate and dramatic ditching of business as usual in the energy industry worldwide. Global emissions would need to peak within five years or so, to fall by at least 50 percent within the next half century, and to carry on down after that. A trillion-ton target could be achieved with more modest early cuts and greater reductions later. 3753

methane, which, however you measure it, is the second most important man-made greenhouse gas after carbon dioxide. Measured over a century, the warming caused by a molecule of methane is about twenty times as great as that caused by a molecule of carbon dioxide. But methane does most of its warming in the first decade, its typical lifetime in the atmosphere. It has a quick hit. Measured over the first decade after its release, a molecule of methane causes a hundred times as much warming as a molecule of carbon dioxide. 3770

eliminate all methane emissions from landfill sites, 3777

The methane specialist Euan Nisbet, of London’s Royal Holloway College, reckons that the short-term hit would be almost as great as banning all cars on the streets of Britain. 3779

If the world is mainly concerned about the effect of greenhouse gases in fifty to a hundred years’ time, then we should probably stick with the existing formula. But if we are also concerned about quickly reducing global warming to stave off more immediate disaster, then there is a strong case for coming down hard on methane now—on leaks from landfills, gas pipelines, coal mines, the guts of ruminants, and much else. “Cutting carbon dioxide emissions is essential, but we have neglected methane and the near-term benefits [acting on] it could bring,” says Nisbet. He wants the Kyoto Protocol rules narrowed to a twenty-year time horizon. Jim Hansen takes a similar view. “It makes a lot of sense to try to reduce methane, because in some ways it’s easier,” he says. Hansen also advocates action on soot, which he calculates to be the third biggest man-made heating force in the atmosphere. Soot, as we saw in Chapter 18, has a local cooling effect but a wider and more considerable warming effect. It sticks around in the atmosphere for only a few days, but while it is there, its effects are large. Action against soot and methane would not stop global warming. But it would give the world time to introduce measures against the chief culprit: carbon dioxide. 3781

technologies fall into four categories: much more efficient use of energy; a switch to low-carbon and carbon-free fuels; capturing and storing or recycling some of the emissions that cannot be prevented; and finding new methods of storing energy, 3830

In the past thirty years, global carbon dioxide emissions have grown only half as fast as the global economy—thanks mostly to improved energy efficiency. And many of the new energy technologies we will need are already in use, offering benefits such as cheaper or more secure energy. 3833

What is needed first is faster progress in a direction in which we are already headed. The top priority should be energy efficiency. More than half of the immediate cheap potential for reducing carbon dioxide emissions lies in improving energy efficiency in buildings, transport, and industry. Much of it could be done at zero or even negative cost, because the cost savings would outweigh the investment. This is also the area where we as individuals can most easily make a difference—by buying energy-efficient light bulbs and appliances, insulating our homes properly, cutting down on car use, and choosing energy-efficient models such as hybrids. 3836

Hydrogen is manufactured by splitting water into hydrogen and oxygen, which is a very energy-intensive process. So if the energy for splitting water were generated by burning fossil fuel, there would be little environmental gain; but if the energy came from renewables, such as solar or wind power, that would change everything. The hydrogen fuel cell is not so much a new source of energy as a new way of storing energy. It could be the only way to make cars truly greenhouse-friendly. And it may turn out to be the best way of utilizing fickle renewable energy sources like wind and the sun. The big problem with these energy sources is that wind cannot be guaranteed to blow (nor the sun to shine) when the energy is needed. But if the energy is converted into hydrogen, it can be kept for future use. 3848

universally adopt efficient lighting and electrical appliances in homes and offices; double the energy efficiency of 2 billion cars; build compact urban areas served by efficient public transport, halving future car use; effect a fiftyfold worldwide expansion of wind power, equivalent to 2 million 1-megawatt turbines; effect a fiftyfold worldwide expansion in the use of biofuels for vehicles; embark on a global program of insulating buildings; cover an area of land the size of New Jersey (Socolow’s home state) with solar panels; quadruple current electricity production from natural gas by converting coal-fired power stations; capture and store carbon dioxide from 1,600 gigawatts of natural gas power plants; halt global deforestation and plant an area of land the size of India with new forests; double nuclear power capacity; increase tenfold the global use of low-tillage farming methods to increase soil storage of carbon. 3865

Ice-albedo feedback A positive feedback on air temperature caused by the presence or absence of highly reflective ice. Thus, during warming, ice melts and is replaced by a darker surface of ocean or land vegetation that absorbs more heat, amplifying the warming. The reverse happens when cooling causes ice to form. 3952



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Catherine Of Siena by Sigrid Undset

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Last annotated on July 31, 2016

“Daughter, do you know who you are and who I am? If you know these two things you will be very happy. You must know that you are that which is not, but I am That Which Is. If your soul is possessed of this knowledge the devil will never be able to cheat you, and you shall escape all his snares and all his cunning without suffering. You will never consent to anything which is against My commands. Without difficulty you will attain all the gifts of grace and all the virtues of love.” God has created all life out of nothing, and if the mercy of God did not sustain its existence it would immediately return to nothing. If we are left to ourselves, without the mercy of God, we fall into sin, which is also nothingness. By ourselves we can neither think of nor achieve anything which is virtuous or good. It is therefore true that that which is created is in itself nothing. But because God is the foundation and origin of everything, it is only He Who Is. As soon as a creature through the light of belief has come to understand this truth he may call himself blessed. For eternal blessedness consists of this: knowing God as He really is. As 517

“My visions are always accompanied at first by a certain amount of fear, but as they unfold they bring a growing feeling of security. First comes bitterness, but later come strength and consolation. The visions which come from the devil create at first a feeling of security and sweetness, but they end in terror and bitterness. My way is the way of penitence. At first it seems hard and difficult to follow, but the further you pursue it, the happier and sweeter it appears. The way of the devil, on the other hand, is sweet and happy to begin with, but as the soul pursues the way of sin it goes from bitterness to bitterness, and the end is eternal damnation. And because I am the Truth My visions always lead to a greater knowledge of the Truth, and it is of the greatest necessity that a soul gains knowledge of Me and of itself. This makes the soul honour Me and despise itself, and that is the meaning of humility. Visions which come from the devil make the soul which he visits proud, for he is the father of lies and of pride, and the soul is filled with vanity which is the core of all pride.” Later Our Lord taught her other axioms: “My daughter, think always of Me, and I promise to think of you.” “Empty your heart of all other cares and thoughts, think only of Me and rest in Me. 533

the young girl “swam under the water in the sea of God’s love” this natural happiness changed to the supernatural joy which was later to make such a deep impression on her children of the spirit. They found the most astonishing and delightful characteristic of their beloved “mother” was this joy which ceaselessly flowed from her, even when she had to bear an inhuman burden of work, apparent defeat and disappointment, terrible physical and spiritual suffering— 544

she knew that “we cannot live without loving.” There was the true and proper love of the Reality which is God, and the false love towards oneself and the world—love for things which have no real existence. 561

for My sake shall you let all that is bitter seem sweet, and all that is sweet seem bitter. Then you need be afraid of nothing, for you will be strong in all adversities.” 567

The artificial division of religion and politics did not exist for the people of the Middle Ages. If they thought over the matter at all, they were completely aware that all the problems concerning the community—good or bad government, the welfare or misery of the people—are in the final instance religious problems. 1851

Catherine never had any doubts about the answer. A man is nothing by himself, has nothing from himself. His existence is in his Creator, everything he is and owns is from his Creator. United with his Creator, who is boundless Love, eternal Truth, Wisdom personified, man receives his share of the qualities of the Divine—within the limits of humanity. If a man loves God, he will be able to love his neighbour, to attain wisdom, and to be just and truthful. Because God is our eternal blessedness, a child of God becomes a blessing for his fellows. Love for one’s own ego, for something which is in reality nothing, leads to an abyss of nothingness. The love of a selfish man is nothing, truth escapes between his hands, his wisdom will show itself to be foolishness, his justice injustice, and in the end a series of disappointments and mistakes will lead him to hell—to the devil who is the spirit of disappointment and barrenness. “Unless the Lord build the house, they labour in vain that build it.” Catherine knew the truth of these words. 1855

Catherine’s genius was that her Christ-like heart had room for all her children of the spirit—perhaps she did not love them all with equal intensity, but at any rate she loved them in such a way that no glimpse of any jealousy among them has reached us. It is as though she loved each one in a special way, so that for each daughter and son she could be exactly what he or she needed. The theme of all her letters to Neri di Landoccio is always the same: be of good courage. But she also advised him solemnly to see through this world, to see how little its gifts are worth, to fill himself with the love of God, for His love for us will fulfil all our truest and holiest desires. 1873

In the precious blood of Jesus Christ was healing for his soul, which Catherine once compared with a leaf which trembles with every wind. 1878

She reminded them that they had once taken vows to live in poverty (the Augustinian hermits are also a mendicant order); but how had they kept these vows? They lived like cardinals, in spacious cells, with bookshelves, good beds and arm-chairs. “How can you dare to try to understand anything of the kingdom of heaven? You have thrown away the kernel and now chew the empty shell of faith. For the sake of Jesus Christ, stop living such a life. . . 1956

When she spoke as though she believed that her sins were the cause of the misery of the Holy Church and the whole world, she meant it with deadly seriousness. Obviously she knew that hundreds of thousands of other souls were also sufficiently sinful to bring the same miseries over the whole world and the Church. But it was not for her to judge them—she could only judge herself. 1991

in a mysterious way the sins of the faithful impoverish the whole of Christendom. 1995

we all have our share in the rewards of all the saints and the guilt of all sinners. When a volcano erupts, streams 1998

Love alone is able to put an end to discussion, unite those who are divided, enrich those who are poor in virtue; for love will bring to life all the other virtues, give peace, put an end to war, give patience, strength and perseverance in all good and holy causes. “It never tires, cannot be divorced from the love of God and our neighbour, either by suffering or injustice, either by derision or injuries; it cannot be moved by impatience, nor by the joys and pleasures which this unreal world can offer us. “I exhort you”, the young Mantellata writes to the Cardinal, “to take upon yourself these bonds, this love, so that you may listen to the sweet Truth who has decided your destiny, given you life, form, and order, and has taught you the dogmas of truth.” She commands him to work with all his might to clear away the disgraces and miseries of which the world is full, and which are caused by sin and offend God’s name. He is to use the power given to him by the Vicar of Christ in the way she says: without love he cannot do his duty. But in order to love God with the whole of one’s heart one must tear all self-love out of the heart, and with it, all submission to one’s ego and the world. For these two kinds of love are opposites, so that self-love divorces us from God and our neighbour. The one kind of love brings life, the other death, the one light and the other darkness, the one peace and the other war. Self-love makes the heart shrink so that it cannot even contain its own ego; and certainly not its neighbour. It causes slavish fear which hinders a man from doing his duty, either from ignorance or from the fear of losing his position in the world. So Catherine advises the Cardinal to take courage and strength in Jesus Christ, to be zealous and to raise the banner of the holy cross. She signs this letter in the same way as all her other letters: “Dolce Gesù, Gesù Amore.” 2035

In another letter she writes of the same subject: “A soul which is full of slavish fear cannot achieve anything which is right, whatever the circumstances may be, whether it concern small or great things. It will always be shipwrecked and never complete what it has begun. Oh, how dangerous this fear is! It makes holy desire powerless, it blinds a man so that he can neither see nor understand the truth. This fear is born of the blindness of self-love, for as soon as a human being loves himself with the self-love of the senses he learns fear, and the reason of this fear is that it has given its hope and love to fragile things which have neither substance nor being and vanish like the wind. . . . ” She 2049

Our Lord hates above all things three abominable sins, covetousness, unchastity and pride. 2076

She advises him to repent sincerely of his sins, and begs him to work not only for the temporal well-being of the Church, though this is surely important too, but above all to drive these wolves from the fold, these devils in human shape who think of nothing but their own sinful pleasures and their criminal love of pomp and power. Finally she begs his forgiveness for her boldness, and asks him to pray for her. 2083

“Love, love, love, and remember that you were loved even before you were created. For God who sees Himself, passionately loves the beauty of His creation, and He created it because His love is boundless, to give it eternal life and to allow it to enjoy the indescribable blessedness which He Himself possesses.” No power is worth having unless one has power over one’s own soul. “This city [the city of the soul] is so strong, you are so powerful within it, that neither devil nor man can take possession of it without your consent.” 2096

To see the Bride of Christ regain her original beauty, to see the Church washed clean of all that its unworthy servants had soiled it with, became more and more the very core of Catherine’s struggle to achieve perfect unity with Jesus Christ. 2108

Her advice is always the same: break the chains of sin, cleanse yourselves by confession, be reconciled to God—then you will be real rulers, for who can really be master if he is not master of himself, if reason does not rule his senses? 2321

which we all deserve for our ingratitude, and that truth may make us all free. “Let all do the work which God has given them, and not bury their talent, for that is also a sin deserving severe punishment. It is necessary to work always and everywhere for all God’s creatures. God is not bound by places or people. He looks upon our honest and holy desires, which are the tools we must work with.” 2326

this world, Catherine did not believe in it. For her it was a mirage, which shines for a moment before it vanishes into nothing. This did not prevent her judgment of worldly affairs from being acute, and the advice she gave her correspondents full of sound common sense. But her advice was too straightforward and honest for people who dealt in cunning and intrigues—so they did not follow it. 2345

Tuscany. These republics were already examples of the advantages and disadvantages which follow democracy always and everywhere. Freedom had made the citizens rich, cultured and intelligent, their best men burned with patriotism and took their responsibility towards their countrymen very seriously. But these free citizens were also implicated in an endless series of private quarrels and political feuds—sometimes the enmity was caused by childish vanity or mean egotism, sometimes by serious conflicts between ideals and philosophies which led to differing opinions as to what is necessary to a good and just government. There were ceaseless encounters between men who cynically sought their own advantage or blindly believed in the infallibility of their own wisdom. People constantly changed sides in these quarrels, either because of their convictions or for the sake of what they could get out of it. Freedom had emptied its cornucopia over the beautiful Tuscan countryside and let its good and evil gifts rain down. 2443

She describes her longing to see him stand as a fruitful tree, loaded with noble fruit because it is planted in good earth. But if the tree is not planted in this good earth, which is self-knowledge—the knowledge that we are nothing, existing only in Him Who Is—the tree will wither. The worm of egoism will eat up the roots, for he who loves himself feeds his soul with mortal pride, the principle and origin of evil in all men, in those who rule and those who must obey. A man who has become the victim of self-love becomes indifferent to sins and faults among his subordinates, for he is afraid to annoy them and make them his enemies. Either he attempts to punish them so halfheartedly that it is useless, or else he does not punish them at all. In other words Catherine tells the Pope openly that in the last resort it is he who carries the whole responsibility for the terrible abuses which are draining the life of the Church, even though according to human reckoning he may be a fine person with many good qualities. Nevertheless it is he who is responsible for the bad shepherds and the treacherous monks whose shameful way of living is undermining the faith of believers. “If the blind leads the blind both fall into the abyss; 2489

God is That Which Is Strong, for all strength and virtue emanate from Him. This strength has not been taken from His bride, and nothing else possesses it. The enemies of the Church, who fight against her, have lost this strength and help; 2596

it seems to me that God reveals no other remedy than peace. 2660

afterwards. The Sweet Truth reminded her of these words in the Gospel: “It must needs be that offences come”, but also “woe to him through whom they come.” 2706

“Rejoice therefore when you suffer affliction, and love, love, love each other.” 2714

so the great truth was made clearly apparent—that Christ receives a soul entirely because of His mercy, and not because of any merits of the soul itself. But as the soul of Niccolo entered the mystery of the Holy Trinity it turned and looked at her, as the bride does when she has come to the house of her bridegroom and with bowed head acknowledges those who have accompanied her, as a last sign of gratitude. 3027

a man is forced to live up to his social position; even people who otherwise condemned the luxury of the prelates were agreed on this. 3430

Père Hurtaud chose the most appropriate when he decided to call his French translation The Book of Mercy. The undercurrent beneath the waves of shifting ideas in these conversations between the Eternal Father and her whom He calls His very dear daughter, and His much loved child, is the belief in God’s mercy. With her heart crushed by compassion Catherine begs for mercy—for all this world which sin has laid waste, for all Christians and heathens and the infidel too. And finally, when the Eternal Father compresses all He has taught His daughter into a few sentences, He says: “I have told you that I will show the world mercy so that you can see that mercy is the sign by which I am known.” God is inseparable in His being, but we must speak of Him as we experience His actions in different ways: thus St. Thomas speaks of one of God’s qualities which is neither love nor goodness, nor righteousness, nor providence, but which perfects all God’s perfections, which is the root of all His actions towards that part of His creation which He has given the ability to think and judge—His mercy. 3497

In the mirror of God’s goodness the soul sees how badly it has degraded and crippled itself by love of the wrong things. When she saw herself in this mirror Catherine realised that her guilt was so great that it was enough to have caused all the misery of the world and the Church which she wept over. Therefore she begged God that His vengeance might fall on her head, but His mercy over His people. “I will not go from Your presence before I have seen that You will have mercy on them. What would it help me if I knew that I was sure of my own blessedness, if Your people are to be given to death, and darkness shrouds your Bride, for my sake and no one else’s?” So she prayed for the Holy Church and for all men, calling on the love which caused Him to give His Word, His only Son, so that He might be a mediator between Him and us. “O abyss of mercy, we are Your image, and You became our image when You united Yourself with man and unveiled the eternal divinity in the dark clouds of Adam’s degenerate flesh.” When she saw that she had been given a new and deeper understanding of the love which caused the redemption by Christ Crucified, Catherine was filled with holy joy and prayed again for the whole world—although if the Holy Church should regain the outward beauty which is an expression of its eternal inner beauty, the whole world would be saved, for it would draw all men to itself so irresistibly that it would lead to the conversion of all men, both Christians and heathens. But when Adam rebelled against God the old royal road which led innocent man from earth to heaven was destroyed. An abyss opened between the two kingdoms, and through this abyss runs a dark and tumultuous river—all the unreal, fleeting things to which mankind’s contorted desire aspires. For we cannot live without desire; our soul’s actions are desire, holy or unholy. So when mankind had rebelled against God it immediately rebelled against itself; the flesh rebelled against the spirit and mankind drowned in the dark and bitter waters of sin. Because these waters lack solidity, none can live in them without drowning. These waters are the joys and honours of this world: in all eternity they stream past and are carried away in the current. Man thinks it is the things he loves which float, but in reality it is he himself who is swept by the stream towards the end of his life. He would like to stop, to keep his hold of this life and the things he loves, so that they are not washed out of his reach. He reaches out blindly to whatever he happens to touch, but he cannot tell the difference between the valuable and the valueless. Then comes death and takes him from all he loves, or Providence takes a hand, and even before his death he may be robbed of all his beloved worldly treasures. And because he has run after unreality he has followed the way of lies and is the child of the devil who is the Father of Lies. 3514

God made a bridge over this abyss when He gave the world His Son. For God, who created us without our having anything to do with it, demands of us that we should work with Him for our salvation. We are all bound to work in the vineyard where God is the husbandman. We have all been given our little vineyard, but the way in which we cultivate it is of great importance for the prosperity of our neighbour’s vineyard. Out in the country Catherine had certainly seen how a piece of earth overgrown with weeds and infested with insects was a source of infection for the neighbouring fields. In fact all our vineyards are a part of the Lord’s great vineyard, the Holy Church, and we are all bound to work here too. But because it is through the grace which God gives us that we are able to work with Him for our salvation, Catherine prays for light. 3535

It is the old teaching of the mystics on the Via Purificativa, the way to cleanse the soul, the Via Illuminativa, the way to enlightenment of the eternal truths, and the Via Unitiva, the way to unification with God in love. She develops the bridge symbol in several ways. The soul steps onto the bridge by three steps. 3542

intelligence and will. With an interpretation, entirely her own, of a phrase in the Bible, Catherine declares that when these three qualities of the soul run together in the desire for unity with God, Christ will fulfil His promise: “When two or three are gathered together in my name, I am among them.” She compares memory with a pitcher full of the impressions which we obtain through our emotional life; fill it with nothing, and the empty pitcher is easily broken, or it emits a shrill clang if anyone knocks it. Or fill it with reality, the love of God, and, like a pitcher filled with water from the well, it can take a knock without being broken or emitting a loud noise. For none here on earth can escape suffering and blows, and the pursuit of nothingness also brings hard blows and great bitterness for the soul: those who follow the devil have to bear his cross, and there are many who become martyrs for the devil too. But for a heart which is full of God, suffering is sweet, for we know that it is sent to us by love, so that we shall gain by it. For a soul cannot live without loving. It must have something to love, for it was created of love. No place or position in the world exempts us from the law of love. None may make his inheritance, his office, his authority, marriage or children an obstacle which hinders his attainment of this unity with God. All visible and sensual things are created by Him and are good in themselves; it is only if we love the created things more than the Creator that they become the tools of our damnation. Ceaselessly the devil tries to tempt us to this wrong kind of love, but it is we who condemn ourselves, because we are willing to be led astray. The 3550

God speaks to His daughter of the presumption of judging one’s neighbour, and explains to her how it is possible to work for the conversion of sinners, calling evil by its rightful name, but yet leave the judgment of them to God. He particularly warns Catherine against judging unworthy priests and monks. To wage war on the Church because its bad servants sin is itself a great sin. God who raised up His priests and clothed them in power and dignity will judge them Himself, and however wretched they may be they are still the ministers of the sacraments which nourish the life of grace in us. But Christ says, “My priests shall be high-minded men, not hired apprentices. They must not sell the grace of the Holy Spirit, which is Myself, for rewards.” In the Dialogue God speaks too of the degeneration within the Church, and expresses Himself so uncompromisingly regarding bad priests and monks that some of the French translations which appeared at a time when anti-clericalism in France was at its most violent, simply omitted these chapters in Catherine’s book. She compares good priests and monks with suns which give life and warmth to the whole of Christendom. But woe to the priests and monks who are proud, practise simony, and intrigue to win honour and power among men. They waste the riches of the Church, which should be used for charitable work and for the upkeep of ecclesiastical buildings, on themselves and their concubines and bastards, or on their relations for whom they have exaggerated love. Instead of feeding Christ’s lambs they flay them and use their dishonest earnings for gambling and drinking. Nevertheless God says the same to us as His Truth says in the Gospel: “Do as they tell you, continue to keep the commandments they preach, but do not imitate their actions.” 3568

mercy is so divine that You cannot deny it to those who pray for 3587

In her beautiful final prayer Catherine pours out her thanks for the treasures with which the Holy Trinity has filled her heart: “O eternal Trinity, You are a bottomless ocean. The more I throw myself into the ocean, the more I find You, and the more I find You the more I will search. I can never say of You—It is enough. . . As the hart longs for the running water of the spring, my soul longs to escape from the dark prison of my body to see You in truth. . . For in the light with which You have illuminated my intellect I have seen and tasted Your bottomless depths, O Eternal Trinity, and beauty of all that is created. . . O Eternal Trinity, You are the Creator, I am Your creature. In my redemption through the blood of Your Son I have recognised that You love the beauty of Your creatures. O abyss, O Eternal Divinity, bottomless ocean! Oh, what could You give me that is better than Yourself? You are the fire which burns eternally, and never dies. You are the fire which consumes self-love, You are the fire which melts all the frost and illumines all things, and it is in this light that You have taught me to know Your truth.” 3605

Not that all that God has created is not good in itself, but how sinful and stupid our flesh is which clamours for and becomes attached to the transitory goods of this life! Our life and the beauty of youth are as short-lasted as the beauty of a flower; once it has been plucked no one can preserve it. So it is with our life on earth when the Highest Judge lets death pluck us, none knows when. She reminds them that it is their duty to be examples of pure and holy life—and they have become as hired apprentices, ungrateful and untruthful. For it is a lie to say that they elected Urban out of fear—the comedy with Cardinal Tebaldeschi was played through fear. 3728

besides her usual advice regarding love for oneself and love for Life, she offers particular advice regarding the sins of ingratitude: blasphemy, swearing, scandal, and wicked attempts to ruin the names and reputations of one’s neighbours. Only men who have learned to love God humbly and sincerely can govern their fellow-men with righteousness and human love, remain faithful to Christ in His Church, and faithfully protect the honour and happiness of their neighbours. 3940

Only the will can commit a crime; neither devils nor any other being can force it to commit the smallest sin if it is not willing. Therefore the sinful will which submits to the temptations of the enemy is a sword which kills the soul when it is offered to the enemy by the hand of free will. Which is more cruel, the enemy or the person who is wounded? We are the more cruel, for we agree to our own death.” She quotes a proverb which was current in the Middle Ages: “It is human to sin, but devilish to persist in sinning.” 3967

“In Your nature, Eternal Divinity, I have learned to know my own nature”, she 4010

“Love which moves the sun and all the stars.” 4017

Think Like a Commoner: A Short Introduction to the Life of the Commons by David Bollier

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fabulous sums of stocks, bonds and cash. Serious wealth can also be a community asset and the rich set of social relationships that make community possible. The Linux story is a stunning proof that the commons can be highly generative and contemporary as well as being entirely practical and effective. 283

commoners are intent on addressing difficult practical questions such as, What’s the best way to irrigate these forty acres when water is scarce? and What’s a fair way to allocate access to a dwindling fishery in this coastal bay? Commoners are also not afraid to tackle the problem of shirkers, vandals and free riders: individuals who want benefits without corresponding responsibilities. The point is that the commons is a practical paradigm for self-governance, resource management and “living well.” Commoners can often negotiate satisfactory resolutions to meet their common purposes without getting markets or government bureaucracies involved. They struggle to figure out the best structures for managing a collective resource, the procedures for making rules and operational norms that work. They understand the need to establish effective practices to prevent over-exploitation of their forest or lake or farmland. They can negotiate fair allocations of duties and entitlements. They like to ritualize and internalize their collective habits and stewardship ethic, which over time ripen into a beautiful culture. 288

Commons certainly include physical and intangible resources of all sorts, but they are more accurately defined as paradigms that combine a distinct community with a set of social practices, values and norms that are used to manage a resource. Put another way, a commons is a resource + a community + a set of social protocols. The three are an integrated, interdependent whole. 304

the lesson from the Wolfpak and the parking commons is that local commons can provide types of management and order that government bureaucracies and formal law cannot. Boston snowplows may not reliably clear the streets of snow, and the city government’s enforcement of parking rules may be unreliable or expensive. Hawaiian authorities may not wish to hire a police officer or lifeguard to patrol Banzai Pipeline Beach (leaving a void of governance?), or such tasks may be seen as too impractical or “small” for a large bureaucracy to address. But the commoners? They often have their own deep stores of knowledge, imagination, resourcefulness and commitment. Their informal governance may in fact outperform official forms of government. In fact, as explicit negotiations among commoners become so engrained that they settle into habit, custom becomes a kind of invisible “vernacular law.” Vernacular law originates in the informal social zones of society — coffeehouses, schools, the beach, “the street” — and becomes a source of effective order and moral legitimacy in its own right. Social norms such as queuing up in a line (and punishing those who cut in line) and meal etiquette (never take the last helping) are a kind of passive commoning that most of us have internalized as “the way things are done.” They constitute an implicit mode of commoning for managing access to limited resources. 340

EACH OF THE COMMONS described above arose spontaneously, without the direction or oversight of centralized institutions or government. Each is committed to a larger collective purpose while also providing personal benefits for individuals. None is driven by a quest for money or personal fortune, at least not directly. In most commons, in fact, the market is a rather peripheral presence. Yet even without the direct involvement of markets or the state, serious production and governance occur. The beauty of the commons as a “rediscovered” paradigm is both its generality and its particularity. It embodies certain broad principles — such as democratic participation, transparency, fairness and access for personal use — but it also manifests itself in highly idiosyncratic ways. For these reasons, I like to compare the commons to DNA. Scientists will tell you that DNA is ingeniously under-specified precisely so that the code of life can adapt to local circumstances. DNA is not fixed and deterministic. It is partial and adaptable. It grows and changes. A commons is like a living organism in that it co-evolves with its environment and context. It adapts to local contingencies. A forest commons in Vermont is likely to be quite different from one in Nepal or Germany, because the local ecosystems, tree types, economies, cultural histories and much else vary. And yet commons in each of these places are nonetheless commons: stable regimes for managing shared resources in fair ways for the benefit of participating commoners. The “diversity within unity” principle that commons embody is what makes the commons paradigm so versatile and powerful — and so confusing to conventional economists and policymakers. What’s critical in creating any commons, as mentioned earlier, is that a community decides that it wants to engage in the social practices of managing a resource for everyone’s benefit. This is sometimes known as commoning. The great historian of the commons Peter Linebaugh has noted that “there is no commons without commoning.” It’s an important point to remember because it underscores that the commons is not only about shared resources; it’s mostly about the social practices and values that we devise to manage them. Commoning acts as a kind of moral, social and political gyroscope. It provides stability and focus. When people come together, share the same experiences and practices and accumulate a body of practical knowledge and traditions, a set of productive social circuits emerges. 351

escorted through a ritual shudder, the professor whisks them along to the main attraction, the virtues of private property and free markets. Here, finally, economists reveal, we may surmount the dismal tragedy of a commons. The catechism is hammered home: individual freedom to own and trade private property in open markets is the only way to produce enduring personal satisfaction and social prosperity. Hardin explains the logic this way: we can overcome the tragedy of the commons through a system of “mutual coercion, mutually agreed upon by the majority of the people affected.” For him, the best approach is “the institution of private property coupled with legal inheritance.” He concedes that this is not a perfectly just alternative, but he asserts that Darwinian natural selection is ultimately the best available option, saying, “those who are biologically more fit to be the custodians of property and power should legally inherit more.” We put up with this imperfect legal order, he adds, “because we are not convinced, at the moment, that anyone has invented a better system. The alternative of the commons is too horrifying to contemplate. Injustice is preferable to total ruin.” 393

There is just one significant flaw in the tragedy parable. It does not accurately describe a commons. Hardin’s fictional scenario sets forth a system that has no boundaries around the pasture, no rules for managing it, no punishments for over-use and no distinct community of users. But that is not a commons. It is an open-access regime, or a free-for-all. A commons has boundaries, rules, social norms and sanctions against free riders. A commons requires that there be a community willing to act as a conscientious steward of a resource. Hardin was confusing a commons with “no-man’s-land” — and in the process, he smeared the commons as a failed paradigm for managing resources. To be fair, Hardin was following a long line of polemicists who projected their unexamined commitments to market individualism onto the world. As we will see later, the theories of philosopher John Locke have been widely used to justify treating the New World as terra nullius — open, unowned land — even though it was populated by millions of Native Americans who managed their natural resources as beloved commons with unwritten but highly sophisticated rules. 413

are. Commons scholar Lewis Hyde dryly notes, “Just as Hardin proposes a herdsman whose reason is unable to encompass the common good, so Lloyd supposes persons who have no way to speak with each other or make joint decisions. Both writers inject laissez-faire individualism into an old agrarian village and then gravely announce that the commons is dead. 427

basis for a large literature of “prisoner’s dilemma” experiments that purport to show how “rational individuals” behave when confronted with “social dilemmas,” such as how to allocate a limited resource. Should the “prisoner” cooperate with other potential claimants and share the limited rewards? Or should he or she defect by grabbing as much for himself as possible? Needless to say, the complications are endless. But the basic premise of such social science experiments is rigged at the outset. Certain assumptions about the selfishness, rational calculation of individuals and lack of context (test subjects have no shared social history or culture) are embedded into the very design of the “game.” Test subjects are not allowed to communicate with each other, or develop bonds of trust and shared knowledge. They are given only limited time and opportunity to learn to cooperate. They are isolated in a lab setting for a single experiment, and have no shared history or future together. Aghast at the pretzel logic of economic researchers, Lewis Hyde puckishly suggested that the “tragedy” thesis be called, instead, “The Tragedy of Unmanaged, Laissez-Faire, Common-Pool Resources with Easy Access for Noncommunicating, Self-Interested Individuals.” The dirty little secret of many prisoner’s dilemma experiments is that they subtly presuppose a market culture of “rational” individuals. Most give little consideration to the real-life ways in which people come to cooperate and share in managing resources. That is changing now that more game theory experiments are incorporating the ideas of behavioral economics, complexity theory and evolutionary sciences into their design. 432

Paradoxically enough, the heedless quest for selfish gain — “rationally” pursued, of course, yet indifferent toward the collective good — is a better description of the conventional market economy than a commons. In the run-up to the 2008 financial crisis, such a mindset propelled the wizards of Wall Street to maximize private gains without regard for the systemic risks or local impacts. The real tragedy precipitated by “rational” individualism is not the tragedy of the commons, but the tragedy of the market. Happily, contemporary scholarship has done much to rescue the commons from the memory hole to which it has been consigned by mainstream economics. The late American political scientist Elinor (“Lin”) Ostrom of Indiana University deserves special credit for her role in expanding the frame of analysis of economic activity. In the 1970s, the economics profession plunged into a kind of religious fundamentalism. It celebrated highly abstract, quantitative models of the economy based on rational individualism, private property rights and free markets. A child of the Depression, Ostrom had always been interested in cooperative institutions working outside of markets. As a young political scientist in the 1960s, she began to question some of the core assumptions of economics, especially the idea that people are unable to cooperate in stable, sustainable ways. Sometimes working with political scientist Vincent Ostrom, her husband, she initiated a new kind of cross-disciplinary study of institutional systems that manage “common-pool resources,” or CPRs. CPRs are collective resources over which no one has private property rights or exclusive control, such as fisheries, grazing lands and groundwater. All of these resources are highly vulnerable to over-exploitation because it is difficult to stop people from using them. We might call it the “tragedy of open access.” (Hardin himself later acknowledged that he should have entitled his essay “The Tragedy of an Unmanaged Commons” — an oxymoron, but never mind.) 451

What distinguished Ostrom’s scholarship from that of so many academic economists was her painstaking empirical field-work. She visited communal landholders in Ethiopia, rubber tappers in the Amazon and fishers in the Philippines. She investigated how they negotiated cooperative schemes, and how they blended their social systems with local ecosystems. As economist Nancy Folbre of the University of Massachusetts, Amherst, explained, “She would go and actually talk to Indonesian fishermen or Maine lobstermen, and ask, ‘How did you come to establish this limit on the fish catch? How did you deal with the fact that people might try to get around it?’” From such empirical findings, Ostrom tried to figure out what makes for a successful commons. How does a community overcome its collective-action problem? The recurring challenge facing a group of principals in an interdependent situation, she wrote, is figuring out how to “organize and govern themselves to obtain continuing joint benefits when all face temptations to free-ride, shirk, or otherwise act opportunistically. Parallel questions have to do with the combinations of variables that will (1) increase the initial likelihood of self-organization, (2) enhance the capabilities of individuals to continue self-organized efforts over time, or (3) exceed the capacity of self-organization to solve CPR [common-pool resource] problems without eternal assistance of some form.” Ostrom’s answer was Governing the Commons, a landmark 1990 book that set forth some of the basic “design principles” of effective, durable commons. These principles have been adapted and elaborated by later scholars, but her analysis remains the default framework for evaluating natural resource commons. The focus of Ostrom’s work, and of the legions of academics who now study commons, has been how communities of resource users develop social norms — and sometimes formal legal rules — that enable them to use finite resources sustainably over the long term. Standard economics, after all, declares that we are selfish individuals whose wants are unlimited. The idea that we can depend on people’s altruism and cooperation, economists object, is naive and unrealistic. The idea that commons can set and enforce limits on usage also seems improbable because it rejects the idea of humans having unbounded appetites. Ostrom nonetheless showed how, in hundreds of instances, commoners do in fact meet their needs and interests in collective, cooperative ways. The villagers of Törbel, Switzerland, have managed their high alpine forests, meadows and irrigation waters since 1224. Spaniards have shared irrigation waters through huerta social institutions for centuries while, more recently, diverse water authorities in Los Angeles learned how to coordinate their management of scarce groundwater supplies. Many commons have flourished for hundreds of years, even in periods of drought or crisis. Their success can be traced to a community’s ability to develop its own flexible, evolving rules for stewardship, oversight of access and usage, and effective punishments for rule-breakers. Ostrom found that commons must have clearly defined boundaries so that commoners can know who has authorized rights to use a resource. Outsiders who do not contribute to the commons obviously have no rights to access or use the common-pool resource. She discovered that the rules for appropriating a resource must take account of local conditions and must include limits on what can be taken and how. 466

What is fascinating is the parallel development, outside of academia, of an eclectic, transnational corps of activists and project leaders who have embraced the commons as an organizing principle for their campaigns for social change. This, arguably, is what is making the commons a significant force in politics, economics and culture today. New movements of people worldwide are beginning to see how the commons paradigm describes their lives and their relationships to other people and resources. Software programmers, urban gardeners, indigenous peoples, academic researchers, permaculturists, Indian textile makers, Istanbul residents defending Gezi Park, the users of public libraries and parks, Slow Food activists: the affinity of these groups for the commons is not necessarily intellectual or scientific; it’s personal and passionate. For many of these commoners, the commons is not a “management system” or “governance regime”; it’s a cultural identity, a personal livelihood and a way of life. It’s a way to revive democratic practice. It’s a way to live a more satisfied life. 556

I like to think of this as a vernacular movement more than a political movement or ideological perspective. The term “vernacular” was given a special meaning by iconoclastic social critic Ivan Illich in his 1981 book Shadow Work. As a critic of the dehumanizing tendencies of institutions, Illich saw vernacular spaces as informal cultural zones where people naturally come to their own moral judgments and act out of their own sovereign humanity. The vernacular flourishes in the realm of householding and subsistence, and of family life and child rearing. It lives in the shared spaces of a community in which people assert their collective moral values and political interests, over and above those of the state, the corporation and other institutional powers. As one of Illich’s students, Trent Schroyer, put it, the vernacular realm evokes a “sensibility and rootedness . . . in which local life has been conducted throughout most of history and even today in a significant proportion of subsistence- and communitarian-oriented communities.” The vernacular consists of “places and spaces where people are struggling to achieve regeneration and social restoration against the forces of economic globalization.” There is a certain timelessness and mystery associated with the vernacular, and as you have probably guessed, it has a lot to do with the commons. The commons is a fragile social institution and sensibility that naturally arises from vernacular culture, as if driven by a life force. It invariably tries to assert and maintain itself in the face of powerful institutions that have other priorities and interests. Sometimes commoners succeed in negotiating a rapprochement with those institutions, and carve out a protected zone for commoning. Urban gardens in New York City had to struggle to maintain themselves in the face of development pressures, for example. Coastal fishery commons must often struggle against large-scale industrial trawlers who swoop through their waters extracting fish for global markets rather than local consumption. Digital commoners must contend with copyright laws and corporate demagoguery that equate sharing with criminal activity (“piracy”). History has shown that the forces of market enclosure are cruel and relentless in deconstructing and destroying commons; they don’t like the competition. A successful commons is a “bad example” because it bears witness to better practical alternatives. Sharing is also objectionable because it is an affront to the ideology of private property rights (with the exception of tech companies like Google and Facebook, whose business model relies upon monetizing social sharing). For their part, governments and bureaucracies are often wary of the commons as an independent, potentially threatening power base, preferring the certainties and rewards of market-based allies. Governments generally prefer to manage resources through strict standardized systems of control. To them, commoning appears to be altogether too informal, irregular and unreliable — even if the actual successes of commons refute that prejudice. Any basic 575

This process is often called the enclosure of the commons. It’s a process by which corporations pluck valuable resources from their natural contexts, often with government support and sanction, and declare that they be valued through market prices. The point is to convert resources that are shared and used by many to ones that are privately owned and controlled, and treat them as tradeable commodities. To talk about enclosure is to open up a conversation that standard economics rarely entertains — the dispossession of commoners as market forces seize control of common resources, often with the active collusion of government. The familiar debate of “privatization versus government ownership” does not really do justice to this process because government ownership, the supposed antidote to privatization, is not really a solution. In many instances, the state is only too eager to conspire with industries to seize control of common resources for “private” (i.e., corporate) exploitation. Regulation is too often a charade that does more to legalize than eradicate market abuses. To talk about enclosure, then, is a way to point to the commons and reframe the discussion. The language of enclosure makes visible the antisocial, anti-environmental effects of “free markets” and validates commoning as an appropriate, often-effective alternative. A few years ago, I learned of a contemporary enclosure that eerily replicated the medieval pattern of land enclosure. For more than a century, the village of Camberwell, in the fertile Hunter Valley region of New South Wales, Australia, had used part of an open flood plain around Glennies Creek as a commons. It was a place for residents to keep their horses and dairy cows, and to let their children fish, swim and ride horses. In April 2005, according to the Sydney Morning Herald, “a pair of officers from the Department of Lands arrived, called together members of the [Camberwell] Common Trust, and told them the Crown land would be immediately resumed and turned over to the Ashton mine that looms over the Upper Hunter village in the form of a hollowed-out hill on the other side of the creek.” The action was just another instance of government using its authority to seize common lands for corporate purposes. The secretary of the Camberwell Common Trust told a reporter, “When we go to community meetings with the mines they are always talking about what they will do ‘when’ they get approval. They never say ‘if’ they get approval.” Both mining companies and government make out well from enclosures. The mining companies get cheap access to minerals and lax environmental oversight. The Australian government earned about $1.5 billion in royalties and fees at the time of the Camberwell enclosure. Commoners are generally not so lucky. In Camberwell, blasts from the mining hollowed out the hills around the village. Parts of the commons cracked, according to the Morning Herald. Nearly two-thirds of the village population gave up fighting the mining companies and moved elsewhere. The Camberwell experience is a classic example of state-assisted market enclosure. In the US, the government allows mining interests to extract mineral wealth on public lands under the Mining Act of 1872. Unchanged for more than 140 years, this law lets mining companies extract gold, silver and iron ore for five dollars an acre, period. It’s been estimated that Americans have lost more than $245 billion worth of revenues over the years from this law — while ruining beautiful mountains and rivers with mine tailings and other wastes. Similar stories from around the world can be told about timber companies raping public forests, oil companies drilling in pristine wilderness areas, industrial trawlers decimating coastal fisheries and transnational water bottlers sucking groundwater dry. In Latin America, transnational corporations are working with neoliberal governments to impose aggressive “neo-extractivist” policies. As Argentinian professor Maristella Svampa explains, the idea is to build… 606

A Brief History of the English Enclosure Movement The term “enclosure” is generally associated with the English enclosure movement, which occurred at various times in medieval history and through the nineteenth century. To put it plainly, the king, aristocracy and/or landed gentry stole the pastures, forests, wild game and water used by commoners, and declared them private property. Sometimes the enclosers seized lands with the formal sanction of Parliament, and sometimes they just took them by force. To keep commoners out, it was customary to evict them from the land and erect fences or hedges. Sheriffs and gangs of thugs made sure that no commoner would poach game from the king’s land. Enclosure was irresistible to the 1 percent of medieval England because it was an easy way to grab more wealth and power with the full sanction of the law. It could help struggling barons and upwardly mobile gentry consolidate their political power and increase their holdings of land, water and game. An anonymous protest poem from the eighteenth century put it well: The law locks up the man or woman Who steals the goose from off the common But leaves the greater villain loose Who steals the common from off the goose. The law demands that we atone When we take things we do not own But leaves the lords and ladies fine Who take things that are yours and mine. The poor and wretched don’t escape If they conspire the law to break; This must be so but they endure Those who conspire to make the law. The law locks up the man or woman Who steals the goose from off the common And geese will still a common lack Till they go and steal it back. As enclosures swept the villages of England, commoners suffered serious hardships. They depended upon the forest for their firewood and roof thatches, and on acorns to feed their pigs. They relied on shared fields to grow vegetables, and on open meadows for wild fruits and berries. An entire rural economy was based upon access to the commons. Barred from using their commons, villagers migrated to cities, where the emerging industrial revolution turned them into wage slaves, if they were lucky, and beggars and paupers if they weren’t. Charles Dickens drew upon the social disruptions and injustices of enclosures in writing Oliver Twist, Great Expectations and his other novels about London’s troubled underclass. One important goal of the English enclosures was to transform commoners with collective interests into individual consumers and employees. Which is to say: creatures of the marketplace. The satanic mills of the Industrial Revolution needed obedient and desperate wage slaves. One of the lesser-noticed aspects of enclosures was the separation of production and governance. In a commons, both were part of the same process, and all commoners could participate in both. After enclosures, markets took charge of production and the state took charge of governance. The modern liberal state was born. And while the new order brought about vast improvements in material production, those gains came at a terrible cost: dissolution of communities, deep economic inequality, an erosion of self-governance and a loss of social solidarity and identity. Governance became a matter of government, the province of professional politicians, lawyers, bureaucrats and monied special interest lobbies. Democratic participation became mostly a matter of voting, a right limited to men (and at first, property owners). Enclosure also isolated people from direct encounters with the natural world and marginalized social and spiritual life. During the course of a hundred and fifty years, from the late 1600s to the mid-1800s, about one-seventh of all English common land was carved up and privatized. As a result, deep inequalities took root in society and urban poverty soared. The foundations of the modern market order were being laid, and the masters of this new world had no need for the commons. The hallmarks of the new order would be individualism, private property and “free markets.” Karl Polanyi was an economic historian who… 667

David Johnson’s claim that law amounts to a “self-referential, organizational identity” that belongs to the people who make it. “If law has a life of its own,” he writes, “and in some sense causes its own form of order and persistence, we should be studying its biography rather than pretending that we can design and repair its mechanisms from the outside.” In other words, we must understand the subjective, socially internal dynamics of commons and recognize that this is where law originates. When law is seen in this perspective — not just as a series of formal constitutions and statutes but as a self-organized system that a community creates to manage itself and its resources in orderly fair ways — it is easy to see that the commons itself is a living embodiment of law. It amounts to an evolving social contract. Individuals come together to negotiate the rules and norms that will govern their community. They specify how members may access and use shared resources. They set about making rules for managing land, water, fish and wild game, and for monitoring usage and punishing vandals and free riders. In this broader sense, the law of the commons extends into the mists of time and precedes formal written law by many millennia. 1298

Some of the most astute commentators on these problems are autonomous Marxists such as Massimo De Angelis, editor of The Commoner website; George Caffentzis, founder of the Midnight Notes Collective; Silvia Federici, an historian who concentrates on the feminist implications of the commons; Peter Linebaugh, author of The Magna Carta Manifesto and other histories of English commons; and Michael Hardt and Antonio Negri, the political theorists and authors of Multitude, Empire and Commonwealth. Each in different ways has noted that the core problem of unfettered capitalist markets is their tendency to erode the authentic social connections among people (cooperation, custom, tradition) and to liquidate the organic coherence of society and individual commons. Capital breaks commons into their constituent parts — labor, land, capital, money — and treats them as commodities whose value is identical with their price. This has caused a persistent moral and political crisis because market capitalism cannot answer the questions, What can bind people together beyond the minimal social and civic ties needed to participate in market exchanges? Can a market-based society survive without the commons? 1418

How we define property rights matters because they influence the sorts of personal and social entitlements we may enjoy, affect the kind of social relations we will have and have enormous effects on our sense of well-being (or alienation). In a much-quoted definition, the eighteenth-century jurist William Blackstone described property rights as “the sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.” He implied that property rights belong solely to individuals. But of course property need not be defined this way. As the cruise ship passengers showed, they could choose to exercise temporary individual “use rights” to the same resource instead of exclusive possession. (To be technical, the cruise ship owner is arguably the “owner” of the deck chairs, but the passengers possess them for limited periods of time and in this case are free to set their own rules.) Different property rights schemes have very different implications for how people’s needs are met (or not met). Such choices influence the nature of the social order and the general attitudes among people. This may be the real point of the allegory of the deck chairs — that property rights are more malleable than most people suspect; that their design can be altered; and that such choices have far-reaching effects on how we relate to each other and how we use resources. 1444

People like to think of property as a fairly self-evident category. By default they tend to see it as a private right to exercise exclusive control over physical objects such as land, cars and smartphones. A landowner typically sees his plot of land as a fixed, individual parcel of inert soil over which he may do whatever he wants. But the conceit that “property” has no social or ecological implications is a fantasy of modern life. In reality, a piece of land is a living part of a living ecosystem. Even as a commodity, its value is dependent upon the character of adjacent pieces of land and the larger ecosystem. A country home with sweeping views of the surrounding countryside alive with chirping birds and friendly neighbors is more valuable than an identical house located next to a factory and a belching smokestack. In this sense, land is really a fictional commodity, as we have seen. It may be treated as private property, and we maintain the illusion that it is truly self-contained and fungible. But it is not really a bounded unit whose fullest value can be expressed by a price, in isolation from its context. Property is a kind of social fiction — an agreed-upon system for allocating people’s rights to use a resource or exclude access to it. Individual property rights are by no means the only or best way to manage a resource. Land can be well managed as a trust on behalf of the public and future generations. It can be managed through cultural practices and traditions that treat it as a sacred gift of nature, as indigenous peoples often do. Specific and limited rights can be allocated to people in various ways, as farming collectives and conservation easements often do. 1455

The Inalienable Rights of Commoners Property rights do not arise naturally, as the great Digger leader Gerrard Winstanley noted in 1659. They are the result of conquest: “For the power of enclosing land and owning property was brought into the creation by your ancestors by the sword.” 1475

the modern tendency to assert absolute individual property rights is a libertarian fantasy. One person’s property rights invariably end up affecting another person’s property rights; everyone’s freedom cannot be limitless. Indigenous peoples help us see that Western conceptions of property reflect some deep-seated cultural attitudes toward nature and social relationships. We moderns presume that humans can commoditize water, land, genes and other elements of nature as if they are inert objects that can be isolated from their natural context and owned as chattel. 1498

The problem is that dominant market-based forms of law usually privilege individual rights and ignore collective rights and needs. Law does not usually recognize the commons as an institutional form, so it can be difficult to achieve a collective purpose while working within the straitjacket of individual property rights. That’s why protecting commons from enclosures has generally required legal ingenuity, at least within the context of the modern liberal state: the commons exists within a lexical void, rendering it unnamed and inscrutable. It’s important to see 1506

the commons is not simply another variant of property. Its character is quite different. First, the commons is less about ownership as we usually understand it than about stewardship. Ask indigenous peoples if they “own” the land and they will reply that the land owns them. To talk about ownership brings to mind the “sole and despotic dominion” over a resource that Blackstone described. A commons implies a more personal engagement with a resource and a longer-term perspective. It also implies a richer ongoing set of ethical and cultural relationships than private property normally entails. A commons is about the shared management of a resource by many — something that may or may not require formal property law to achieve. 1513

The commons asks us to consider a different paradigm of social and moral order. It asks us to embrace social rules that are compatible with a more cooperative, civic-minded and inclusive set of values, norms and practices. The commons bids us to reject Homo economicus as the default ideal of human behavior. It asks us to entertain the idea that certain rights should be inalienable — that is, not for sale — and to elevate certain social values over private property rights. This is the challenge faced by so much of the human rights movement — to recognize human dignity, respect, social reciprocity and social justice as elemental human needs that law must protect. Traditionally, human rights have been seen as an abstract, universal norm selectively enforced by the nation-state (depending upon political circumstances). The commons proposes a more local, “on the ground” reconceptualization of human rights: a way for communities to meet basic needs more directly and, quite possibly, more reliably. 1533

Locke’s theory of property merits our attention because it still sets the framework for how we see and justify property rights. If the labor that we expend in discovering or improving a piece of land entitles us to own it, then land that is “undeveloped” belongs to no one and is therefore free for the taking. This was a convenient idea for eighteenth-century European explorers eager to seize the riches of the New World. By the logic of Locke’s philosophy, such lands should be considered terra nullius, or empty land (sometimes referred to as res nullius, or a nullity), because land becomes valuable only as individuals apply their labor and ingenuity to it (by improving it, making it marketable, etc.). It is Locke’s conceit that nature is an inert object that can be privately owned without regard for its connections to its existing inhabitants or larger natural ecosystems. Thus even though indigenous peoples and peasants have managed land, water, fisheries, forests and other natural resources as commons from time immemorial — without formal legal titles — Western imperialists have taken comfort in the legal fiction that the land doesn’t belong to anyone — so we can march right in and take it! In this way, Locke’s theory of private property deliberately ignores the prior use rights and customs of indigenous peoples, the rights of future generations and the inherent needs of nature itself. Using Lockean logic, it has become customary to talk about oceans, outer space, biodiversity and the Internet as if they too are resources that belong to no one. The logic of res nullius justifies unchecked private plunder. Tellingly, Locke added a brief qualification to his theory stating that any private appropriation is limited to “at least where there is enough, and as good, left in common for others.” He raises an awkward issue that is too obvious to ignore: the exercise of private property rights may encroach on and even destroy resources that belong to everyone. In other words, there is an unresolved tension between private property and the commons. This “Lockean proviso,” as it is often called, is mostly treated as a symbolic, throwaway gesture, however. Philosophers and legal scholars may invoke it to show their intellectual rigor, but in practice politicians and the investor class don’t care a whit about honoring it. Transnational bottling companies are still sucking groundwater supplies dry without leaving enough, and as good, in common. Agriculture–biotechnology (ag-biotech) companies are still marketing proprietary genetically modified crops that destroy sustainable seed-sharing. Industrial trawlers are still overexploiting ocean fisheries to the point of exhaustion, dispossessing small coastal fishing communities. Whatever one makes of his proviso, Locke’s singular intent was to justify private property, not assure the longevity of the commons. In this tradition, private property laws today continue to ignore or criminalize commoners who use resources in a collective fashion. Nonmarket subsistence commoning is not seen as “adding value” in a Lockean sense; by this logic no one is entitled to property rights protection. This is how the “freedom” of private property is used to dispossess and violate commoners, as seen in the international land grab of customary lands in Africa. It is important to understand the Lockean analysis because it has become the central moral justification of modern capitalism and its enclosures. As a number of commons scholars, such as Wolfgang Hoeschele and Roberto Verzola, have noted, capitalism is about the engineering of scarcity. To maximize profits and market share, businesses deliberately create scarcity by finding novel ways to limit supplies or access to resources. Copyright and patent law, for example, take resources that are cheap and easy to reproduce — information and knowledge — and deliberately give limited-term monopolies to authors and inventors whose creativity is presumed to be wholly novel and original. The ag–biotech industry likes… 1550

The price system typically fails to take account of all sorts of value that are external to the marketplace. For example, price cannot easily represent types of value that are subtle, qualitative, long-term and complicated — precisely the attributes of nature. What’s the market value of the atmosphere? Of a clean river? Of babies born without pollution-induced birth defects? Markets have trouble answering such questions because there is no meaningful market price for such things. Price only measures exchange value, after all; it doesn’t really measure use value. And so the grand narrative of conventional economics celebrates Gross Domestic Product as the height of human progress by totaling the value of all market activity. It doesn’t really care if that activity is beneficial to society or not — in fact, it doesn’t even ask that question! Instead it just measures if money has changed hands, which is its moronic definition of wealth creation. By this reckoning, the Gulf of Mexico oil spill and the Fukushima nuclear disaster should be considered good, because they ended up stimulating economic activity. Ida Kubiszewski, Robert Costanza and a team of other economists vividly demonstrated the shortcomings of GDP in a 2013 study of the net social benefits of economic activity in 17 countries, representing 53 percent of the world’s population. Using a new index, the Genuine Progress Indicator or GPI, they explicitly took into account dozens of factors that GDP ignores, such as negative activities like crime, pollution and social problems as well as positive nonmarket activities such as volunteering and household work. Their conclusion? The economists found that the costs of economic growth globally have outweighed the benefits since 1978! This year was also the point at which the global ecological footprint of human activity exceeded global biocapacity. And despite a three-fold global increase in GDP since 1950, life satisfaction in nearly all 17 countries surveyed had not improved significantly since 1975. John Ruskin called the unmeasured, unintended harms caused by markets “illth.” The problem with the price system, as yoked to private property, is that it generates as much illth as wealth — but hardly any of this illth gets counted. It’s off the books. A company’s bottom line and a nation’s GDP reflect only the monetized wealth generated by markets; they deliberately omit the nonmarket illth. This damage is borne mostly by commons as markets take what they can from nature, for free, without acknowledging its actual value (because nature is seen as res nullius). Once profits have been taken and privatized, the market then dumps its wastes and disruptions back onto the commons, leaving commoners and governments to mop up the mess. As mentioned earlier, this might be called the “tragedy of the market” — the unmetered, hidden subsidies and costly “externalities” that markets, in the service of private property, impose upon the commons. This should not be surprising in a society that looks to price as the highest, most reliable metric of value. If a resource does not have a price or property rights, it naturally will be regarded as “not valuable” or “free for the taking.” No wonder normal market activity frequently rides roughshod over ecological values; nature’s wealth does not come with price tags. 1597

Market externalities are easy to ignore, too, because they tend to be diffused among many people and across large geographic areas. No individual or locality can take effective action against air pollution, say, or against pesticide residues in food. Externalities also tend to lurk on the frontiers of scientific knowledge (Does this vaccine cause autism? Do cell phones cause brain cancer?), which means that identifying and confirming negative externalities can be scientifically difficult. And industries actively resist the scientific verification of harmful externalities, lest unwelcome news triggers angry political responses and costly reparations. For all these reasons, a system of stewardship, not ownership, is more likely to take conscientious precautions to prevent harms. In a commons, the structural pressures to earn money are reduced and the incentives to take into account subtle, long-term factors are greater. As a social institution, a commons is also more likely to care about the long-term sustainability of a resource than a market, because the very identities and cultures of commoners are wrapped up in the management of the resource. Markets tend to care primarily about financial returns, and see everything else (working conditions, product safety, ecological concerns, etc.) as secondary. The basic problem is that the signals communicated by prices are too crude and impersonal to alter management practices. 1623

adequate systems to protect the commons from market encroachments. What steps can commoners take to protect the things they love? This is an urgent issue so long as private property and price are the default definitions of value in public policy, because as we have seen, the price system, however valuable in certain contexts, overrides most ecological, social and moral values. How can commoners assure protection for human dignity and respect, over and above that enabled by private property rights? How can they secure the right to engage in nonmarket social exchange — gift economies, informal collaborations, new forms of collective action — whose value is barely recognized by the modern liberal polity? How can commoners uphold social justice and human rights as inalienable values that may have to trump corporate property rights? 1635

the open educational resources (OER) movement has pioneered the cooperative development of open textbooks, curricula and course materials. 1666

law professor Yochai Benkler in his landmark 2006 book The Wealth of Networks, “is the emergence of more effective collective action practices that are decentralized but do not rely on either the price system or a managerial structure for coordination.” Benkler’s preferred term is “commons-based peer production,” by which he means systems that are collaborative, nonproprietary and based on “sharing resources and outputs among widely distributed, loosely connected individuals who cooperate with each other.” 1683

in 2009 and after, a wide array of open educational resources, or OER, emerged as the next turn of the viral spiral. All levels of education and learning communities — not just scholarly publishing — got wise to the fact that proprietary control of knowledge is antithetical to their core values: to learn and grow through participation and sharing. Academia is a commons. Community colleges were dismayed to learn that many students were dropping out or delaying their educations because they could not afford their textbooks. It is not unusual for textbook publishers to bring out new editions every two or three years simply to make the existing used books “obsolete” and promote new textbook purchases. Some farsighted OA educators have responded by forming the Community College Consortium for Open Educational Resources, which helps identify and publicize open textbooks. Such books are CC-licensed and available for the cost of a print-on-demand copy. This has reduced students’ expenses by hundreds of dollars apiece. The Massachusetts Institute of Technology (MIT) pioneered open educational resources in 2001 when it produced the first major body of curricular materials — syllabi, readings, videos, datasets — for free online use. MIT’s innovation has profoundly influenced the teaching of physics and other scientific fields in China as well as many small countries with isolated rural populations. It has also spawned the OpenCourseWare Consortium, which now has more than 120 member universities and educational institutions worldwide. The viral spiral that started with free software and the CC licenses continues to expand. The very term “open source” has become a widely used cultural meme to celebrate production that is open, participatory, transparent and accountable. Open source principles now animate a robust “open design” movement that invites anyone to help design clothing, furniture, computer components, even automobiles. A group called Arduino now designs and produces scores of printed-circuit boards and computer components, which enable cheap and easy customization by techies. An Open Prosthetics Project invites anyone to contribute to the design of prosthetic limbs — or to the specifications for limbs that ought to be designed even if the designer doesn’t know how to do it herself. Among the designs: prosthetic limbs for rock climbers and a prosthetic arm for fishing. One of the more fascinating open-network projects is Wikispeed, a Seattle-based automotive prototyping and manufacturing start-up project that has collaborators in fifteen countries. Its goal is to use open source principles to design and build a modular, lightweight race car that can travel a hundred miles on a gallon of gasoline. Community networks like Open Source Ecology are now building shareable, low-cost equipment for off-the-grid “resilient communities.” One of its prime projects is the LifeTrac, a low-cost, multipurpose open source tractor whose components are modular, inexpensive and easy to build and maintain. In other words, not complex, expensive or proprietary. Open source design and manufacturing of physical things has reached a large enough scale that the community of innovators have formed their own association, the Open Hardware and Design Alliance. Digital commons now pop up in the most unlikely places. A self-organized group called Crisis Commons is a network of tech volunteers who provide humanitarian aid in response to natural disasters. Following the Haiti earthquake of 2009, thousands of volunteers associated with Crisis Commons swiftly built Web-based translation tools, people finders and maps showing routes to empty hospital beds. There is also a range of what I call “eco-digital commons,” in which Internet technologies are being used to help monitor and manage the environment. Some websites now invite individuals to use mobile phones, motion sensors, GPS tracking and other electronic systems to monitor local sightings of birds, butterflies and invasive species, or to monitor pollution levels in… 1785

corporations only support “sharing” if they can make money from it. That’s not commoning. 1832

subsistence commons, operating outside of market system without private property rights or money, are vitally important to an estimated two billion people worldwide, according to the International Association for the Study of the Commons. 1887

It’s worth emphasizing that subsistence commons vary a great deal and are not without their problems. Many need better management; others are poorly managed and could be improved; still others struggle in unsupportive political environments. Yet they remain an important means of everyday sustenance and dignity that strive to respect ecological limits. That’s an impressive accomplishment that markets and states have trouble emulating. 1889

A South African lawyers’ group called Natural Justice has developed a legal instrument known as “biocultural community protocols” (BCP) that is a novel attempt to protect cultural traditions and practices from appropriation by outsiders. BCPs set forth the specific values and customary procedures that a community has chosen to manage its natural resources. The protocols also spell out the procedural and substantive rights of commoners to participate in decisionmaking, and to demand free, prior and informed consent to specific public policies that might be imposed on them. The BCPs also ensure that people can monitor and evaluate the impact of projects in their community. It is difficult to overgeneralize about indigenous peoples’ commons because they embody so many different types of landscapes, tribal cosmologies and cultural practices. Still, legal scholar Rebecca Tsosie has noted striking similarities among indigenous systems of knowing and interacting with the natural world. Indigenous peoples’ commons tend to reflect “a perception of the earth as an animate being; a belief that humans are in a kinship system with other living things; a perception of the land as essential to the identity of the people; and a concept of reciprocity and balance that extends to relationships among humans, including future generations, and between humans and the natural world.” Indigenous peoples have developed remarkably stable socio-ecological models precisely because they focus on long-term social relationships, not irregular market transactions. Westerners often dismiss indigenous peoples’ commons out of hand because they are not based on strict individualism, private property rights and market notions of “value” (i.e., a price for everything). As N. Bruce Duthu, a leading scholar of Native American law, has written, “The idea of ‘property’ in the Western tradition. . .implies an orientation toward the Market use of resources without special regard for the long-term ecological consequences or the social meanings of nature to people; the price system presumes a basic equivalence among like-priced elements of nature. Societies that have a more direct, subsistence relationship to nature may therefore find property- and market-based sensibilities alien and even offensive.” Not surprisingly, the industrialized nations of the world scoff at Bolivia’s proposal that the United Nations recognize “nature’s rights,” an idea that lies at the heart of so many indigenous peoples’ commons. Honoring “Mother Earth” — as the Pachamama movement in Latin America advocates — is seen by the industrialized world as ridiculous, impractical nonsense, but this prejudice simply illustrates the West’s alarming cultural myopia. It 1913

In gift economies, however, as Lewis Hyde noted in his classic book The Gift, social boundaries are blurred or even eradicated through gift exchange. There is no self-serving calculation of whether the value given and received is strictly equal; the point is to establish ongoing social relationships and sympathies. The subtitle of Hyde’s book — Imagination and the Erotic Life of Property — captures this idea nicely: gifts bring people closer together, especially when the exchange is indirect and staggered over time. So long as gifts continue to circulate among people, without a clear reckoning of what one is “owed,” the social commons thrives. 1956

It is often cheaper, easier and more reliable to coordinate an activity through a trusted community. This is surely one reason that “collaborative consumption” is growing as a new hybrid sector of the market economy; artfully designed Web systems let people coordinate the (cash-based) “sharing” of cars, commuting rides, bikes and tools. One of the more remarkable Internet-based gift economies is CouchSurfing, a free, informal system of overnight hospitality used by travelers (and the people who host them) in more than ninety-seven thousand cities and towns around the world. Cash exchange between host and visitor is explicitly prohibited. CouchSurfing is a vast Wed-mediated gift economy that helps more than five million strangers a year give and receive hospitality in each other’s homes, often forging new friendships in the process. 1963

Cities are an especially fertile environment for social commons because of the great diversity and density of people there. San Francisco has been something of a leader. After a local organization, Shareable magazine, issued a policy paper, “Policies for a Shareable City,” Mayor Ed Lee appointed a Sharing Economy Working Group to explore ways to encourage a “shareable city.” Among the ideas: resource-sharing among citizens (e.g., ride sharing), coproduction assisted by the city government (urban agriculture) and mutual aid among citizens (eldercare). In Naples, Italy, Mayor Luigi de Magistris has appointed an Assessor of the Commons to take account of local commons systems and has rallied municipal officials throughout Italy to improve city government support for local commons. 1971

In Rome, Italy, the former employees of a grand public theater and former opera house, Teatro Valle, took over the premises in 2011 after the city government had failed to support it, and managed it as a self-organized commons. The protest was part of a larger complaint about the government’s failure to maintain civic and recreational spaces even as it privatizes cherished public properties, leading to higher rents and evictions. The occupation of Teatro Valle, still underway, has inspired other citizen groups to mount direct action protests that have reclaimed other buildings and spaces. Instead of simply fighting privatization, aggrieved Romans have come to realize that they need active, ongoing self-governance beyond representative government. 1977

There are other more ambitious initiatives to try to promote social commons in urban areas. Urban designers Nikos A. Salingaros, Federico Mena-Quintero and others are seeking to apply the principles of peer-to-peer production to urban environments. “P2P Urbanism,” as it is called, seeks to make city design and daily life more hospitable to ordinary people. Instead of the dehumanizing monumentalism that “starchitects” have inflicted on many cities, P2P Urbanism proposes collaborative design and user participation in urban planning, drawing upon the wisdom of pattern theory guru and architect Christopher Alexander. The initiative also seeks to make urban design more adaptable to local conditions and individual needs in the style of open source software and peer production. 1983

and accountable to them. However, in contemporary life, commerce is so often integrated with vast national or global markets and driven by the “divine right of capital,” as Marjorie Kelly puts it. Capital-driven markets tend to produce enormous structural disparities of power that disenfranchise consumers, workers and communities. They plunder nature with little concern for the long-term consequences. The good news is that it is becoming easier for many communities to assert greater control over the structure and behavior of markets. For example, community-supported agriculture (CSAs) and local farmers’ markets have a deep stake in their communities. These social relationships and the local accountability of markets mean that a community can meet many needs while avoiding the rapacious ethic of global capitalism. Markets need not be predatory and socially corrosive; they can become socially integrated into a community and made locally responsive. Other examples include cooperatives, the Slow Food movement and mutual businesses (owned by their member-consumers), all of which try, in different ways, to incorporate larger social values with market activity. One of the most successful commons-based business enterprises I have encountered is Cecosesola, the Central Cooperative for Social Services of Lara, in Venezuela. For more than forty years, this self-organized, self-financed project has run over eighty cooperatives — banks, farms, factories — as well as civic associations and organizations. Cecosesola deliberately avoids hierarchical relationships and bosses by moving tasks and production among its 1,200 associate workers. Deliberations take place in assemblies that strive for consensus — a process that requires a great deal of mutual education, communication and dialogue. Prices at Cecosesola’s five local food markets are not based on demand but on “fairness.” All vegetables are sold at the same price per kilo, for example. Cultivating trust, commitment to the common good and the courage to take risks — all within a flexible, evolving organizational structure — lie at the heart of Cecosesola’s improbable success. 1998

The trick in melding commons and markets, to my mind, consists in nourishing a distinct culture of commoning while devising “defensible boundaries” around the commons so that it can maintain its basic autonomy. In medieval times, commoners would often “beat the bounds” — walk the perimeter of their forest or piece of communal land — as part of an annual community celebration that doubled as an occasion to patrol the boundaries of their commons. If they came upon a private fence or hedge that had enclosed the commons, the commoners would knock it down, re-establishing the integrity of their land. Community enforcement of the “perimeters” of commons is essential. Our task today is to devise modern-day equivalents of beating the bounds. Two successful examples in cyberspace are the General Public License for software and the Creative Commons licenses. Both ensure that commoners can retain control over the fruits of their shared labors by prohibiting private appropriations of code and digital content, respectively. The biocultural protocols developed by the South African advocacy group Natural Justice have a similar purpose — to prevent transnational corporations from appropriating the specialized ethnobotanical knowledge and agro-ecological practices of indigenous peoples. Commoners today “beat the bounds” when they devise formal rules and ethical norms as ways to preserve their commons. The elaborate governance rules of Wikipedia editing, the customs that Maine lobster fishers have negotiated among themselves, the rules for New Mexican acequias — all have the goal of preserving the resource and the community while excluding outsiders who have not invested their energies in cultivating the commons or who may act as vandals or free riders. Equipped with self-devised rules and governance systems, commoners achieve something else as well: they can pressure markets to be more responsive to the consumers who must rely upon them. One might call these “commons-based markets” — coherent communities with enough power to influence and tame markets. Such markets are more prevalent on the Internet, where social communities (or loose networks) can self-organize as passionate affinity groups before turning to markets to meet certain needs. 2014

commons from capitalist exploitation. How can the commons be structured so that its logic is decoupled from that of capitalist markets — and yet still be able to interact with markets as needed? For my colleague Silke Helfrich, the key is to ensure that a commons has the capacity to protect and reproduce itself. The commons must have within its very structure the capacity to assure its own longevity and self-protection. It must be able to protect its resources and community norms. This could be achieved through legal rules that prevent outsider appropriation or interventions. It could be achieved through social practices and norms that constitute commons governance. It could be achieved through geographic isolation from markets or through technological barriers (fences around a resource; digital “gates” for authorized commoners). Without such protections, commons are vulnerable to capitalist appropriations, a problem that can be seen in the Google Books Library Project, Facebook and other open platforms. In such situations, commoning becomes another type of “market input” that can be alienated from commoners and privatized. It is therefore important that commons develop the means to protect the fruits of their labor and reproduce themselves and other commons. What we need, says Helfrich, is “a shift from commons-based peer production to commons-creating peer production.” Ultimately, she insists, “the commons is not about organizational form or property rights. It’s about the purpose. If commoning ends with a sale on the market, then what happens to all the other people who have a stake in the process of commons-based production?” “Open” systems give no guarantee that the long-term social or ecological interests of contributors will be respected or protected. State 2038

the U.S. Patent and Trademark Office’s Peer to Patent project, which invites people to submit instances of “prior art” for inventions. This is a way to improve the quality of patents by helping to identify prior innovations that might call into question a patent application claiming ownership of a novel invention. The wiki-style crowdsourcing helps prevent the government from giving out unwarranted patent monopolies that could inhibit future innovation. Given the proper support, citizen-commoners with expertise and interests in given fields could evolve into active constituencies that act as agency watchdogs. They could come up with their own innovations and pressure government agencies to fulfill their missions better. 2084

In our book, Green Governance: Ecological Survival, Human Rights and the Law of the Commons, my colleague Burns H. Weston and I tried to imagine new sorts of minimalist, flexible policy structures that could encourage the work of commons at all levels — local, regional, national, transnational and global. This takes us beyond the state trustee commons to entirely novel modes of state support for commons. The goal is to unleash the great self-reinforcing energies of commons as a valuable form of governance without stifling them through top-down micromanagement or political interference. The design challenge is to find a way to govern CPRs at the lowest levels feasible — a principle often known as “subsidiarity” — and with multiple centers of authority. Levels of commons would be diversified and “nested within” higher levels of governance — the concept of “polycentricity,” an idea that Elinor Ostrom explored in her work. 2094

While skeptics may scoff at such ideas as too speculative and far-fetched for dealing with global environmental problems, it is surely more utopian to think that centralized state institutions of limited competence and declining social trust will be able to force people to adopt changes that the Market/State itself does not really wish to implement in the first place. By contrast, commons have shown their capacity to energize people to take direct responsibility; set limits on market activity; model a new vision of human development; and nurture an ethic of sufficiency. However the new global commons are structured (and this is a longer discussion than we can deal with here), the new state-mediated systems will have to open up new spaces that let commons-based governance flourish. That, at least, is the vision that Burns Weston and I propose. 2101

Government agencies — long accustomed to doling out subsidized assets and infrastructure to voracious corporations — must be structured to act as conscientious and transparent administrative and fiduciary trustees of common assets. Purists may object that government-managed systems for shared resources cannot truly be considered commons. But we should remember that even commons such as open source software or academic research depend upon government and markets in all sorts of indirect ways. Government funding supported the development of the Internet and still funds a vast amount of academic research; most personal computers are still acquired through commercial vendors; and so on. The question is not so much whether markets or governments have some role in commons but rather to what degree and under what terms. The preeminent challenge is to assure the greatest integrity of commons, so that the fruits of commoning are not siphoned away by clever, covetous businesses and governments. For now, the idea of a state-authorized Commons Sector may seem politically quixotic. After all, the state is generally indifferent or hostile to most collective enterprises except corporations. Thus a serious ongoing challenge for commoners is to self-organize themselves into quasi-sovereign collectives — a wiki, a seed-sharing collective, a water commons — committed to building and protecting their various resources and to insisting that the State recognize and respect them. We need new federations within the Commons Sector that can mobilize politically. We must devise legal innovations that can give the commons real standing in law. Until such things are achieved, the empire of capital will continue to impose its suffocating logic as widely as possible. 2119

TO ANDREAS WEBER, a theoretical biologist in Germany, the commons is not simply a matter of public policy or economics. It is an existential condition of life in all its forms, from cellular matter to human beings. “The idea of the commons provides a unifying principle that dissolves the supposed opposition between nature and society/culture,” he writes. “It cancels the separation of the ecological and the social.” According to Weber, the commons provides us with the means to reimagine the universe and our role in it. If we are to truly transform our economic and political systems, Weber argues, then we must also address some unquestioned, deeply embedded premises of those systems. In effect we must reassess the nature of reality itself. As creatures immersed in the liberal political paradigm and the principles of Darwinian evolution, most of us implicitly see life as a fierce, competitive struggle and the economy as a kind of machine in which countless individuals strive to maximize their personal wealth and advantage. Competitive triumph is all. We also see, implicitly, a Newtonian universe in which large abstract forces buffet the inanimate particles of nature. In this view, human consciousness and meaning are insignificant if not moot in the cosmic scheme of things. Our tacit metaphysical commitments, argues Weber, are the very basis for our “free market” economic and political structures. What’s so intriguing is that many scientists are starting to see the natural world and evolution through a different metaphysical prism, one that sees life as a system of cooperative agents constantly striving to build meaningful relationships and exchange “gifts.” Competition still exists, of course, but it is interwoven with deep, stabilizing forms of cooperation. In this new theoretical scheme, the subjective experiences of an organism matter. That’s because, in the emerging scheme of biological thought, all organisms are “meaning-making” living systems. Life is seen as an evolutionary process in which embodied subjects interact with their environment and other living organisms to create meaningful relationships. Subjectivity is not an illusion or an inconsequential side-story, as our existing metaphysics claims; it is not a mere bubble of ephemeral, trivial feelings in an empty universe. Rather, subjectivity is the centerpiece of a new “existential ecology” whose primary concern is subjects, not objects alone. Human beings are not isolated atoms adrift in a vast indifferent universe. Our human subjectivity is not separate from a nature that exists as an alien, unfathomable “other.” The subjective and the objective, the individual and the collective, blur into each other — just as in a commons! Weber, speaking as a scientist, calls his new evidence-based theory “biopoetics.” It is both a metaphysics and a biological theory that can explain “the deep relationship between felt experience and biological principles.” Weber argues that the “science of life” as traditionally studied is no longer an adequate methodology for understanding living things. Conventional science fails to address the realities of consciousness and subjectivity in living organisms; indeed, these topics have been more or less banished from the field of study. But, as Weber writes, “only if we understand organisms as feeling, emotional, sentient systems that interpret their environments and do not slavishly obey stimuli, can we ever expect answers to the great enigmas of life.” For him, biopoetics has the potential to provide “a new holistic account of biology as the interaction of subjects producing and providing meaning and hence laying the ground for understanding the meaningful cosmos of human imagination.” 2139

The commons is central to this vision. Only through commoning do we start to reintegrate ourselves with nature and with each other. Our challenge, Weber contends, is to bring about a new “Enlivenment” — a new type of rebirth to succeed the three-hundred-year-old Enlightenment. Our calling is to enact a vision of the universe that honors our subjective identities and need for meaning as biological necessities. We can do this by engaging in “the rituals and idiosyncrasies of mediating, cooperating, sanctioning, negotiating and agreeing, to the burdens and the joy of experienced reality,” says Weber. “It is here where the practice of the commons reveals itself as nothing less than the practice of life.” While Weber’s biological theories, like the commons, remain outside of the mainstream, to me they help explain the deep visceral appeal of the commons paradigm. They confirm that the commons is no PR gambit or “messaging” strategy, but rather a prism for seeing the world anew, and more profoundly: in its totality. In all its diversity. With a realistic understanding of humanity as it works on the ground. Weber’s analysis situates the individual as a conscious, subjective agent in the world. It recognizes the role of actual history, local circumstances, culture and individuals in shaping human evolution and in creating commons. To see the commons — to really see the commons — we need to escape the highly reductionist mindset of market-based economics and culture. We have to learn to see that a cooperative logic can animate human institutions, and that, with the right social structures and norms, this humanistic ethic actually works. Market culture has insidiously narrowed our imaginations. By privileging the interests of private property, capital and markets as governing priorities, our very language marginalizes the idea of working together toward common goals. 2167

Taking the commons seriously, however, means changing some of the ways that we see the world. Our choices are not confined to being employees, consumers, entrepreneurs or investors seeking to maximize our personal economic well-being. We can begin to imagine ourselves as commoners. We can begin to become protagonists in our lives, applying our own considerable talents, aspirations and responsibilities to real-life problems. We can begin to act as if we have inalienable stakes in the world into which we were born. We can assert the human right and capacity to participate in managing resources critical to our lives. 2188

The commons challenges some of the myths that lie at the heart of liberalism, market economics and modernity. It rejects the idea that technological innovation, economic growth and consumerism will inexorably improve our lives if only we try harder and give ourselves more time. As noted earlier, normal economic activity arguably generates as much illth as it does wealth. In this sense, the commons dares to challenge the commodity logic that enshrines price as the supreme arbiter of value and material progress as the linchpin of all progress. Commons scholar James Quilligan helps us understand this when he writes: “The notion of ‘goods and services’ in traditional economics is a reduction of the social relations among individuals — and of the individuals themselves — into commodifiable and fungible things. But a commons-based economics raises the possibility of experiencing value through the practical relationships that arise among individuals, the resources of the world, and that which exists between people and the world” (emphasis in original). 2201

Norms cannot be easily generalized or made universal. This is precisely why it is so difficult to commodify the fruits of the commons without destroying the commons; its value is socially embedded and not readily converted into cash. Monetizing resources in a commons threatens to corrode the social relationships that hold a commons together. As we saw in Chapter 9, indigenous peoples tend to have very different attitudes toward property. When a transnational corporation attempts to patent traditional knowledge or genetic material, they consider such propertization both fatuous and outrageous. No individual can claim to be the sole “author” of collective resources (as copyrights and patents imply) because these resources required generations of stewardship, inherited innovation and culture to develop and refine! No one can appropriate and sell for private gain something entrusted to a commons as a sacred trust. Hence the term “biopiracy.” 2216

Indigenous peoples generally see individuals as nested within a larger network of people; the very idea of the “self-made” person is somewhat ridiculous or even delusional. Not surprisingly, the idea of private property tends to be nonsensical for them because property is not so much a description of a thing as it is a description of social relationships with others. The idea of “sole and despotic dominion” over a resource, as Western law has come to think of property, denies our inescapable dependence on nature and our interdependence on each other. Indigenous people tend to see their resources and knowledge as embedded in a community of reciprocal care and group stewardship. Modern industrial societies presume (incorrectly) that such arrangements are archaic and unnecessary, and that markets can provide what we need. “Monetize the resource and split the income. What could be fairer?” 2229

the “monoculture of knowledge of the 20th Century,” as anthropologist Marianne Maeckelburgh has put it. The knowledge generated by large centralized institutions and disciplines is too brittle, monochromatic and remote from the diverse lived realities of real people. The dominant systems of thought in our time, especially those of bureaucracies, conventional economics and scientific inquiry, have delegitimized vernacular culture — the practice-based ways of knowing and being. We need to understand ourselves as corporeal, situated human beings if we are to surmount our many ecological and social challenges. The loss of diverse languages around the world represents a major setback in humanity’s quest to come to terms with the more-than-human world. Most of Australia’s two hundred and fifty aboriginal languages have disappeared, as have one hundred native languages in the area now known as California. As Daniel Nettle and Suzanne Romaine point out, “the extinction of languages is part of the larger picture of near-total collapse of the worldwide ecosystem.” Native languages represent invaluable storehouses of particularized knowledge, especially about specific ecological systems. “Every language is an old-growth forest of the mind,” as ethnobotanist Wade Davis memorably puts it. 2238

Maeckelburgh has studied a range of activist and networked communities to identify the “alternative ways of knowing” that self-organized communities are developing. This “knowledge is collectively constructed,” she notes. It is “context-specific, partial and provisional.” And it makes a distinction “between knowing something and knowing better. At the heart of the struggle for self-determination, then, is what anthropologist Arturo Escobar calls “a micro-politics for the production of local knowledge. . . . This micro-politics consists of practices of mixing, re-using, and re-combining of knowledge and information.” Commoners rarely presume that there is a fixed body of canonical knowledge whose authority must be respected. They create their own (situational) types of knowledge through engagement with each other and their common resources. Why should some abstract, self-serving bureaucratic or economic framework automatically prevail when local expertise and experience-rich traditions may be more trustworthy, responsive and practical? 2250

humanity and ecological responsibility. Wendell Berry, the poet and ecologist, has put it this way: “Only the purpose of a coherent community, fully alive both in the world and in the minds of its members, can carry us beyond fragmentation, contradiction, and negativity, teaching us to preserve, not in opposition but in affirmation and affection, all things needful to make us glad to live.” Or as Berry said on another occasion, quoting Alexander Pope, “Consult the genius of the place in all.” This approach resonates so deeply with commoners because global commerce has diminished so much that was once distinctive and fecund about individual places. 2262

Wendell Berry said it well: “The great enemy of freedom is the alignment of political power with wealth. This alignment destroys the commonwealth — that is, the natural wealth of localities and the local economies of household, neighborhood, and community — and so destroys democracy, of which the commonwealth is the foundation and practical means.” We should not romanticize the local as an easy or automatic solution to the problems caused by global markets, however. The need for responsive “top-down” structures remains. Some collective-action problems can only be solved with appropriate high-level policies or infrastructures. Centralized bodies are often needed to assure a rough equality of opportunity and resources, or to oversee redistributions of wealth. It doesn’t make sense for every community to replicate functions that might be performed effectively (and without harmful externalities) at a state or national level, or even by larger markets. On the other hand, a certain redundancy and inefficiency are essential to a system’s long-term resilience. For the time being, however, we don’t really have a rich typology of larger-scale commons infrastructures. We don’t really know how to design or build them. Such functions are usually considered the province of government. But I think it is time for commoners themselves to imagine how infrastructures and large governing protocols should be engineered. This could be politically difficult. Governments are jealous of their sovereignty and are not generally predisposed to understand and support commons. The idea of letting bottom-up, network-driven decisions emerge and prevail is threatening to traditional institutions of control. Yet that may be the only way that the energy, imagination and social legitimacy of commoners will be available to solve our myriad problems. We’ve already seen in countless ecological and social crises that the state and market, as constituted, are not up to the job. Let’s begin to acknowledge this simple fact. 2277

Commons-based models are not just “policy mechanisms” that are inserted into a situation to “solve” a problem; they generally embody a very different vision of life than that of Western industrialization and consumerism. 2307

In Ecuador and Bolivia, buen vivir — “good living” — is a discourse that attempts to name a different development vision and way of being in the world. Buen vivir honors the ideas of community autonomy, social reciprocity, respect for natural ecosystems and a cosmic morality. In various ways, indigenous peoples, traditional cultures and commoners caught up in market systems are trying to express a worldview beyond the rational instrumentalism and economic mentality of market capitalism. In this sense, the commons is not just about managing resources; it’s an ethic and inner sensibility. This inner conviction ultimately empowers people to take responsibility for the Earth’s resources and to nourish their own sense of stewardship. People discover that it is not only personally enlivening and culturally wholesome to participate in a commons; it is a way to encourage people to set and enforce sustainable limits on markets. Commoning provides a credible alternative to the growth- and consumer-based visions of development peddled by the World Bank. It provides a path for reducing inequality and insecurity in marginalized nations while highlighting the vital role of local ecosystems and commons-based governance. 2308

The basic problem is that the state has strong incentives to ally itself with market forces in order to advance the privatization and commodification of public resources. Enclosures + economic growth = power and tax revenues. To disrupt this logic, we must reconceptualize the role of the State so that it acts to authorize and support commons-based provisioning. As Professor Burns Weston and I explain in our book Green Governance, political pressure must be brought to bear on states to recognize a number of “macro-principles and policies” to support the commons. These include recognition of:        commons- and rights-based ecological governance as a practical alternative to the state and market;        the principle that the Earth belongs to all;        a state duty to prevent enclosures of commons resources;        state trustee commons as a way to protect large-scale common-pool resources;        state chartering of commons;        legal limitations on private property as needed to ensure the long-term viability of ecological systems; and        the human right to establish and maintain ecological commons. 2322

The commons, to the extent it is considered at all, is often equated with “the citizenry” or “the public,” and not with distinct communities of commoners. It may take some cultural imagination, therefore, to entertain the idea of the commons as an independent sector separate from the State, with its own moral compass and political identity. There are legitimate policy questions about how national and provincial governments can formally recognize the commons in law. It is not self-evident how the State could assure that local commons, absent intervention, would not abuse their authority or the environment, or discriminate unfairly against some people. These are serious questions, but I do not consider them insuperable. After all, the State has delegated considerable authority to corporations to perform certain functions while retaining ongoing oversight. If the State can charter corporations as a vehicle for serving the public good, in principle it ought to be able to delegate similar authority to commons. Diverse sorts of commons demonstrably serve the public good every bit as much as State-chartered corporations do (and at far less cost to the environment and public resources). And properly structured commons are generally more responsive than legislatures and State bureaucracies, which tend to be geographically remote, inaccessible to the layperson and heavily influenced by monied special interests. 2346

law. The State could and should do more to recognize the authority of commons as vehicles for serving the public interest. But calibrating the level of State involvement is tricky. It is important that the State not become too involved in overseeing the commons lest it overwhelm the will of commoners to manage things themselves, which is the very point. Yet the State should not simply use the existence of commons to shirk its own responsibilities by withdrawing legal, administrative or financial support for them. This is a criticism made of UK Prime Minister David Cameron’s “Big Society” policy gambit, which has celebrated community control while cutting public funding to assist it. 2366

As I see it, the proper model for State support of commons should be “State policies in the service of commons formation and stewardship.” The State should openly recognize that self-organized commons can perform certain functions more effectively than the State or Market, and with greater perceived legitimacy, fairness and participation. 2371

it is abundantly clear that commoners using digital networks can now amass, organize and deploy knowledge more rapidly and reliably than large centralized bureaucracies (examples abound in the use of wikis, crisis-relief coordination, reporting via social networks and crowdsourcing of research). The real challenge may be how to find new ways for bureaucratic institutions and digital commons to collaborate. Ecosystem resources, too, are often more effectively and responsively managed by local commoners with the direct authority and responsibility to supervise their own forests, fisheries or water systems without outside interference. 2374

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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Finance holds a disproportionate amount of power in sheer economic terms. (It represents about 7 percent of our economy but takes around 25 percent of all corporate profits, while creating only 4 percent of all jobs.) But its power to shape the thinking and the mind-set of government officials, regulators, CEOs, and even many consumers (who are, of course, brought into the status quo market system via their 401(k) plans) is even more important. This “cognitive capture,” as academics call it, was a crucial reason that the policy decisions taken by the administration post-2008 resulted in large gains for the financial industry but losses for homeowners, small businesses, workers, and consumers. It’s also the reason that the rules of our capitalist system haven’t yet been rewritten in a way that would force the financial markets to do what they were set up to do: support Main Street. As the conversation detailed above shows, when all the people in charge of deciding how market capitalism should operate are themselves beholden to the financial industry, it’s impossible to craft a system that will be fair for everyone. 59

Wage growth is flat. Six out of the top ten fastest-growing job categories pay $15 an hour and workforce participation is as low as it’s been since the late 1970s.4 It used to be that as the fortunes of American companies improved, the fortunes of the average American rose, too. But now something has broken that relationship. That something is Wall Street. 118

the business of America isn’t business anymore. It’s finance. From “activist investors” to investment banks, from management consultants to asset managers, from high-frequency traders to insurance companies, today, financiers dictate terms to American business, rather than the other way around. 127

Wealth creation within the financial markets has become an end in itself, rather than a means to the end of shared economic prosperity. The tail is wagging the dog. Worse, financial thinking has become so ingrained in American business that even our biggest and brightest companies have started to act like banks. 130

They are, in essence, acting like banks, but they aren’t regulated like banks. 136

only the tip of the iceberg. In fact, American firms today make more money than ever before by simply moving money around, getting about five times the revenue from purely financial activities, such as trading, hedging, tax optimizing, and selling financial services, than they did in the immediate post–World War II period.8 147

Eight years on from the financial crisis of 2008, we are finally in a recovery, but it has been the longest and weakest recovery of the postwar era. The reason? Our financial system has stopped serving the real economy and now serves mainly itself, 151

capitalism is sick, and the big-picture symptoms—slower-than-average growth, higher income inequality, stagnant wages, greater market fragility, the inability of many people to afford middle-class basics like a home, retirement, and education—are being felt throughout our entire economy and, indeed, our society. 154

The financialization of America includes everything from the growth in size and scope of finance and financial activity in our economy to the rise of debt-fueled speculation over productive lending, to the ascendancy of shareholder value as a model for corporate governance, to the proliferation of risky, selfish thinking in both our private and public sectors, to the increasing political power of financiers and the CEOs they enrich, to the way in which a “markets know best” ideology remains the status quo, even after it caused the worst financial crisis in seventy-five years. 160

It’s a shift that has even affected our language, our civic life, and our way of relating to one another. We speak about human or social “capital” and securitize everything from education to critical infrastructure to prison terms, a mark of our burgeoning “portfolio society.”9 164

Takers, those that use our dysfunctional market system mainly to enrich themselves rather than society at large. These takers include many (though certainly not all) financiers and financial institutions, as well as misguided leaders in both the private and the public sector, including numerous CEOs, politicians, and regulators who don’t seem to understand how financialization is undermining our economic growth, our social stability, and even our democracy. 170

Today finance engages mostly in alchemy, issuing massive amounts of debt and funneling money to different parts of the financial system itself, rather than investing in Main Street.10 “The trend varies slightly country by country, but the broad direction is clear: across all advanced economies, and the United States and the UK in particular, the role of the capital markets and the banking sector in funding new investment is decreasing. Most of the money in the system is being used for lending against existing assets,” says Adair Turner, former British banking regulator, financial stability expert, and now chairman of the Institute for New Economic Thinking, whose recent book, Between Debt and the Devil, explains the phenomenon in detail.11 In simple terms, what Turner is saying is that rather than funding the new ideas and projects that create jobs and raise wages, finance has shifted its attention to securitizing existing assets (like homes, stocks, bonds, and such), turning them into tradable products that can be spliced and diced and sold as many times as possible—that is, until things blow up, as they did in 2008. Turner estimates that a mere 15 percent of all financial flows now go into projects in the real economy. The rest simply stays inside the financial system, enriching financiers, corporate titans, and the wealthiest fraction of the population, which hold the vast majority of financial assets in the United States and, indeed, the world. 176

the fact that we are in the longest and weakest economic recovery of the post–World War II period, despite the trillions of dollars of monetary and fiscal stimulus that our government has shelled out since 2008, shows that our model is broken. Our ability to offer up the appearance of growth—via low interest rates, more and more consumer credit, tax-deferred debt financing for businesses, and asset bubbles that make us all feel richer than we really are, until they burst—is at an end. What we need isn’t virtual growth fueled by finance, but real, sustainable growth for Main Street. 189

How did this sector, which was once meant to merely facilitate business, manage to get such a stranglehold over it? 197

rapid-fire computerized trading that now makes up about half of all US stock market activity.13 The entire value of the New York Stock Exchange now turns over about once every nineteen months, a rate that has tripled since the 1970s.14 No wonder the size of the securities industry grew fivefold as a share of gross domestic product (GDP) between 1980 and mid-2000s while ordinary bank deposits shrunk from 70 to 50 percent of GDP.15 217

With the rise of the securities and trading portion of the industry came a rise in debt of all kinds, public and private. Debt is the lifeblood of finance; it is where the financial industry makes its money. At the same time, a broad range of academic research shows that rising debt and credit levels stoke financial instability.16 And yet, as finance has captured a greater and greater piece of the national pie—its share of the US economy has tripled in the postwar era17—it has, perversely, all but ensured that debt is indispensable to maintaining any growth at all in an advanced economy like the United States, where 70 percent of output is consumer spending. Stagnating wages and historically low economic growth can’t do the trick, so debt-fueled finance becomes a saccharine substitute for the real thing, an addiction that just gets worse and worse.18 As the economist Raghuram Rajan, one of the most prescient seers of the 2008 financial crisis, argued in his book Fault Lines, credit has become a palliative to address the deeper anxieties of downward mobility in the middle class. As he puts it sharply, “let them eat credit” could well summarize the mantra of the go-go years before the economic meltdown.19 222

financial fees are rising, even as financial efficiency falls.23 So much for efficient markets.24 STEALING THE SEED CORN OF THE FUTURE But as credit and fees have risen inexorably, lending to business—and in particular small business—has come down over time. Back in the early 1980s, when financialization began to gain steam, commercial banks in the United States provided almost as much in loans to industrial and commercial enterprises as they did in real estate and consumer loans; that ratio stood at 80 percent. By the end of the 1990s, the ratio fell to 52 percent, and by 2005, it was only 28 percent.25 Lending to small business has fallen particularly sharply,26 as has the number of start-up firms themselves. In the early 1980s, new companies made up half of all US businesses. By 2011, they were just a third,27 a trend that numerous academics and even many investors and businesspeople have linked to the financial industry’s change in focus from lending to speculation.28 The wane in entrepreneurship means less economic vibrancy, given that new businesses are the nation’s foremost source of job creation and GDP growth. As Warren Buffett once summed it up to me in his folksy way, “You’ve now got a body of people who’ve decided they’d rather go to the casino than the restaurant” of capitalism. In lobbying for short-term share-boosting management, finance is also largely responsible for the drastic cutback in research and development outlays in corporate America, investments that are the seed corn for the future. Indeed, if you chart the rise in money spent on share buybacks and the fall in corporate spending on productive investments like R&D, the two lines make a perfect X.29 The former has been going up since the 1980s, with S&P 500 firms now spending $1 trillion a year on buybacks and dividends—equal to more than 95 percent of their net earnings—rather than investing that money back in research, product development, or anything that could contribute to long-term company growth. Indeed, long-term investment has fallen precipitously over the past half century. In the 1950s, companies routinely set aside 5–6 percent of profits for research. Only a handful of firms do so today. Analysis funded by the Roosevelt Institute, for example, shows that the relationship between cash flow and corporate investment began to fall apart in the 1980s, as the financial markets really took off.30 240

We have made a Faustian bargain, in which we depend on the markets for wealth and thus don’t look too closely at how the sausage gets made. 281

The number of new initial public offerings (IPOs) is about a third of what it was twenty years ago. Part of this is about the end of the unsustainable, Wall Street–driven tech stock boom of the 1990s. But another reason is that firms simply don’t want to go public. That’s because an IPO today is likely to mark not the beginning of a new company’s greatness, but the end of it. According to a Stanford University study, innovation tails off by 40 percent at tech companies after they go public, often because of Wall Street pressure to keep jacking up the stock price, even if it means curbing the entrepreneurial verve that made the company hot in the first place.35 284

In the first half of 2015, the United States boasted $81.7 trillion worth of financial assets—more than the combined total of the next three countries (China, Japan, and the United Kingdom).38 We are at the forefront of financialization; our financiers and politicians like to brag that America has the world’s broadest and deepest capital markets. But contrary to the conventional wisdom of the last several decades, that isn’t a good thing.39 All this finance has not made us more prosperous. Instead, it has deepened inequality and ushered in more financial crises, which destroy massive amounts of economic value each time they happen. Far from being a help to our economy, finance has become a hindrance. More finance isn’t increasing our economic growth—it is slowing it.40 Indeed, studies show that countries with large and quickly growing financial systems tend to exhibit weaker productivity growth.41 That’s a huge problem, given that productivity and demographics together are basically the recipe for economic progress. One influential paper published by the Bank for International Settlements (BIS) put the issue in quite visceral terms, asking whether a “bloated financial system” was like “a person who eats too much,” slowing down the rest of the economy. The answer is yes—and in fact, finance starts having these kinds of adverse effects when it’s only half of its current size in the United States.42 Other reports by groups like the Organisation for Economic Co-operation and Development (OECD)43 and the International Monetary Fund (IMF)44 have come to a similar conclusion: the industry that was supposed to grease the wheels of growth has instead become a headwind to it. Part of this adverse impact stems from the decrease in entrepreneurship and economic vibrancy that has gone hand in hand with the growth of finance. Another part is about the mounting monopoly power of large banks, whose share of all banking assets has more than tripled since the early 1970s. (America’s five largest banks now make up half its commercial banking industry.)45 300

That growing dominance means that financial institutions can increasingly funnel money where they like, which tends to be toward debt and speculation, rather than productive investment on which it takes longer to reap a profit. Power—in terms of both size and influence—is also the reason the financial sector’s lobby is so effective. Finance regularly outspends every other industry on lobbying efforts in Washington, D.C.,46 which has enabled it to turn back key areas of regulation (remember the trading loopholes pushed into the federal spending bill by the banking industry in 2014?) and change our tax and legal codes at will. 321

changes, our economy is gradually becoming “a zero-sum game between financial wealth-holders and the rest of America,” says former Goldman Sachs banker Wallace Turbeville, who runs a multiyear project on financialization at the nonprofit think tank Demos.48 328

Indeed, one of the most pernicious effects of the rise of finance has been the growth of massive inequality, the likes of which haven’t been seen since the Gilded Age. The two trends have in fact moved in sync. Financial sector wages—an easy way to track the two variables’ relationship—were high relative to everyone else’s in the run-up to the market crash of 1929, then fell precipitously after banking was reregulated in the 1930s, and then grew wildly from the 1980s onward as finance was once again unleashed.49 The share of financiers within the top 1 percent of the income distribution nearly doubled between 1979 and 2005.50 331

gap. Financiers and the corporate supermanagers whom they enrich represent a growing percentage of the nation’s elite precisely because they control the most financial resources. These assets (stocks, bonds, and such) are the dominant form of wealth for the most privileged,51 which actually creates a snowball effect of inequality. 338

tome, Capital in the Twenty-First Century, the returns on financial assets greatly outweigh those from income earned the old-fashioned way: by working for wages.52 Even when you consider the salaries of the modern economy’s supermanagers—the CEOs, bankers, accountants, agents, consultants, and lawyers that groups like Occupy Wall Street rail against—it’s important to remember that somewhere between 30 and 80 percent of their income is awarded not in cash but in incentive stock options and stock shares. This type of income is taxed at a much lower rate than what most of us pay on our regular paychecks, thanks to finance-friendly shifts in tax policy in the past thirty-plus years. That means the composition of supermanager pay has the effect of dramatically reducing the public sector take of the national wealth pie (and thus the government’s ability to shore up the poor and middle classes) while widening the income gap in the economy as a whole. The top twenty-five hedge fund managers in America make more than all the country’s kindergarten teachers combined, a statistic that, as much as any, reflects the skewed resource allocation that is part and parcel of financialization.53 342

wealth built on financial markets is “more abstracted from the real world” and thus more volatile, contributing to a cycle of booms and busts (which of course hurt the poor more than any other group).56 As Piketty’s work so clearly shows, in the absence of some change-making event, like a war or a severe depression that destroys financial asset value, financialization ensures that the rich really do get richer—a lot richer—while the rest become worse off. That’s bad not only for those at the bottom, but for all of us. Research proves that more inequality leads to poorer health outcomes, lower levels of trust, more violent crime, and less social mobility—all of the things that can make a society unstable.57 As Piketty told me during an interview in 2014, there’s “no algorithm” to predict when revolutions happen, but if current trends continue, the consequences for society in terms of social unrest and economic upheaval could be “terrifying.”58 359

the depth and breadth of correlations between the rise of finance and the growth of inequality, the fall in new businesses, wage stagnation, and political dysfunction strongly suggest that finance is not just pulling ahead, but is also actively depressing the real economy. On top of this, it’s quantitatively increasing market volatility and risk of the sort that wiped out $16 trillion in household wealth during the Great Recession.59 Evidence shows that the number of wealth-destroying financial crises has risen in tandem with financial sector growth over the last several decades. In their book This Time Is Different: Eight Centuries of Financial Folly, academics Carmen Reinhart and Kenneth Rogoff describe how the proportion of the world affected by banking crises (weighed by countries’ share of global GDP) rose from some 7.5 percent in 1971 to 11 percent in 1980 and to 32 percent in 2007. 371

In the period following the Great Depression, banking was a cornerstone of American prosperity. Back then, banks built the companies that created the products that kept the economy going. If you had some initiative and a great idea, you went to a bank, and the bank checked out your business plan, tracked your credit record, and, with any luck, helped you build your dream. Banks funded America—that’s what we grew up to believe. And that’s what we were told in 2008, when our government pledged some $700 billion of taxpayer money (enough to rebuild the entire Interstate Highway System from scratch and then some) to bail out the American financial system. The resultant Troubled Asset Relief Program, or TARP, was meant to quell the subprime mortgage crisis, brought on, of course, by colossal malfeasance by some of the very banks being saved. But, no surprise, that hasn’t fixed the problem. Wall Street is not only back, but bigger than it was before. The ten largest banks in the country now make up a greater percentage of the financial industry and hold more assets than they did in 2007, nearly two-thirds as much as the entire $18-trillion US economy itself. Main Street, meanwhile, continues to struggle. 385

Financialization is behind the shifts in our retirement system and tax code that have given banks ever more money to play with, and the rise of high-speed trading that has allowed more and more risk and leverage in the system to serve up huge profits to a privileged few. It is behind the destructive deregulation of the 1980s and 1990s, and the failure to reregulate the banking sector properly after the financial crisis of 2008. Individuals from J.P. Morgan and Goldman Sachs may (or, more often, may not) go to jail for reckless trading, but the system that permitted their malfeasance remains in place. The problems are so blatant, in fact, that even a number of Too Big to Fail bankers themselves, including former Citigroup chairman Sandy Weill, have admitted that the system is unsafe, that finance needs much stricter reregulation, and that big banks should be broken up. 422

Not only are many regulators disinclined to police the industry, but they are also woefully underpaid, understaffed, and underfunded. Consider the Commodity Futures Trading Commission (CFTC), which has about the same staff size today as it did in the 1990s, despite the fact that the swaps market it oversees has ballooned to more than $400 trillion.68 It’s not easy for regulators on five-figure salaries, with modest research budgets and enforcement assets, to stay ahead of the algorithmic misdeeds of traders making seven figures. And that’s a shame, because a 2015 survey of hundreds of high-level financial professionals found that more than a third had witnessed instances of malfeasance at their own firms and 38 percent disagreed that the industry puts a client’s best interests first.69 441

(The neuroscience of traders’ brains, which respond to deal making similarly to how addicts’ brains respond to cocaine, is in itself a fascinating area of scholarly inquiry.)70 Other academics, like University of Michigan scholar Gerald Davis, focus on the importance of new management theories such as our notion of shareholder value that puts the investor before everyone and everything else in society, including customers, employees, and the public good. 452

anthropological research that explores the way in which Wall Street culture has come to dominate society and the economy, providing yet another theater for financialization. The anthropologist Karen Ho’s book Liquidated: An Ethnography of Wall Street, for example, looks at how Wall Street’s own labor practices, characterized by volatility and insecurity, have become status quo for the rest of the country.73 “In many ways investment bankers and how they approach work became a model for how work should be conducted. Wall Street shapes not just the stock market but also the very nature of employment and what kinds of workers are valued,” says Ho, who worked in banking before becoming an academic. “What [Wall Street values] is not worker stability but constant market simultaneity. If mortgages aren’t the best thing, it’s, ‘Let’s get rid of the mortgage desk and we’ll hire them back in a year.’ People [in finance are] working a hundred hours a week, but constantly talking about job insecurity. Wall Street bankers understand that they are liquid people.”74 Now, as a consequence, so do we all. Moreover, financialization has bred a business culture built around MBAs rather than engineers and entrepreneurs. Because Wall Street salaries are 70 percent higher on average than in any other industry, many of the best minds are drawn into its ranks and away from anything more useful to society.75 468

reforming business education, which is still filled with academics who resist challenges to the false gospel of efficient markets in the same way that medieval clergy dismissed scientific evidence that challenged the existence of God. It’s about changing a tax system that treats one-year investment gains the same as longer-term ones and induces financial institutions to push overconsumption and speculation, rather than healthy lending to small businesses and job creators. It’s about rethinking retirement, crafting smarter housing policy, and restraining a money culture filled with lobbyists who violate the essential principles of democracy. This book is about connecting those 514

the vast majority of bankers, businesspeople, and economic policy makers aren’t venal—far from it. They are simply part of a very large, complex, and (for them) lucrative system, one that has unfortunately become so dysfunctional that it actively prevents us from making the best and fairest use of our nation’s resources. 528

as the banks got bailed out and swiftly recovered, things in the real economy grew worse. Bank profits reached record heights, yet loans to businesses and consumers shrank. Corporate earnings were high, yet few companies wanted to invest their cash in Main Street. Instead, managers beholden to the markets disgorged it mainly to rich investors and Wall Street.5 Meanwhile, America’s largest financial institutions remained as focused as ever on securities trading, the “casino” part of the banking business, since there was no reason not to be. Regulators had yet—and still have yet—to prohibit bankers from eschewing this more profitable type of business in favor of boring, old-fashioned lending. The very riskiest portion of the markets, derivatives trading, actually grew following the crisis. Globally, it was 20 percent bigger in late 2013 than in late 2007 (and US regulators are trying to police it with budgets that haven’t increased much since then).6 And that’s just what we can see. 599

The great liberal economist John Maynard Keynes, for one, worried that market capitalism might be able to function quite well without actually employing many people, particularly if money went to speculation rather than productive investment. (He called on the government to boost long-term investment through special incentives.) Other thinkers, like Hyman Minsky, Harry Magdoff, and Paul Sweezy, took that idea further, arguing that finance itself creates bubbles and draws money away from the real economy as a matter of course. As Minsky put it, “capitalism is a flawed system in that, if its development is not constrained, it will lead to periodic deep depressions and the perpetuation of poverty.”9 He also believed that the government would be forced to act as a lender of last resort during such periods, a position that would become untenable as public debt levels rose, leading to more public pressure to allow more speculation, which would unleash renewed instability, and so on. This story of a “symbiotic embrace” between finance and underlying economic malaise, one that the markets can’t stave off forever, finds resonance in the fact that every recovery of the post–World War II period has been longer and weaker than the one before.10 628

2015 paper by BIS senior economist Enisse Kharroubi and Brandeis University professor Stephen Cecchetti, who examined how finance affected growth in fifteen countries. They found that productivity—the value that each worker creates in the economy, which, along with demographics, is basically the driver of economic progress—declines in markets with rapidly expanding financial sectors. What’s more, the industries most likely to suffer are those, like advanced manufacturing, that are most critical for long-term growth and jobs. That’s because finance would rather invest in areas like real estate and construction, which are far less productive but offer quicker, more reliable short-term gains (as well as collateral that can be sold in crisis or securitized in boom times).11 No wonder twin booms in credit and real estate were a defining characteristic of many economies worst hit by the 2008 financial crisis.12 Government has a huge role to play in all this. Deregulation from the 1970s onward encouraged banks to move away from their traditional role of enabling investment, and toward embracing speculation. It also paved the way to the so-called shareholder revolution, which enriched investors but pushed corporations into debt and toward short-term decision making. Both trends have redirected capital to less socially useful areas of the economy and created a vicious cycle that’s increasingly difficult to break via the usual methods like monetary policy. Witness the fact that despite the $4.5 trillion the Fed injected into the economy and six years of historically low interest rates, corporations are reinvesting just 1–2 percent of their assets into Main Street.13 Much of the rest is going straight into the pockets of the richest 10 percent of the population—mostly in the form of rising asset prices—and those people are unlikely to spend as much of it as the middle and working classes would. 640

The financial industry is the world’s ultimate power and information hub, the tiny middle portion of an hourglass that represents the larger global economy. All the money in the world, and all the information about who’s making and taking it, passes through that tiny middle. Financiers sit in what is the most privileged position, extracting whatever rent they like for passage. It’s telling that technology, which usually decreases industries’ operating costs, has failed to deflate the costs of financial intermediation. Indeed, finance has become more costly and less efficient as an industry as it deployed new and more advanced tools over time.16 It’s also telling that during the last few decades financiers have earned three times as much as their peers in other industries with similar education and skills.17 As Thomas Piketty put it in Capital in the Twenty-First Century, financiers are, in some ways, like the landowners of old. Instead of controlling labor, they regulate access to things even more important in the modern economy: capital and information. As a result, they represent the largest single group of the richest and most powerful people on earth. Even more so than Silicon Valley titans or petro-czars, financiers are truly masters of our capitalist universe. 679

For several decades now, “the main function of the financial system with respect to corporate America has not been raising funds for investment, but compelling corporations to ‘disgorge the cash’ in the form of payments to shareholders,” says economist J. W. Mason, who studies financialization at the Roosevelt Institute.20 This shift spells bad news for the average worker. Over the last forty years, as finance has grown, the traditional relationship between productivity and wages has gone out the window. Conventional economic wisdom holds that as productivity grows, so too should wages. But during the time that finance has been ascendant, since the late 1970s on, even as productivity per worker doubled, real wages have stalled.21 719

If you want to understand how an industry that creates only 4 percent of the jobs in this country came to represent 7 percent of the economy and take almost 25 percent of all corporate profits, there’s no better place to start than with the history of Citigroup. 737

Dodge v. Ford not only established a legal justification for shareholders’ rights above anyone else’s; it also set a terrible precedent for labor relations that would haunt American business. It was a precedent that chimed with another major business idea of the era: Taylorism. THE PRINCIPLES OF SCIENTIFIC (MIS)MANAGEMENT Even before Henry Ford was battling the Dodge brothers, Frederick Winslow Taylor, a mechanical engineer from Philadelphia, was gaining fame and fortune for his ideas about how to improve American industry. Those ideas, which came to be known as “efficiency theory” or, as critics put it, “Taylorism,” were laid out in his seminal work, The Principles of Scientific Management, published in 1911. Like the Dodge brothers, Taylor didn’t think much of labor. His theories were built around the notion that workers were a lazy and rather stupid bunch who needed to be managed closely if the American economy was to become more efficient. His book laid out his disdain for labor in ways that are hard to imagine any business leader openly articulating today. “One of the very first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox than any other type,” wrote Taylor. “The man who is mentally alert and intelligent is for this very reason entirely unsuited to what would, for him, be the grinding monotony of work of this character. Therefore the workman who is best suited to handling pig iron is unable to understand the real science of doing this class of work.”18 It’s easy to see, in reading this, how Taylor’s ideas were eventually used to justify racist philosophies like eugenics. But around the turn of the century and for the three decades that followed, Taylorism was considered the state of the art in business theory (Taylor himself had a stint teaching the ideas at Harvard Business School). His teachings spread like wildfire in firms eager to become faster, more efficient, and more profitable. Doing so, according to Taylor, involved putting workers in much more rigidly defined boxes, and keeping a tight lid on them. His “time and motion” studies became the basis for new job categorizations in which workers would do one very specific task in a very specific way. Using a stopwatch, Taylor famously stood over factory 1314

large body of research shows, public companies are almost always more conservative in this way than private ones, because the former are under pressure from Wall Street to make quarterly earnings and keep shareholders happy, whether or not that involves decisions that are good for long-term growth. Private companies, for example, invest about twice as much as equivalent public firms do in things like factories, worker training, R&D, and other long-term investments39 (something that belies a claim made by many large public firms today—namely, that a lack of investment into the US economy is the result of high tax rates). 1488

This shift from private to public also engendered shifts in the company’s labor and compensation policies. Ford wanted at all costs to avoid margin-killing strikes, so the firm tended to cut deals with unions that increased pay, while refusing to adopt the more collaborative methods of production that were already being employed in postwar Europe. There, companies like Daimler had adopted a “codetermination” style of management in which labor actually sat on the corporate board and helped make decisions about how the firm was run and how cars were made—a model that ultimately proved more productive and globally competitive. But in the United States, the traditionally Taylorist approach meant management was inclined not to collaborate with labor but to pacify it. Workers got raises but little control, in a Faustian bargain that ultimately backfired decades later as jobs and skills were sent abroad to Asia, where things could be made more cheaply. Adversarial is perhaps the best word to describe relations between management and labor in America, not only at GM but also in most of the auto industry and, indeed, in US corporations as a whole. One of the many reasons that American auto manufacturers are still struggling to implement the sort of collaborative approaches to production that have made some Asian and European companies so successful is that doing so requires a profound mental reset. For example, back in the 1980s and ’90s—when GM and other firms tried to put into place a Japanese-style “andon cord” system that would allow any worker to stop the line if something went wrong—American workers would regularly be yelled at by bosses for actually pulling the cord. They were, some managers thought, just trying to get themselves a free work break.40 The idea that they might take pride in their products and want them to be top-notch seemed an imaginative leap too far. Even when bosses were actually willing to create more collaboration, their efforts were subject to Wall Street approval and the fluctuations of market conditions. Back in 1991, for example, when Robert Stempel, then CEO of GM and a respected “car guy,” tried to roll out lean production methods throughout the firm, he was unable to persuade his board or the analysts on the Street that it was worth the effort. They wanted the company to beat their quarterly numbers now, and so Stempel eventually had to revert to the usual way of doing so. He announced plans to close twenty-one plants and cut 74,000 workers—moves that boosted the company’s stock price but cost it trust with labor, which was of course subsequently less interested in negotiating compromises in compensation in exchange for control over the production process. While there has been some incremental improvement, the basic lack of trust in these relationships, which has been largely broken by financialization, persists to this day. All of it resulted in an increasingly dysfunctional business model, one that discouraged all manner of innovation and long-term thinking. Managers used the fact that they were paying higher salaries to justify cuts in R&D spending. Profits were increasingly bolstered not with truly new products and technologies, but by nipping and tucking costs. “The Ford Motor Company was becoming a stagnant place at which to work,” writes Halberstam in The Reckoning.41 “The impulse of product, to make the best and most modern cars possible, was giving way to the impulse of profit, to maximize the margins and drive both the profit and the stock up. It did not happen overnight. It had begun with McNamara and his systems.” Keeping stock prices up meant keeping costs down, and no one was better at that than the Whiz Kids. Yet even before McNamara was named president of Ford in 1960, his strategy of putting finance ahead of design and engineering was having a major effect on quality. It’s no surprise, then, that the Edsel, the most notorious flop in all of automotive history, happened under the watch of his team. 1495

Hayes and William J. Abernathy, published in 1980, looked at the problem not only in the auto business, but throughout American industry.47 It found that US firms’ research and development spending had been falling since the mid-1960s, even as the percentage of company leaders coming out of finance, relative to any other area, had been increasing. Money spent on mergers amounted to nearly two-thirds of the entire amount of R&D spending by American industry. Companies were hoarding cash rather than investing, and executives spent the majority of their time on “sophisticated and exotic techniques used for managing their cash hoard,” treating “technological matters simply as if they were adjuncts to finance or marketing decisions.” The article, which was entitled “Managing Our Way to Economic Decline,” could have been written today; the only difference would be that the numbers supporting its thesis would be more striking. No wonder it was re-released in 2007 to popular acclaim. The legacy of the Whiz Kids ensured that the top-down, financialized approach to management became the de facto approach at most firms, a misguided practice that still plagues many American companies. This is in large part because the Whiz Kids themselves took over so many top firms in the years following their revamping of Ford. By 1573

It’s about building strong teams, rather than manufacturing balance sheets that look good to investors. Indeed, there’s a large and growing body of research showing that great teams, not all-powerful leaders, are the connective tissue of companies that perform better over the long haul, and that financialization and team building are antithetical.51 1613

hourly employee, who was wearing a World War II–era “We Can Do It” T-shirt, 1619

It’s just one of many examples of how business education doesn’t prepare our future business leaders for the reality of what happens in actual firms and in the capital markets. Instead of turning the finest business minds into innovators and job creators, it’s turning the people who will run the next generation of American businesses into glorified number crunchers. Business education, it turns out, is failing business. 1688

As Nitin Nohria, dean of the Harvard Business School, admits, “anyone can teach you how to read a P&L [profit-and-loss statement] or value a derivative; those kinds of things have become commoditized.”12 The bigger challenge is to teach America’s future business leaders how to be curious, humane, and moral; how to think outside the box about problems like funding the research for a new blockbuster drug. And how to be strong enough to stand up to Wall Street when it demands the opposite. 1713

“The premise of financial theory [taught in MBA programs] is bogus,” says Robert Johnson, an economist and former quantitative trader for George Soros’s Quantum fund who now heads the Institute for New Economic Thinking, an influential group that, among other things, is trying to broaden the nature of economics and business education. “That’s why we end up living with very thin margins of safety—because of the pretense of knowledge and precision about the future which does not exist.”15 1729

I knew any better, kind of like sailors get tattoos,” jokes former GM vice chairman Bob Lutz, whose book Car Guys vs. Bean Counters decries the rise of the MBAs. The problem with business education, according to him, is that students are taught not what happens in real business—which tends to be unpredictable and messy—but a series of techniques and questions that should take them to the right answers, no matter what the problem is. “The techniques, if you read the Harvard Business School cases, they are all about finding efficiencies, cost optimization, reducing your [product] assortment, buying out competitors, improving logistics, getting rid of too many warehouses, or putting in more warehouses. It’s all words, and then there’s a sea of numbers, and you read it all and analyze your way through this batch of charts and numbers, and then you figure out the silver bullet: the problem is X. And you’re then considered brilliant.” The real problem, says Lutz, is that the case studies are static—they don’t reflect the messy, emotional, dynamic world of business as it is. “In these studies, annual sales are never in question. I’ve never seen a Harvard Business School case study that says, ‘Hey, our sales are going down and we don’t know why. Now what?’ ”20 As we read in chapter 2, Lutz believes this kind of approach was one of the things that tanked the American automobile industry and manufacturing in general from the 1970s onward. He’s not alone. Many of America’s iconic business leaders believe an MBA degree makes you less equipped to run a business well for the long term, particularly in high-growth, innovation-driven industries like pharmaceuticals or technology, which depend on leaders who are willing to invest in the future. MBAs are everywhere, yet the industries where you find fewer of them tend to be the most successful. America’s shining technology and innovation hub—Silicon Valley—is relatively light on MBAs and heavy on engineers. MBAs had almost nothing to do with the two major developments in the American business landscape over the last forty years: the Japanese-style quality revolution in manufacturing and the digital revolution.21 1755

Why has business education failed business? Why has it fallen so much in love with finance and the ideas it espouses? It’s a problem with deep roots, which have been spreading for decades. It encompasses issues like the rise of neoliberal economic views as a challenge to the postwar threat of socialism. It’s about an academic inferiority complex that propelled business educators to try to emulate hard sciences like physics rather than take lessons from biology or the humanities. It dovetails with the growth of computing power that enabled complex financial modeling. The bottom line, though, is that far from empowering business, MBA education has fostered the sort of short-term, balance-sheet-oriented thinking that is threatening the economic competitiveness of the country as a whole. If you wonder why most businesses still think of shareholders as their main priority or treat skilled labor as a cost rather than an asset—or why 80 percent of CEOs surveyed in one study said they’d pass up making an investment that would fuel a decade’s worth of innovation if it meant they’d miss a quarter of earnings results22—it’s because that’s exactly what they are being educated to do. 1779

in places like Germany or France today, there was a focus on industry-specific expertise and the practical problems of real firms in the real world. Students had to understand each sector from the ground up, and there was substantial focus on areas like labor relations, government relations, and engineering. Classes on ethics flourished. Joseph Wharton, the Philadelphia industrialist and devout Quaker who founded his namesake school, felt that commerce had a crucial role to play in solving the social problems of the day, namely growing inequality, job disruption, and urbanization. “No country,” he argued, “can afford to have this inherited wealth and capacity wasted for want of that fundamental knowledge which would enable the possessors to employ them with advantage to themselves and to the community.”25 1796

As recently as 1990, the Business Roundtable, a group of CEOs from America’s largest and most powerful companies, said in its mission statement that it was “the directors’ responsibility to carefully weigh the interests of all stakeholders as part of their responsibility to the corporation or to the long-term interests of its shareholders.” Seven years later, though, the group had finally caved, rewriting the statement to say that “the paramount duty of management and of boards of directors is to the corporation’s stockholders; the interests of other stakeholders are relevant as a derivative of the duty to stockholders.”43 Today, whether they believe it or not, it’s rare to find a CEO of a public company who doesn’t publicly buy into the idea of shareholder value. Indeed, the only leaders who can openly question this notion and get away with it tend to be high-profile founder-owners who have a certain cult of personality (Alibaba’s Jack Ma and Starbucks’s Howard Schultz are two who regularly accomplish that feat). 1942

academics, the Center for Higher Ambition Leadership, which aims to find ways to humanize business curriculums and build case studies of how to run more economically inclusive and sustainable businesses. That’s a big deal, because when Bertolini first posed the idea of his wage hike to a group of Harvard Business School professors whom he regularly consulted with, they responded negatively. The CEO, who grew up working class in Detroit and worked a welding line for years before going to college on scholarship, has continued to push forward his agenda within Aetna; in 2015 he gave all his top executives something that’s not yet on the typical MBA reading list—a copy of Thomas Piketty’s Capital in the Twenty-First Century. Companies, says Bertolini, shouldn’t just be moneymaking machines. They also have to invest in people, the real economy, and society as a whole if they want to succeed in the long term. “Capital is the resource that we often manage well, but in my opinion, the scarce resource is a talented and engaged workforce.” Creating that requires thinking bigger, looking at people as assets, not just costs on a balance sheet, and knowing how to think beyond the quarter. “One of my goals as CEO is to help reestablish the credibility of corporate America,” says Bertolini. “That means leaning into the recovering economy and working to bring everyone along, not just a few.” 2118

“The Icahn/Apple situation is a great example of how financial markets are no longer about raising money for investment, but for arbitrage,” the Nobel Prize–winning economist Joseph Stiglitz told me.9 Money is stuck in all the wrong places and flowing to all the wrong people and things. Corporate winners like Apple accumulate vast amounts of cash, yet rather than paying their taxes or giving workers a pay hike (which would also bolster our consumption-oriented economy), they simply turn over cash to investors, who are unlikely to spend it in a way that creates real growth. 2240

Apple and the rest of America’s export-oriented corporate giants may make plenty of cash, but as a group they have created almost no net new jobs since at least 1990, according to an influential study done for the Council on Foreign Relations.12 That is largely due to the fact that despite ebbs and flows in economic growth, corporate earnings, and the credit environment in the United States over the last dozen years, America’s largest firms taken as a whole haven’t invested more than 1–2 percent of their total assets per year into the real economy—real jobs, real goods, real services—over that time.13 This lack of productive investment has nothing to do with bank lending, GDP figures, the rise of China, the failure of Europe, increased government regulation, or partisan politics at home. The biggest economic conundrum of our age—why American companies aren’t investing the $2 trillion in cash they have sitting on their balance sheets (most of which is held overseas) in factories, workers, and wages—turns out to have an easy answer: they are using it to bolster markets and enrich the 1 percent instead. This isn’t just a matter of social justice. You don’t have to view inequality as a moral issue to appreciate that this consolidation of wealth isn’t good for growth—countless data shows that affluent people, like companies, tend to hoard cash (in bank accounts, stocks, bonds, etc.) rather than spend it. When money goes mainly to the 1 percent, it stays in that closed circuit of financial markets that was described earlier. By and large, it doesn’t (despite claims to the contrary) trickle down into the sort of new investments—in businesses, factories, and jobs—that create real economic growth. That’s not the way financial markets were supposed to work. They were supposed to funnel money to new assets and ventures. The great irony of financialization is that it produces bad finance. How did we get to a place in which financial markets have become an insulated system that enriches mainly the wealthy? It’s all part of a shift from a system in which corporations retain their earnings and reinvest to one in which firms distribute profits almost entirely to shareholders and downsize everything else—people, pay, growth-enhancing capital investments, and tax contributions. It’s a shift that is partly enabled by job-displacing technology and globalization but is fundamentally about the pervasiveness of short-term and balance-sheet-oriented thinking throughout the economy. “Financialization has polluted the entire physical investment process, the labor markets, and the innovation cycle of firms,” says Andrew Haldane, the chief economist of the Bank of England and one of the deepest thinkers on the topic of financialization today. “The damage it inflicts on investments in physical and human capital [meaning factories and workers] is hugely important, because that’s what slows down growth.”14 THE RISE OF CREATIVE ACCOUNTING Shareholder activism by people like Carl Icahn and the sort of buybacks being done by Apple and other large public firms are currently one of the best windows into the rise of finance. Back in the 1960s and ’70s, companies invested about 40 percent of each additional earned or borrowed dollar into the real economy.15 All that changed in the Reagan era. “Since the mid-1980s, in aggregate, corporations have funded the stock market rather than vice versa,” says William Lazonick, a University of Massachusetts Lowell professor who has done extensive research on buybacks.16 The legislative change that allowed this destructive shift happened in 1982, which was a crucial year for all kinds of market deregulation. The Supreme Court struck down a key antitakeover law in Illinois—and, by implication, similar laws in all other states. The Justice Department relaxed limits on concentration within industries, making it possible for large, more monopoly-oriented firms to emerge. The floodgates were opened for corporate raiders, 2263

Not only has growth in our economy been higher during times with more regulation, namely the 1950s to the 1970s, but government itself has funded the underlying resources that have allowed private firms like Apple and others to become as profitable as they are. As academics William Lazonick, Mariana Mazzucato, and Oner Tulum have argued in a paper outlining why more of Apple’s cash should go to taxpayers rather than investors, government innovations have been the very fuel of capitalism. “Apple did not have to invent the integrated circuit,” they write. “It did not have to invent the graphical user interface. It did not have to invent the Internet. Moreover, Apple did not have to build universities to educate engineers or roads to allow those graduates engineers to commute to work or the airplanes to carry goods and people around the world. Nor did Apple have to negotiate trade deals with the governments in Japan during the 1980s and in China during the 1990s to ensure access to growth markets for their products.”21 The government did all those things. But it was executives and investors who profited from price hikes in Apple stock. These people are the biggest beneficiaries of the wealth of such corporations, wealth that has been built up by many stakeholders over decades. 2341

the bulk of buybacks since 2001 were done during market peaks, belying the notion that such purchases represent firms’ own belief in a rising share price.25 Why would executives buy back their firms’ stock at such inopportune moments? Many experts believe it’s because buybacks are done at the end of a true growth cycle or, in the case of the most recent boom, at the end of a cycle of easy monetary policy—when the good times are about to end, and buybacks are a way of keeping the party going just a little bit longer. But the buybacks do nothing to help make companies more competitive; in fact, they waste corporate cash, given that they are done when the market was high rather than low. Nonetheless, they do enrich executives, who took from 66 percent to 82 percent of their compensation in stock between 2006 and 2012.26 “It is surely difficult to praise buybacks as being good for shareholders when they are made at such disadvantageous times,” says Andrew Smithers, a British economist and financial consultant. (His book The Road to Recovery makes a convincing case that buybacks and the bonus culture are responsible for slow growth not just in the United States but in many rich countries, because they encourage executives to pay themselves, rather than investing in things that will actually make their companies more profitable.) “Buying overpriced shares is a way of destroying value and spending more money when the market is most overpriced is particularly egregious.”27 What this means on a practical level is 2368

corporations invested at exactly the same rate in the five years after the meltdown as they did in the few years preceding it: around 10 cents of each borrowed dollar. The other 90 cents (which varied in dollar amounts depending on credit and growth conditions) primarily went to shareholder payouts.28 That means that far from funding the economy that you and I live and work in, stock markets now basically fund payouts to the wealthy. This “shareholder revolution,” based on the Chicago School notion that maximizing shareholder value is the purpose of corporate America (as covered in chapter 3), is the single most important reason why high corporate profits and unprecedented cash hoards have failed to translate into jobs, wage growth, and innovation. All of this raises a profound question: What is a company for? We thought that companies, like banks themselves, were supposed to be entities that generated wealth broadly, by allocating capital to productive purposes—investing in people, factories, new ideas, and businesses. But something in that cycle is broken. Today’s companies, like banks, are keeping their wealth in a closed feedback loop where it enriches only a few at the expense of the many. This is a serious dysfunction in our market system, one with multiple growth-destroying effects that we are only just beginning to understand. PRIVATE IS THE NEW PUBLIC One pernicious effect of all this pressure from activist investors is that public markets now are a much less attractive place to raise innovation capital than they used to be, given that they push for short-term gains over long-term objectives. Far from being a place where firms go to fund their best new ideas, markets today have become a place where entrepreneurs and their backers go to cash out via an IPO, or where large public firms manipulate their own stock price via buybacks to please investors. Either way, innovation suffers. For example, Stanford University research shows that tech firms scale back innovation by 40 percent after an IPO, since once a firm goes public, it must focus on pleasing shareholders rather than on investing in the future.29 When it comes to the financial sector’s dampening effect on growth, private and family-owned firms are in many ways the exception that proves the rule. Research shows that privately owned firms invest more than twice as much in the real economy as public firms of similar size operating in the same sector.30 They have also weathered the 2008 crisis much better than many public firms and are now on the upswing rather than the downswing; even as profit margins have flattened or contracted at most big public firms, a 2015 survey of major privately held companies found that 31 percent have raised their margins, and the majority expected to achieve growth rates double the average for their industries in the coming year. 2385

The rich keep their money in banks or in the secondary markets, buying stocks and bonds that already exist, rather than, say, starting new businesses or purchasing new things. The money stays in the financial sector, in other words, instead of being invested in the real economy that we live in. 2568

Yet even as buybacks are likely to slow, mergers and acquisitions are at a record high. Global M&A transactions in early 2015 were worth more than $900 billion, the highest level since 2007.50 Activists love M&A because it always generates quick-hit growth (and bankers love it, too, because it allows them to pocket large fees, both from putting companies together and, later, from breaking them apart if the mergers don’t work). But the game has changed since the infamous wheeling and dealing of the barbarians in the 1980s, evolving to encompass more subtle pressures, too. 2614

Ford, and many other large firms focused on retail and consumer products have created stand-alone lending units. These units “were originally intended to support consumer purchases of their products by offering installment financing but [they] eventually became financial behemoths that overshadowed the manufacturing or retailing activities of the parent firm,” says University of Michigan academic Greta Krippner, whose book Capitalizing on Crisis provides the best quantitative analysis of the shift.6 Krippner tallies the extent to which nonfinancial firms derive revenues from financial investments as opposed to more traditional productive activities (read: making stuff) and finds an alarming trend. While the share of revenues from financial activities vis-à-vis everything else was relatively stable in the 1950s and 1960s, it began to climb in 1970s and then increase sharply over the course of the 1980s. By the late 1980s, the ratio peaked at about five times the levels of the previous postwar decades. After some brief retreats during periods of market boom and bust, the ratio continued rising by the second half of the 1990s and has never stopped.7 Today’s firms represent the apex of this trend. Corporate borrowing is at an all-time high, as are share buybacks, dividend payments, outsourcing, and tax optimizing—all factors that increase the share of financial activities in companies’ revenues. And of course, firms’ investment into jobs, factories, and innovation is near record lows, a decline that has run concurrently to the rise of financial activity within all American businesses.8 Proof of the shift is everywhere. Automakers often generate large chunks of their profits by selling consumers loans to purchase cars, rather than by simply selling the vehicles themselves.9 Energy companies regularly try to boost their profits by speculating in oil futures, a shift that actually undermines their own core business models by creating more volatility in the oil markets. And airlines commonly make more money from hedging on oil prices than on selling airfare, although this strategy can also unexpectedly backfire.10 Indeed, with the 50 percent plunge in oil prices from 2014 to 2015, the airline industry has lost more than $1 billion to bad bets on fuel prices.11 “If I were on the board of a [large airline] I would not hedge oil,” says Warren Buffett, who indeed limited fuel hedging at Burlington Northern Santa Fe railway when he took over the company in 2009. “It doesn’t make any sense to me. If you really think you have an edge in predicting the price of oil futures,” just get into that business, he says. Otherwise, buy your fuel on the spot market, know what your costs will be, and be done with it.12 2777

“The old view is that if you’re in the bolt business, you take risks in the bolt business,” one investment banker proclaimed in BusinessWeek in 1986. “You don’t take risks with the cash.”20 The new view was that cash was there to be poured back into the markets, where it would always earn more than you would make by selling more bolts, or so the thinking went. Pretty soon corporations were nothing more than portfolios, bundles of assets to be managed like stocks. Finally free to turn money into more money—to spin straw, as it were, into gold—CFOs would frequently nix investments in real, tangible products in favor of new financial products like money-market mutual funds, “stripped” Treasuries, offshore dollar accounts, foreign currency hedges, and the most high-risk, high-return asset of all: futures contracts and other sorts of derivatives. The trading culture infected all operations; productive assets became merely commodities to be traded, and quarterly profits were all. One of the most poignant examples of how this kind of thinking tanked once-competitive firms is Kodak, which famously decided to forgo investment into digital film technology. 2897

Sara Lee, another firm that shed jobs and ultimately lost market value after switching from manufacturing to brand management, is another case in point. As its CEO once summed it up, “Wall Street can wipe you out. They are the rule-setters. They do have their fads…and they have decided to give premiums to companies that harbor the most profits for the least assets. I can’t argue with that.”22 GE’s Jack Welch was, of course, the master of figuring out how to make the most money with the fewest possible assets. “My gut told me that compared to the industrial operations I did know, this business [meaning financial operations like lending and credit] seemed an easy way to make money,” he wrote in his autobiography. “You didn’t have to invest heavily in R&D, build factories, and bend metal day after day.”23 While previous GE leaders had poured excess profits into their firm and shared them with employees (in the form of raises) or customers (in the form of price cuts), Welch bought wholesale into the Chicago School thinking around creating shareholder value. To him stock owners were king, and soon after taking over the company, he promised to deliver them an unheard-of 15 percent earnings increase per year. Over the course of his tenure, he fulfilled that promise by cutting tens of thousands of jobs, slashing R&D spending as a percentage of sales by half,24 selling off GE’s famous small appliance division (yes, the one that made televisions and toasters), and imposing a single rule for top managers: Be first or second in your products’ market, and raise your profits every quarter. At GE, it was up or out. In another vicious cycle, expectations of those kinds of returns, combined with now common multimillion-dollar executive pay packages (which resembled Wall Street bankers’ pay more than the comfortable corporate salaries of the time), all but necessitated a move to financial activities. That, after all, was the only way to generate such profits in such a short amount of time. But as GE moved into finance, it began to resemble Wall Street in not just its business model but also its culture, starting with a spate of scandals that began under Welch: improper time card charges on a defense contract; accusations of tax evasion; defrauding the US government on an Israeli Aid Force deal; dumping tons of toxic waste; and a revelation that the firm’s investment banking unit booked $350 million in phantom profits from fake trades.25 The list goes on, including charges of insider trading, fraud, and racketeering. Then there were the everyday accounting high jinks that were a disconcertingly common way of doing business in the pre-Enron era. To keep up his promise of 15 percent growth in earnings every year, Welch frequently resorted to moving money (not to mention jobs) offshore. He also booked income and expenses in ways that were technically legal but were designed to obscure what was really happening within various divisions, allowing him to “pull profits seemingly out of thin air,” as the business-friendly Economist magazine once put it.26 One telling example: Over the last five years of Welch’s reign, between 1996 and 2001, GE earnings per share grew at 90.2 percent, an unprecedented figure for a large conglomerate. But without massive under-reserving at its reinsurance unit (meaning, it didn’t put aside enough for the possibility that many claims would be called in at once), the company would have shown a gain of only 5.6 percent.27 Meanwhile, GE Capital regularly allowed GE to manipulate its quarterly statements by engaging in trades right before reporting day, which would artificially push up the company’s earnings. Such number games were technically forbidden by corporate governance watchdogs, but it was an open secret that GE played them. The company didn’t try particularly hard to hide such maneuvers—after all, Wall Street just wanted its take; it didn’t much care how it was generated.28 2914

Sadly, “by doing exactly what Wall Street wanted, they actually increased risk,” says Harvard Business School professor Gautam Mukunda (who’s trying to help his students understand the downside of financialization).32 So much for shareholder value.33 CULTURE SHOCK Financialization doesn’t just shift how and where companies do business; it changes their very culture, making organizations value risky gambles and quick, easy wins over steady product quality and a consumer-oriented approach. In finance, the trader is at the top of the food chain—he’s the alpha man (they are almost entirely men) who brings home the bear he’s slaughtered and decides who gets to eat what. This culture encourages the glamorization of the individual trader over the firm as a whole, rewarding leaders for large deals and killer trades, rather than for slow and steady growth. Yet these hunters are not penalized for the risk that such actions bring to the firm. Consider the rise of the winner-take-all system of corporate compensation that has prevailed on Wall Street and is now becoming more pervasive throughout corporate America. The last several decades have seen the rise of a ridiculously unfair compensation paradigm in American business, in which CEOs are paid more than three hundred times the salary of their average workers, and an up-or-out system of talent management that rewards type-A stars rather than encouraging team play. Never mind the mounting evidence, offered by academic research, that it’s almost always successful teams, rather than single individuals, that drive a corporation’s success.34 2998

slower growth and lower investment in the real economy as firms jockeyed to make higher margins from speculating with their cash. Even Ronald Reagan, one of the biggest advocates of unfettered capitalism around, knew it. Changes in the regulations governing mergers and acquisitions during the early part of his presidency, in 1982, had opened the way for the proliferation of giant conglomerates prone to financial wheeling and dealing. Between 1980 and 1990, a full 28 percent of the Fortune 500’s largest manufacturing firms received tender bids, most of them hostile, from people like T. Boone Pickens, Carl Icahn, and other corporate raiders. Firms would be spliced, diced, and spliced again, their component parts sold off to the highest bidder, who would often promptly bleed the companies dry. By the end of this period, around a third of the largest firms in the United States had ceased to exist as independent companies.38 Yet even as their laws were helping to create a climate ripe for financialization, Reagan and his advisers had begun to worry about the results, which included the eroding market share of US manufacturing firms vis-à-vis their Asian and European competitors. One report released by Reagan’s Commission on Industrial Competitiveness in 1985 sounds, amazingly enough, like something that could have been written by President Obama’s Council on Jobs and Competitiveness today: “In the 1960s, the real rates of return earned by manufacturing assets were substantially above those available on financial assets. Today, the situation is reversed. Passive investment in financial assets has pretax returns higher than the rates of return on manufacturing assets….As a result, the relative attractiveness of investing in our vital manufacturing core has been compromised.” 39 A little-known and truly stupefying fact is that Reagan was so worried about the financialization of the US economy and its impact on competitiveness that he actually launched a secret project to develop a US industrial policy—a term that is still so strongly associated in the public consciousness with Soviet Russia that it has become (wrongly) a third-rail topic even among most American liberals, not to mention conservatives. The idea behind that Reagan administration effort, known as Project Socrates, was to figure out why America’s foreign competitors were succeeding in establishing highly efficient, thriving corporations while their US counterparts were withering. 3043

The official figure for US manufacturing employment, 9 percent, belies the true importance of the sector. Manufacturing represents a whopping 69 percent of private-sector R&D spending as well as 30 percent of the country’s productivity growth.49 And, according to US government figures, every $1 of manufacturing activity returns $1.37 to the economy. “The ability to make things is fundamental to the ability to innovate things over the long term,” says Willy Shih, a Harvard Business School professor and coauthor of Producing Prosperity: Why America Needs a Manufacturing Renaissance. “When you give up making products, you lose a lot of the added value.” In other words, what you make makes you, economically anyway.50 Certainly, all this was on GE executives’ minds when they made the decision to move manufacturing back to upstate New York. “In the old days, we spent a lot of time looking for sources [globally] for everything we did, and then we picked the cheapest source,” says GE’s Little. “Now we’ve realized that if we can control things and vertically integrate our activities in local markets, then we don’t have to give up that margin that we might have once given to a vendor,” not to mention the value of any intellectual property created as a result.51 It’s a smarter way to think about business, and it’s certainly better for local economies. The question is just how many good new jobs such operations will actually create in America in the coming years. The Boston Consulting Group’s 2014 annual survey of senior manufacturing executives found that the number of respondents bringing production back from China to the United States had risen 20 percent from the previous year. But that won’t come close to replacing the 2.3 million manufacturing jobs lost in the recession that followed the 2008 financial crisis. 3127

Arab Spring, a change that has totally transformed the Middle East. It began, as so many revolutions do, with food riots. “Food is a radically different threat [than other kinds of financial crises], because it affects so many of the world’s poor so profoundly,” Erwann Michel-Kerjan, managing director of the Risk Management and Decision Processes Center at the Wharton School, told me at the time. Food is also an amplifier of many other kinds of risk, particularly political risk. And today its effects are traveling much more rapidly because of the increasing interconnectedness of the world, as well as the increasing power that Wall Street has over the price of a loaf of bread.9 3234

“I’m sure that Goldman used the information they had about aluminum to influence the market between 2010 and 2013,” says Cornell law professor Saule Omarova. (Her paper on the problems inherent in banks both owning and trading commodities, “The Merchants of Wall Street: Banking, Commerce, and Commodities,” first sparked serious media interest in the topic.) “But can I prove it? No. Can the CFTC? I doubt it. And if that’s the case, should Goldman be doing any of this? Absolutely not.”22 3352

Are such rules coming anytime soon? And even if they do, will they definitively separate banking from commerce in risky areas like commodities? Certainly those proposed so far don’t. Many reform advocates are skeptical that they ever will. “I’m not expecting any giant news on this front,” says Lisa Donner, executive director of Americans for Financial Reform, a coalition advocating for tighter regulation of Wall Street.66 Part of the problem, she says, is that no regulators, including the Fed, seem to be asking the profound questions: Why do we have a system that allows finance to be a hindrance to commerce rather than a lubricant to it? How is it that banks could create a bottleneck in raw materials and then profit from it at the expense of their customers? How might we reshape things in a systemic way so that can’t happen? Instead, regulators have so far focused on tweaking the administrative aspects of existing laws while maintaining the silos that make the system so hard to police. They might have good intentions, but they are failing at fixing the problem. “In my view, the Fed has both the legal mandate and the regulatory capacity to address these issues in a more comprehensive way, which is necessary in order to bring the financial markets back in service to the real economy,” says Omarova, 3664

Unfortunately, says Omarova, “regulators are taking on these relatively low-stakes technical questions about additional capital and insurance, but they aren’t asking the big questions—is it a good policy to allow big banks to accumulate so much power, not only over finances, but also over our food, fuel, and other raw materials? What kind of a society will we have if a handful of banking giants end up controlling the country’s energy, metals, and agricultural supply chains?” It’s quite telling that the law gives the Federal Reserve the power to determine what a “complementary” activity is, and whether conducting it would pose “a substantial risk to the safety or soundness of depository institutions of the financial system generally.” But it doesn’t say anything about what impact such activities might have on businesses, consumers, and American families. It’s a legal issue that goes far beyond even the crucial commodities markets. Remember, the Bank Holding Company Act of 1956 (the legislation that was so unfortunately tweaked by Gramm-Leach-Bliley) was really about power—and specifically, about ensuring that banks don’t have too much of it relative to the rest of the economy and to society. If there’s anything that the aluminum fiasco showed, it was that surely the balance isn’t yet right. One telling detail is how many companies affected by the aluminum scandal have been reluctant to speak out about the issue. 3679

Before moving on from her post at the World Food Programme, Josette Sheeran gave a moving TED Talk on the problem of global hunger. “If we look at the economic imperative here, this isn’t just about compassion,” she said. “The fact is studies show that the cost of malnutrition and hunger—the cost to society, the burden it has to bear—is on average six percent, and in some countries up to 11 percent, of GDP a year. And if you look at the 36 countries with the highest burden of malnutrition, that’s 260 billion lost from a productive economy every year. Well, the World Bank estimates it would take about 10.3 billion dollars to address malnutrition in those countries. You look at the cost-benefit analysis, and my dream is to take this issue, not just from the compassion argument, but to the finance ministers of the world, and say we cannot afford to not invest in the access to adequate, affordable nutrition for all of humanity.”69 It’s a laudable goal. However, tackling it will first require not only compassion from world leaders, but real change in Wall Street’s business model. 3714

result. According to Harvard’s Joint Center for Housing Studies, the share of moderately to severely cost-burdened renters (meaning those who pay at least 30 percent of their income in rent) grew to represent half of all American renters in 2013, up from 38 percent in 2000.13 “We get lots of people coming to us saying, we wanted to own, but all the affordable properties have been bought up, so now, we’re renting from Blackstone for more than the price of a mortgage,” says Atlanta-based Tony Romano, the organizing director for the nonprofit Right to the City alliance, which has produced a number of studies on the consequences of private equity moving into the housing market.14 3809

Since their birth four decades ago, private equity firms have perfected a business model that is designed to extract as much wealth from every target company with as little capital or risk to themselves as possible. The current business model “emerged out of the shareholder-value revolution and the leveraged buyout (LBO) movement of the 1970s and 1980s,” say Eileen Appelbaum, a senior economist at the Center for Economic and Policy Research (CEPR) in Washington, and Cornell University professor Rosemary Batt in their influential book, Private Equity at Work.21 This mirrors what we’ve already learned in chapters 3 to 5; as Appelbaum and Batt put it, the rise of private equity represents “a fundamental shift in the concept of the American corporation—from a view of it as a productive enterprise and stable institution serving the needs of a broad spectrum of stakeholders to a view of it as a bundle of assets to be bought and sold with an exclusive goal of maximizing shareholder value.” If the markets are an ocean, private equity firms like Blackstone are the great white sharks that have perfected the use of debt, leverage, asset stripping, tax avoidance, and legal machinations to maximize profits for themselves at the expense of almost everyone else—their investors, their limited partners, their portfolio companies and the workers in them, and certainly society at large.22 During the 2012 presidential race, Mitt Romney’s candidacy spurred a vigorous debate over whether private equity firms create or destroy jobs on a net basis. The research can be spun in many ways, but the upshot is that employment generally declines in companies that spend too much time in private equity’s hands. Job destruction is particularly bad in the retail sector, although the other end of the spectrum has some firms in which private equity’s overall effect on jobs is modest at best.23 But what’s clear is that the private equity model, even more so than most Wall Street practices, enriches a few investors at great cost to others. Let’s not forget that while private equity firms may operate as owners (though they often aren’t regulated or taxed as such), they are essentially financial intermediaries; they make money not necessarily by growing the pie, but by taking an ever-larger slice of 3855

Charles Calomiris and Stephen Haber meticulously outline in their book, Fragile by Design: The Political Origins of Banking Crises & Scarce Credit, the subprime crisis itself was “the outcome of a series of spectacular political deals that distorted the incentives of both bankers and debtors.”44 Unfortunately, nothing about this paradigm has changed—indeed, things have arguably gotten worse. Given that some of the largest players in the game now are outside the formal banking sector, you have a particularly dangerous tethering of the country’s most important industry, housing, with the fastest-growing and least transparent part of the financial sector, shadow banking. This time around, though, financial institutions aren’t just trading risky securities. They actually own and operate real properties—meaning, they have an even more direct impact on the lives of average Americans. Private equity firms already control many people’s jobs; now they control the roofs over people’s heads, too. 4045

Worse yet, for such short-term gains, we all get charged massive fees. In one study on the topic, Stanford professor emeritus and Nobel laureate William Sharpe calculated that investing in low- or no-cost funds rather than actively managed funds could result in a 20 percent higher standard of living in retirement, in part due to the fees commanded by the managed funds.9 Bogle has run his own numbers, including not only the lower returns for active funds but additional hidden fees from portfolio turnover costs, charges for investment advice, and other such expenses. As he put it in 2014 testimony to the Senate Finance Committee, “the high costs of ownership of mutual fund shares, over the long-term, are likely to confiscate as much as 65 percent or more of the wealth that retirement plan investors could otherwise easily earn, simply by diverting market returns from fund investors to fund managers.” He added, “many of the infirmities of our retirement system are the result of the heavy costs incurred by investors because of our bloated financial system.” Popping that finance bubble, the one that takes nearly 25 percent of corporate profits and creates only 4 percent of the jobs, is crucial to getting both retirement and the economy back on track.10 It’s an enormous task, one as big as the fund business itself. 4293

Then, as now, there was little data to show that any actively managed fund could regularly outperform the market, particularly when you factored in fees. (Morningstar, the respected purveyor of mutual fund analysis services, basically conceded this point in 2010.)13 A particularly telling recent piece of research done by law academics at Yale and the University of Virginia found that after considering costs, not only did index funds outperform actively managed portfolios by a significant amount, but 16 percent of the time the impact of high fees would actually offset the entire tax benefit of investing in a 401(k) plan for young workers over the course of their careers.14 Investors then and now were better off simply linking their investments to the market via an index fund, an industry that Bogle and others had begun to develop. But active fund management was much more profitable, and the industry worked hard to convince average Joe investors that they needed to pay for professional guidance through this wild world of investing. “You wouldn’t settle for an ‘average’ brain surgeon,” said one index fund critic. “So why would you settle for an ‘average’ mutual fund?”15 Another fund management firm papered Wall Street with posters showing an angry Uncle Sam putting a rubber stamp across index funds. “Index funds are un-American!” the ad screamed. “Help stamp out index funds.” 4326

By the 1970s, the die was basically cast. Fund management firms themselves began to move away from the unlimited liability partnership structure and to go public, creating further conflict between the needs of clients and the incentives for the firm to maximize profits for itself, whatever the risks to investors. This has created a dizzying amount of wheeling and dealing, which may be good for the fund companies but is of questionable interest to investors. 4351

“The staggering economies of scale that characterize money management have been largely arrogated by fund managers to themselves, rather than shared with their fund shareholders,” concludes Bogle. Or, as the great economist Paul Samuelson put it presciently in 1967, “I decided that there was only one place to make money in the mutual fund business—as there is only one place for a temperate man to be in a saloon, behind the bar and not in front of the bar. And I invested in…[a] management company.”23 In lieu of pouring all your money into Fidelity or BlackRock, there are any number of studies that tell us how much better off we are investing the Vanguard way, in low- or no-fee index funds. The world’s smartest investors buy it—Warren Buffett recently told me that upon his death, his wife’s inheritance would be invested 90 percent in Vanguard’s S&P 500 equity index funds.24 So why don’t we all follow that wisdom? The answer has its roots in behavioral economics, which tells us that the “rational man” is more than capable of making irrational decisions. As The Economist put it recently, “everyone knows that if you go to a casino, the odds are rigged in favour of the house. But people still dream of making a killing. The same psychology seems to apply to fund management, where investors flock to high-cost mutual funds even though the odds are against them.”25 Most of us simply don’t trust ourselves about investing, and it’s in the interests of the industry to make it seem much more confusing than it is. That gives them more business; as we have seen, one of the great tricks of finance is to advance the cult of the expert. By cloaking what is essentially a pretty simple decision (put your money in index funds and forget about it until you are sixty-five) in all sorts of complicated jargon, the industry convinces people that they need someone to explain it to them. No wonder a recent survey found that 7 out of 10 wealthy individuals say their financial adviser, the person who sells them on all those high-fee funds, is as important to them as their doctor.26 4378

This perplexing phenomenon—wherein individuals who are unable to make the best market decisions nonetheless get forced into taking more personal responsibility for their retirement future—became more common through the 1980s. That was when the private 401(k) retirement investing system, on which about half of us depend today, really took off. Amazingly, the creation of this entire system was an accident. Like our bloated healthcare system, our modern 401(k) retirement savings arrangement was a fluke that some clever people came up with in an effort to exploit parts of the tax code. In 1980, a benefits consultant working on a cash bonus plan for bankers had the idea to take advantage of an obscure provision in the tax code passed two years earlier, which allowed employees to set aside money to be matched by employers, which would increase tax deductions that could be taken by the corporation. That moment was the beginning of the 401(k), a 4397

When the bankruptcy of Detroit began in late 2013, the terms of the settlement quickly took center stage and became “a discussion between an emergency manager, from a law firm dedicated to the financial sector, and the financial sector,” explains Wallace Turbeville, a former Goldman Sachs banker who is now a senior fellow at the nonprofit think tank Demos. “The people [meaning pensioners] tried to get a seat at the table, but the emergency manager had a monopoly on the information [on city finances] and for the first four months of the process his was the only story available.”34 That, says Turbeville, along with what he believes were dubiously calculated numbers (crunched by emergency manager Kevin Orr’s team) that overestimated pension liabilities, resulted in a widespread belief that oversize pensions had caused Detroit’s demise. In fact, he says, it was the financiers who cut the dubious bond deals with the city in the first place that put Detroit into bankruptcy. That Wall Street debt was “the biggest contributing factor to the increase in Detroit’s legacy expenses,” explains Turbeville, who wrote an influential report in 2013 outlining the role that finance had played in Detroit’s demise.35 The long and short of it was that the people negotiating the debt settlement on behalf of the city were completely outsmarted and outflanked by financiers, who cut deals for millions of dollars of extremely long-term interest rate swaps that were subject to immediate termination if the city’s credit deteriorated, which of course it quickly did. The termination of the contracts required immediate payment of all projected profits that would be earned by the banks had the contract not been terminated. That meant that Detroit was suddenly on the hook for a huge lump-sum payment that made its cash flow position completely untenable. If this contract sounds Kafkaesque, you’re right, it is. But this sort of “heads I win, tails you lose” wording is woefully common in municipal finance deals, which pit Wall Street against Main Street in a completely unfair way and tend to include all kinds of tax loopholes that further add to the complexity. The Detroit story has something of a happy ending. Thankfully, activists and local politicians decided to fight back, and federal judge Steven Rhodes eventually approved the city’s bankruptcy plan, threw out the initial settlement of the $800 million derivatives deal, and made financial institutions settle for a fraction of that amount, as part of a larger settlement to rid the city of $7 billion in debt. After sixteen months of legal wrangling, fighting, and soul-searching, a group of private donors, including family foundations with landmark names like Ford and Kellogg, banded together with community development agencies, big businesses, and the state itself. They decided that it was inconceivable that the onetime heart of American economic power—which had already lost much of its tax base, more than half its population, and a devastating portion of its labor pool—should fall further. They came up with the $800 million to offset some of the pension pain and save Detroit’s art—a “grand bargain,” as it has become known, that gave the city a future. Suddenly the government, its workers, and Detroit’s creditors were more willing to come to terms. Residents got creative, and financial institutions took payment in assets that represented a bet on Motown’s future, rather than grabbing what cash they could before fleeing. Union reps accepted decreases of 5–10 percent in pension payments, a painful and contentious decision, but much less draconian than what Orr had originally proposed. In the end, no major stakeholders refused to be part of the almost universally praised settlement, which turned the page on the largest municipal bankruptcy in history. As Michigan’s Republican governor, Rick Snyder, told me, “none of this would have been possible without the grand bargain. If people were going to accept this kind of pain, they had to feel that the private… 4474

Given the growing public awareness of the issue, now would be an ideal moment for the next American president to announce major root-and-branch reform of the retirement system and take the country to higher ground before the tsunami hits. How to do this? We should start by committing to maintaining Social Security in its present form, given that it’s the only part of the system that’s unfailingly effective at keeping most elderly people secure. To protect the solvency of the system, we could increase the maximum income level subject to the payroll tax, change the formula for benefit levels while limiting payouts to wealthy people who don’t need them, and raise the retirement age for some Americans. (This last issue needs to be examined carefully to avoid creating hardships for people like manual laborers and others who do physical work that can’t be sustained over a certain age.) Public pension plans, for their part, will need to come clean about overoptimistic return projections—they should start basing their forecasts on 5 percent a year, not 8 percent, and be obligated to tell both pensioners and the public whether they can meet them. Getting out in front of shortfalls early will help cities avoid the fate of Detroit. As for Americans who currently save via 401(k)s or IRAs, there is a much more straightforward solution. They should simply move their savings into programs that are dominated by low- or no-fee index funds (and be auto-enrolled in such programs unless they choose otherwise). For their part, the purveyors of these funds should ensure that fee loads and returns are clearly stated and easily accessible so individuals don’t have to hunt for and guess about them. Regulators should also strictly limit early withdrawals or loans against such private savings, which should do what the 401(k) was intended to do in the first place—protect us in our golden years. There’s already a model that provides many of these things and could be easily copied: the Thrift Savings Plan used by federal workers, which is large, cheap, and effective. If Congress has a problem replicating its own successful savings model for the broader public, then voters should ask who, exactly, their elected officials are serving—Wall Street or Main Street? At the state level, the shift has already begun. The California Secure Choice (CSC) Retirement Savings plan, for example, aims to guarantee every Californian working in the private sector a living wage in retirement. CSC was signed into law in 2012 by Governor Jerry Brown. It combines the best of old-style defined-benefit plans (traditional pensions that guarantee workers a certain level of yearly income in retirement) with the flexibility and mobility of a 401(k). This plan will cover workers in California who don’t currently have access to formal retirement savings via their work, which is a particularly big number, since California has more immigrants, freelancers, and young people working without benefits than many other states. “I’m a big fan,” says the Economic Policy Institute’s Monique Morrissey. “It’s probably the farthest along of all the retirement reform ideas in terms of practical implementation.” Details of the plan, which might be unveiled as early as 2016, are now being hashed out in consultation with a variety of industry and academic experts. It’s likely that CSC will use behavioral nudges to get as many eligible people as possible to participate, for instance by making enrollment automatic unless a worker opts out, rather than requiring a sign-up to opt in.45 Participants in CSC would sock away at least 3 percent of their income, most likely in a conservative index fund like an S&P 500 fund, where the pooled money is invested in all 500 stocks in that index. Index funds are considered a simple way to ensure that investors see the same return as the overall stock market—and they’re cheaper, too, since index funds don’t employ stock-picking wizards and charge the related fees. 4555

…the powerful financial services industry exploits vulnerable individual investors.”49 Information asymmetry will always work in favor of Wall Street. But asset managers could be forced to take a fiduciary pledge, a kind of Socratic oath for bankers, just like the one medical professionals must take, which would bind them to serving their customers rather than primarily themselves. Those found to be in violation of such an oath could be subject to strict penalties and big fines. 4631

the kind of market system Adam Smith had hoped for, one in which “the interest of the consumer [must be] the ultimate end and object of all industry and commerce.”52 4662

As a recent Harvard Business School alumni survey summed up the problem, we’re stuck in an economy that’s “doing only half its job.”9 Says Michael E. Porter, a coauthor of the study: “The United States is competitive to the extent that firms operating here do two things—win in global markets and lift the living standards of the average American.” At the moment, we’re still succeeding at the first but failing at the second. But “business leaders and policymakers need a strategy to get our country on a path toward broadly shared prosperity,” Porter adds. And one of the biggest challenges in that respect will be creating a tax code that stops rewarding taking over making.10 PERVERSE INCENTIVES The US tax code is nearly seventy-five thousand pages long. That fact right there tells you a lot about what’s wrong with it, but its perversity can also be summed up in a very simple way: The American tax code rewards debt over equity, at both the corporate and consumer level, a structure that has contributed mightily to the rise of finance and the fall of American business. The US tax code has made it much more advantageous for both companies and consumers to borrow than to save. That has in turn added fuel to the fire of financialization, since banks and other financial institutions are basically in the business of issuing debt—the main way they make their money. It has also contributed to slower growth, as capital is misallocated and mispriced, flowing to all the wrong places for all the wrong reasons.11 Consider the way the tax code works today. Corporations can deduct interest payments on debt from their taxes, yet their dividends and retained profits can’t be written off and are taxed at the full corporate load. Jason Furman, the head of the National Economic Council, has estimated that these and other similar tax breaks make corporate debt as much as 42 percent cheaper than corporate equity. 4757

The world is more awash in debt now than ever before in history. And who benefits from all this? The financial industry, of course. Today four-fifths of all the stock of global financial assets is in debt or deposits.19 That’s due in large part to the fact that we have a tax code that rewards debt so disproportionately. Unfortunately, all this has made our economy extremely prone to bubbles, crises, and stagnation. As we have learned throughout this book, the number of financial crises in the modern era has increased in lockstep with rising debt.20 Indeed, the famous economist John Kenneth Galbraith believed that all financial crises stemmed from too much debt and credit, and there is a wealth of research to back up that notion.21 One of the biggest myths put forward during the financial meltdown of 2008 was that we had to save banks to save the economy, but in fact, a growing body of academic research has found that just the opposite is true. In their seminal book House of Debt, economists Atif Mian of Princeton and Amir Sufi of the University of Chicago make a very strong case that what we need isn’t more debt-fueled finance and credit to fix the economy, but much, much less of it.22 Marshaling a large body of research and data stretching over one hundred years, they present a compelling case that the financial crisis started not with the failure of the banks, but with the collapse of consumer spending, which began well before the fall of Lehman Brothers—as early as two years before in some areas of the country. The fall in consumer spending was most pronounced and happened earliest in communities most heavily saddled with debt. (It was by no means limited to those areas, however. As the authors explain, when consumption in one city or region collapses, it has a knock-on effect of job losses and slower growth throughout the nation.) Basically, House of Debt makes a very convincing argument that recessions occur when finance arrives on the scene and offers middle- and lower-income people more and more debt. That brews up asset bubbles, which eventually burst, hitting the biggest debt holders—which also tend to be the poorest people—hardest. Everyone hunkers down and stops spending, and unemployment grows. The perverse cycle continues, as out-of-work people with even less spending power are buried under mounds of debt (no federally subsidized bailouts for them). Indeed, House of Debt paints a fascinating picture of how similar the periods leading up to the Great Depression and the Great Recession were in this regard. 4806

Why does it reward takers over makers so thoroughly? There’s no clear or complete answer. Certainly a large part of it is politics. Our entire financial system is based on debt, and, as we know, the financial lobby wields tremendous political power. Financiers have used that power over these many decades to push for a system that rewards the creation of debt, which is the core of their business model. But the truth is that like many large and complex systems (take healthcare, or the retirement system, which I covered in chapter 8), the American tax code’s favoring of debt over equity isn’t the result of some grand design, but rather “the unintended consequence of an extended series of discrete, reactive, short-term political decisions,” in one economic historian’s words.26 Interest groups lobby for this or that loophole, and little by little, rules and regulations that might seem to make sense in a vacuum combine to create a system of perverse incentives that reward exactly the kind of behavior the economy doesn’t need. 4847

Powering Forward: What Everyone Should Know About America’s Energy Revolution by Bill Ritter Jr.

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Today, there are nearly 400 solar energy companies in Colorado, providing more than 4,000 jobs. Colorado is among the top 10 states for per capita solar capacity. In the wind industry, Colorado hosts 23 manufacturing facilities and ranks fifth in the nation for wind energy jobs. All totaled, the state ranks in the top 10 nationally for installed wind and solar capacity. 56

Scientists began understanding the link between carbon dioxide and the greenhouse effect in the late 1800s. As far as we know, the first US president alerted to climate change was Lyndon Johnson in 1965. That November, his science advisors gave him a report warning that carbon emissions “will modify the heat balance of the atmosphere to such an extent that marked changes in climate… could occur.” The White House release of the report summarized its findings: Carbon dioxide is being added to the earth’s atmosphere by the burning of coal, oil, and natural gas at the rate of six billion tons a year. By the year 2000, there will be about 25 percent more carbon dioxide in our atmosphere than at present… Pollution is an inevitable consequence of an advanced society, but we need not suffer from the intensity and extent of pollution we now see around us… Society must take the position that no citizen, no industry, no municipality has the right to pollute. President Johnson told the US Congress in a special address that year that, “This generation has altered the composition of the atmosphere on a global scale through… a steady increase in carbon dioxide from the burning of fossil fuels.” His advisors recommended that special taxes be levied against polluters. It is an idea our political leaders are still debating a half century later.2 page 234 Had we confronted climate change and oil addiction when they first came to our attention, addressing these problems would have been far cheaper and less disruptive than it will be today. With market-based actions and regulations when necessary, including a price on carbon pollution, the United States could have engaged in a more gradual evolution to a clean and stable energy economy. We might have avoided the oil shocks that helped trigger “stagflation” and the stock market crash of 1973, as well as the succession of painful economic recessions that hit the American people in the early 1980s, 1990s, and 2000s. It can be argued that the extreme weather events causing great suffering today would be significantly less extreme, and their impact on federal spending much lower. Acting today can still reduce the impacts of climate change in the future, but it will require from us nothing short of an energy revolution. 177

The revolution we need today would definitely disrupt the established order – our fossil energy economy – but it is neither subversive nor violent. It is bloodless, but far from gutless. It would fundamentally change the way we produce and consume energy to provide maximum benefit to our citizens while strengthening and expanding our economy. It would be profoundly patriotic. In fact, revolution is an American tradition “as necessary in the political world as storms in the physical,” as Thomas Jefferson put it.3page 234 In a letter to William Stephens Smith, he wrote, “God forbid we should ever be twenty years without such a rebellion… What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance?” 200

the accelerating pace of climate change requires that the transition to clean energy be the most rapid in the history of industrial economies.4page 234 No More Business as Usual Most of us like order and predictability, but “business as usual” is no longer an operative concept in energy planning. Our energy economy in the twentieth century, including the public policies that influenced it and the public appetites that drove it, was formed by and for fossil fuels. Because fossil fuels are finite resources, it is an economy that by definition cannot be sustained. The transition to other fuels has always been a question of when, not if. Now we have the technology at our fingertips to expand energy productivity and the use of renewable fuels. Zero-carbon renewable electric generation and energy storage have plummeted in price in the past decade; their costs are expected to continue to decline. No industry in our economy would choose to return to the “business as usual” case of 20 years ago, yet that is where our utility sector remains mired. 209

Our decision, to paraphrase Buckminster Fuller, is whether to be architects of our future or its victims. If we choose to be its architects, we will find that life in the new energy economy is better than the old in nearly every respect. Imagine a suite of services for consumers that puts them in control of their energy choices, a more resilient energy grid that provides more reliable power, and cleaner energy generation that helps preserve a hospitable and resource-rich natural environment for future generations. We have demonstrated that we are capable of change, innovation, and better use of resources. If we can direct our creativity toward reducing the pollutants that are driving our changing climate, there is no doubt we can lead the world in a clean energy revolution just as we led the information revolution. 222

Then in 1969, the heavily polluted Cuyahoga River in Cleveland, Ohio, caught fire. Time magazine covered the story, giving it national attention. The anti-intuitive visual proof that industrial emissions were bad enough to make a river burn created a political moment for the environment. The same year, US Senator Gaylord Nelson of Wisconsin witnessed a massive oil spill in California. It motivated him to found Earth Day, celebrated for the first time on April 22, 1970, by an estimated 20 million people.6page 234 As Earth Day organizers wrote, it was a “rare political alignment, enlisting support from Republicans and Democrats, rich and poor, city slickers and farmers, tycoons and labor leaders.” 7page 234 The year became even more significant for the environmental movement when the US Congress passed and the Republican president Richard Nixon signed the landmark Clean Air Act and the National Environmental Policy Act, two pieces of legislation that created the Environmental Protection Agency (EPA), and later, the Clean Water Act. In December 1972, as the crew of Apollo 17 traveled toward the moon, it snapped the first photograph of an entire sunlit side of the Earth. It showed the planet as a “little blue marble,” our only home in black, inhospitable space. It became one of the most widely distributed photographs in history,8page 234 a potential planetary “aha moment” 241

The World Bank reports that the global economy has lost more than $2 trillion over the last three decades because of the mismanagement of fisheries; 80 percent of ocean fish stocks are either depleted or in danger of depletion, threatening the primary source of protein for 1 billion of the world’s people.10page 235 268

Half of all plants and animals on the planet are expected to disappear by the end of this century, largely because of human activity. 277

Climate scientists are summoned to congressional hearings today to be accused of heresy by elected leaders who deny the reality of global warming. It is as though our politics have regressed four centuries to the time of Galileo. We are better than this. And we can do better than this! We need to find common ground on which to build a prosperity based on stewardship of natural capital and environmental systems, and on the knowledge that our well-being is intimately interconnected with those systems. While we want to grow our economy and markets for our products throughout the world, we must remain stubborn stewards of our environment, leaving the next generation a future worthy of all of our technological accomplishments. We need a moral economy that recognizes our obligation to those who built and sacrificed to preserve our country in the past and to those who will inherit it in the future. The energy revolution requires that we reassert fundamental American values that transcend partisanship: conservation, independence, choice, freedom, self-sufficiency, transparency in government, duty to country, and the commitment that each generation will make life better for the generations that follow. There are selfish reasons, too. The need for a global energy revolution has been called the largest market opportunity in history. If we do not capture that opportunity, other nations will. 289

In my view, other nations and future generations should judge those of us who live in the United States – and we should judge ourselves – not by what we did in the past, but by what we do now to help all nations build their economies with clean and sustainable energy. We cannot count on good luck, good karma, cool new technologies, or serendipity to accomplish the disruptive shift we need in our energy and environmental policies. 305

The bottom line is that we need to accelerate and complete a transformative energy revolution in the United States. It is not the only thing we must do to secure a better future, but we cannot achieve that future without it. 312

The activist is not the man who says the river is dirty. The activist is the man who cleans up the river. – Ross Perot Colorado has not been exempt from the weather disasters that are increasing in frequency and intensity around the world. These events can be attributed to complicated causes, but their impacts are profoundly personal. Few Coloradans will forget the Hayman forest fire that burned southwest of Denver in 2002. It was so large and intense, it created its own weather system. More than 5,300 people had to evacuate their homes. Or the record Waldo Canyon fire near Pikes Peak in 2012 that killed two people and destroyed 346 homes. Or the 2013 Black Forest fire near Colorado Springs that set another record, destroying 511 homes and killing two more people. Or the West Fork fire the same year, which forced the evacuation of the entire community of South Fork. Then, in the fall of 2013, 100 miles to the north of the West Fork fire, eight days of rains produced epic flooding across 17 Colorado counties and nearly 2,400 square miles – a disaster ranked as a 1,000-year rainfall event. The floods changed the course of rivers and the future of riverside communities. Between 2006 and 2013, Coloradans were hit with nearly $4 billion in property damages and 70 fatalities due to severe weather; only eight other states had higher levels of deaths and damages.14page 235 State officials have tracked a temperature increase of approximately 2°F between 1977 and 2006, the blink of an eye in geophysical terms. The rising temperatures have been accompanied by drought. In 2006, parts of Colorado were still recovering from a 2000–2003 drought that resulted in the driest conditions in the state’s instrumented history.15page 235 The Colorado River, a vital source of water to 30 million people in seven states, fell to its lowest level since monitoring began in 1885.16page 235 332

people in all parts of Colorado were receptive to clean energy development. Urban residents appreciated how clean energy would improve air quality. Rural residents in the more conservative parts of the state appreciated how ranchers and farmers could earn new income by leasing land for wind turbines. Rural counties and communities liked the idea of earning new tax revenues. Our substantial population of rugged individualists liked the idea of greater energy independence. 397

the vulnerabilities for an economy that depends on fossil energy production. As the independent research organization Headwaters Economics put it, “The volatility of fossil fuel markets poses obstacles to the stability and long-term security of economic growth in energy-producing regions.”23page 235 It also concerned me that unless oil and gas were produced responsibly, their extraction and use could be detrimental to Colorado’s citizens and to its indispensable tourism industry. An estimated 12 percent of America’s outdoor industry companies reside in Colorado, accounting for more than 100,000 jobs and $10 billion in economic activity. 420

cabinet. I judged each candidate in part on whether he or she supported the goal of tying energy production and economic development to environmental sustainability. That criterion guided my selection of Colorado’s new directors of Natural Resources, Labor, Local Affairs, Regulatory Affairs, Health and Environment, and the director of my Office of Energy Management and Conservation. My final appointment was Don Elliman as the director of Colorado’s Office of Economic Development and International Trade – a person who understood the business community better than anyone I knew and who was clearly committed to a clean energy agenda. 437

In my inaugural address on January 9, 2007, I returned to the theme that had resonated so strongly with Colorado’s voters. “The Colorado Promise is simple,” I said. “It’s about making a better future. A better future for our children and our grandchildren. It’s about hope. It’s about finding the common ground for the common good.” “Let’s start,” I said, “by being bolder than any other state when it comes to renewable energy. Let’s commit right now to making Colorado a national leader… a world leader… in renewable energy. Let’s create a New Energy Economy right here in Colorado.” 447

I learned an important lesson from this experience. When the government proposes policy changes or new regulations to protect the public interest, the industries affected by the changes push back hard. Many inside the industry see it as their job to resist government interventions in their businesses. Once the battle is over and the outcome decided, vested interests adapt and thrive with reasonable regulations. In fact, as I will explain in more detail later, oil and gas companies have told us that reasonable regulations are beneficial. They help weed out the “bad actors” that exist in every industry, they prevent competitors from engaging in unfair practices, and they increase public confidence in oil and gas production. As one oil and gas executive told me, good companies are smart and facile enough to adapt to almost any reasonable regulatory environment. The problem is not regulation; it is that government keeps changing the rules. 505

The simple reality is that human beings and natural systems are interconnected and interdependent, especially now that human activity has already impacted, and has such enormous potential to further affect, the biosphere.47page 237 This fundamental fact is often obscured by our appetite for economic development combined with several conventional mindsets. One is the outdated idea that natural systems and other species can absorb whatever we choose to do, as they did when the human footprint was smaller. Another is that our rightful role in the biosphere is to dominate and consume it rather than to be its stewards. Yet another troublesome mindset is “reductionism” – the habit of thinking in parts rather than in systems. Environmental educator and author David Orr describes this last point very well: The results (of reductionism) are dumbfounding. In record time, we have shredded whole ecosystems, acidified the oceans, killed off entire species, squandered topsoil, leveled forests, and changed the chemistry of the atmosphere… To anticipate and avoid such things requires a mindset capable of seeing connections, patterns, and systems structure, as well as a sightline far beyond the quarterly balance sheet or the next election. Wisdom begins with the awareness that we live amidst complexities that we can never fully comprehend let alone control.48page 237 728

A vision without a task is but a dream; a task without a vision is drudgery; but a vision with a task is the hope of the world. – Inscription on a church wall in Sussex England, c. 1730 839

an observation made in 1994 by the late environmental educator Donella Meadows: Vision is the most vital step in the policy process… If we don’t know where we want to go, it makes little difference that we make great progress. Yet vision is not only missing almost entirely from policy discussions; it is missing from our whole culture. We talk about our fears, frustrations, and doubts endlessly, but we talk only rarely and with embarrassment about our dreams.60page 239 846

In my view, however, the role of a political leader is not only to create and communicate a vision of his or her own, it is also to facilitate a process that engages constituents in the visioning work. If people do not participate in creating an understanding of where they want to go, they will not own it. If they do not own it, they are less likely to work for it, defend it, or sustain their commitment to it. While the principles and guarantees defined by the Founding Fathers – for example, our right to life, liberty, and the pursuit of happiness – are critical compass points, they are not a vision. As time passes, those principles remain constant but new knowledge, technologies, and influences appear, creating new opportunities and constraints. 857

In was not until 1893 that electric power became part of America’s vision for modern society. Chicago hosted the world’s fair that year and invited bids from companies interested in providing electricity to the exhibits.64page 239 The finalists were the General Electric Company, backed by Thomas Edison and J. P. Morgan; and Westinghouse, in collaboration with the brilliant engineer Nikola Tesla. The major difference between the two bids was that the General Electric Company provided DC power, while Westinghouse and Tesla favored AC power. Because AC power was less expensive, produced less waste heat, and was better suited to transmission over long distances, Westinghouse won the contract. When the fair opened, its crown jewel was the White City, a life-size urban setting lit by electric streetlights, spotlights, and giant searchlights. Thanks to the White City, the fair reportedly used three times more electricity than the City of Chicago. It became the first large test of AC power, so impressive that one witness said the spectacle was “like getting a sudden vision of Heaven.”65page 239 886

The Department of Energy (DOE) says that the United States experiences more power interruptions than any other developed nation; these have increased 285 percent since data were first collected in 1984.69page 240 Severe weather, the most common cause of outages today, costs the economy as much as $33 billion every year, according to the DOE.70page 240 Between 2003 and 2012, severe weather caused an estimated 679 widespread power outages in the United States71page 240 – a problem expected to grow worse as climate change produces more violent and frequent weather events.72page 240 Our centralized power system wastes roughly two-thirds of the primary energy that we put into the system. Conventional coal plants are only about 35 percent to 45 percent efficient. Another 6 percent of electric power is lost as it moves through transmission and distribution lines.73page 240 The power system has not kept up with rapidly emerging energy technologies such as generation from solar and wind technology. Utilities are struggling to accommodate the brave new world in which new power plants are appearing on rooftops and in farm fields. The Edison Electric Institute estimates that the nation will need to invest as much as $2 trillion by 2030 to repair, update, and expand the grid to serve growing electric consumption.74 page 240 920

We need a twenty-first century White City to fire the imaginations of the American people about the future we can and must create, because a secure and sustainable electric system today would look nothing like it did at the Chicago World’s Fair. What has not changed, however, is the wisdom of an observation commonly attributed to Thomas Edison: “If we did all the things we are capable of doing, we would literally astound ourselves.” 949

1939 at the New York World’s Fair in Flushing Meadows. More precisely, it took place in a pavilion called Futurama sponsored by General Motors.76page 240 Futurama was the fair’s most popular attraction, drawing 45 million visitors to an experience that was part museum exhibit, part amusement park ride. After surviving long lines, visitors sat in chairs on a conveyor belt that carried them for nearly 20 minutes through large-scale models of the United States as GM imagined it could be in 1960 (Figure 5.2).77page 241 When they emerged, visitors were given badges that read, “I have seen the future.” Norman Bel Geddes, the pavilion’s designer, believed that the “free-flowing movement of people and goods across our nation is a requirement of modern living and prosperity.” Futurama gave visitors an experience of what Geddes had in mind. He described it this way: Futurama is a large-scale model representing almost every type of terrain in America and illustrating how a motorway system may be laid down over the entire country – across mountains, over rivers and lakes, through cities, and past towns – never deviating from a direct course and always adhering to the four basic principles of highway design: safety, comfort, speed, and economy. The GM/Geddes vision filled an acre of the fairgrounds with models of more than 500,000 individual buildings, 1 million trees, and 50,000 cars, 10,000 of which were speeding along a 14-lane superhighway. By all accounts it was mind-boggling for an audience still suffering the aftershocks of the Great Depression and hungry for hope that the future would be better. Futurama was a promise that American ingenuity would not only pull the country out of the Depression, it would also create a world of unprecedented personal freedom and mobility. America entered World War II two years later. When millions of American soldiers came home, Futurama seemed to become the prototype for economic development. 957

For the last 15 years, Gallup’s polling has found that the American people prefer more energy conservation to more energy production. In what should have been a message to Congress, the Yale Project on Climate Change Communication 1083

the fate of a candidate often is determined by who frames him or her first and how they do it. The same is true for public policy. Those who define the argument usually win it. 1159

Scientists began researching and talking about it in the mid-1800s, when one of Napoleon’s engineers, Jean Baptiste Joseph Fourier, recognized that some of the solar radiation that entered the Earth’s atmosphere was not getting back out. A succession of discoveries related to climate change occurred in the decades that followed.100page 243 When President Lyndon Johnson’s science advisors warned him about climate change, they pulled no punches. “Through his worldwide industrial civilization, Man is unwittingly conducting a vast geophysical experiment,” they wrote. “Within a few generations he is burning the fossil fuels that slowly accumulated in the earth over the past 500 million years.” They predicted that by the year 2000, atmospheric concentrations of CO2 would be “sufficient to produce measurable and perhaps marked changes in climate.”101page 243 With remarkable prescience, they warned President Johnson about rising sea levels, melting ice caps, and warming oceans, all of which are evident in physical measurements and observation today. Despite President Johnson’s subsequent warning to Congress and several new environmental laws,102page 243 carbon emissions continued growing in the United States and worldwide. There was no concerted effort to put a lid on greenhouse gas emissions.103page 244 Twenty-three years later, the United Nations launched the IPCC. Political debate in the United States began in earnest around 1992 when President George H.W. Bush joined 153 other nations in signing the United Nations Framework Convention on Climate Change (UNFCCC), the document that has been the basis for international climate negotiations ever since. With the United States a signatory to the UNFCCC and the IPCC issuing increasingly conclusive findings, organized opposition began in earnest. Coalitions of oil, coal, utility, automakers, and trade associations – including the US Chamber of Commerce, the National Mining Association, and the National Association of Manufacturers – formed lobbying groups such as the Global Climate Coalition and the Information Council on the Environment (ICE) to get involved in the climate policy debate. They originated the so-called climate “denial industry.”104page 244 In 2002, the leading consultant for Republicans at the time, Frank Luntz, warned the GOP that is was vulnerable on environmental issues. He wrote a strategy memo recommending that Republicans show concern for the environment, but uncertainty about climate change. “The environment is probably the single issue on which Republicans in general – and President (George W.) Bush in particular – are most vulnerable,” he advised. “Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate.”105page 244 1180

statements I have seen from either party was written by then-governor and now congressman Mark Sanford, a Republican from South Carolina. It was published in the Washington Post in 2007. For the past 20 years, I have seen the ever-so-gradual effects of rising sea levels at our farm on the South Carolina coast. I’ve had to watch once-thriving pine trees die in that fragile zone between uplands and salt marshes. I know the climate change debate isn’t over, but I believe human activity is having a measurable effect on the environment. The real “inconvenient truth” about climate change is that some people are losing their rights and freedoms because of the actions of others – in either the quality of the air they breathe, the geography they hold dear, the insurance costs they bear, or the future environment of the children they love.108page 244 During the 2008 presidential race, the Republican Party platform acknowledged climate change nine times, including this statement: The same human economic activity that has brought freedom and opportunity to billions has also increased the amount of carbon in the atmosphere. While the scope and long-term consequences of this are the subject of ongoing scientific research, common sense dictates that the United States should take measured and reasonable steps today to reduce any impact on the environment. Those steps, if consistent with our global competitiveness, will also be good for our national security, our energy independence, and our economy.109page 244 The platform went on to urge that the “power of scientific know-how and competitive markets” be mobilized to “decrease emissions, reduce excess greenhouse gases in the atmosphere, increase energy efficiency, mitigate the impact of climate change where it occurs, and maximize any ancillary benefits climate change might offer for the economy.”110page 244 After the 2008 campaign, the GOP’s talking points changed. Climate change disappeared from the party platform in the 2012 presidential race, except to criticize President Obama for overreacting. The 2012 presidential candidates, Republican and Democrat, did not talk about it. 1231

more promising way to change the direction of a conversation is to engage the value system of the person to whom we are speaking. This requires insight, humility, empathy, and the ability to speak the languages of different values. 1269

In the fall of 2013, four former Environmental Protection Agency (EPA) administrators who served under Republican presidents published an op-ed in the New York Times titled The Republican Case for Climate Action. They wrote: We served Republican presidents, but we have a message that transcends political affiliation: the United States must move now on substantive steps to curb climate change, at home and internationally… Rather than argue against (President Obama’s) proposals, our leaders in Congress should endorse them and start the overdue debate about what bigger steps are needed and how to achieve them.112page 245 More recently, former Treasury Secretary Henry Paulson’s column in the New York Times made the case for a carbon tax, a policy aligned with traditional conservative values because it would put markets rather than government regulations to work in the transition to clean energy.113page 245 Some of the more recent advice on communicating with voters about energy issues comes from research on “what Americans really want,” by Stephen Ansolabehere of Harvard University and David Konisky of Georgetown University:114page 245 • In regard to preferences, people care less about partisanship and more about their perceptions of environmental harm and energy costs. When asked to make a choice between more expensive energy and greater environmental damage, people say they are willing to pay more for energy if it is cleaner. • Energy preferences are not source-specific. “People don’t like or dislike coal or wind because it is coal or wind,” the researchers concluded. “Rather, it is the attributes that matter. People like coal because it is cheap, but they dislike that it’s dirty. They like natural gas because it is relatively clean and has become relatively inexpensive. In this respect, Americans view energy sources as consumers view any good. Americans want energy to be less harmful to the environment and they want it to be less expensive.” • The American people don’t think about these issues on a global scale. Their interest is engaged by policies that address problems they feel are proximate. Climate and energy issues should be discussed in terms of local benefits and impacts. In March 2015, researchers from Yale, George Mason University, and Ohio State University conducted experiments to test ways to frame climate science so that lay people better understand it. They found that simple, clear messages using numeric data worked better than general statements to improve the public’s understanding of the scientific consensus and their confidence in that consensus.115page 245 So, the best way to enlist the American people in a clean energy revolution may not be a frontal attack on the fossil energy industry, but rather a declaration of war against pollution and its impacts on public health, against volatile and unreliable energy prices and supplies, and against the proximate danger of weather disasters. 1277

The American Association for the Advancement of Science (AAAS) has launched a campaign to explain climate science in risk-management terms: We are acting like people who take risks with their health (e.g., with behaviors such as smoking, poor food choices) but still hope to live long lives free of serious illness. To make decisions about managing a risk, we consider the likelihood that a particular event will happen, the consequences if it did, and the cost of effective actions to prevent it. These are the same steps that go into making decisions about climate change.118page 245 America’s most expert risk managers – the intelligence and defense communities – have long considered climate change and fossil energy dependence threats to national security.119page 245 The National Intelligence Council’s studies on climate risks go back at least to 2008, when it declared that global warming would be an urgent and growing threat to national security over the next 20 years. The 2015 National Security Strategy lists climate change and disruptions in energy markets among our top security threats, alongside terrorist attacks and weapons of mass destruction.120page 246 The Quadrennial Defense Review from the Department of Defense warns that climate change will multiply threats around the world and put new pressures on the frequency, scale, and complexity of military missions.121page 246 These are conversations that national leaders and the American people should be having. 1330

Fox News viewers scored “significantly worse than if they had reported watching no media at all.”123page 246 In the past, the government tried to prevent dogma from being disguised as news with a regulation called the Fairness Doctrine. Instituted in 1949, the doctrine required companies that held broadcast licenses to present “honest, equitable, and balanced” views on both sides of controversial issues of public importance. It did not require that opposing views be given equal time, but rather that both sides be presented. The requirement was considered an obligation for companies in exchange for using the public airwaves. The Federal Communications Commission (FCC) discontinued enforcing the doctrine in 1987 and allowed it to disappear altogether in 2011. 1373

a profession protected by freedom of speech should protect the integrity of speech. 1426

The financial advisory firm Lazard concludes that even without government subsidies and without counting externalized costs and benefits, the price of renewable resources places them squarely in competition with fossil resources in many areas of the United States.140page 247 Lazard reports that the levelized costs of energy (LCOE)141page 247 for solar and wind have dropped 82 percent and 61 percent respectively since 2009.142page 247 This is happening at the same time that mid- and long-term market forces are threatening to push up the cost of fossil fuels. Extraction is increasingly invasive and expensive as easy supplies disappear. More importantly, it is likely that nations will put a price on carbon either individually or collectively. Even the world’s largest oil companies now advocate for it.143page 247 1503

Ceres, the nonprofit organization of investors, companies, and public interest groups, estimates that fuel savings would reach $100 trillion between 2010 and 2050 and create millions of new jobs.147page 248 1536

superabundance” today, according to a 2012 analysis by the management consulting firm Bain & Company.149page 248 Bain predicts that by 2020, global capital will reach $900 trillion. Fast-growing, emerging markets are a “natural destination” for capital investment, Bain says. The abundance of capital will “tip the balance of power from owners of capital to owners and creators of good ideas – wherever they can be found.” In other words, the potential is enormous for capitalizing the transition to clean energy. The key to unlocking those investments is stable government policies. 1547

Sovereignty by definition is a nation’s unlimited power over its own affairs and its freedom from external control. But this absolutely does not exist any longer for individuals or for nations in the contemporary world, if it ever did. Most of us in the United States have accepted – in some cases reluctantly – compromises in our “freedom from external control” as individuals. We are no longer sovereign smokers in most places. We are not self-governing drivers free of traffic laws. Some compromises of sovereignty are essential for the common good. 1645

building a new energy economy is not a sacrificial act; it is the process of seizing opportunity. 1672

John Kenneth Galbraith once said, “The conventional view serves to protect us from the painful job of thinking.” Buddha is quoted as saying, “With our thoughts we make the world.” Put together, these two bits of wisdom tell us that challenging convention may be painful, but we cannot make a new world without new thoughts. That is where the energy revolution begins. 1676

The price of gasoline at the pump, to cite just one example, does not include the medical costs associated with asthma from air pollution, or the cost of maintaining the Strategic Petroleum Reserve to protect against interruptions in oil supplies, or the military cost of keeping oil shipping lanes open in the Persian Gulf, or even the full cost to maintain our roads. It does not reflect the fact that we spend money to protect ourselves from terrorism at the same time part of the money we pay for gasoline is ending up in oil-producing countries that support terrorist organizations. These hidden costs are said to be “externalized,” meaning that someone other 1692

In 2009, for example, the National Research Council (NRC), part of the National Academy of Sciences,170page 250 issued a study on the hidden life-cycle costs of coal, oil, other fossil fuels, and the electricity produced from them.171page 250 The NRC estimated that these fuels caused externalized damages of $120 billion in the United States during 2005, the most current year for which data were available. The estimate reflected health damages from vehicle and power plant pollution, as well as damages that air pollution caused to crops, timber yields, buildings, and recreation. The NRC did not try to determine the costs of several other important detrimental impacts, including climate disruption, the degradation of ecosystems, and risks to national security. Nevertheless, in what might rank as the most obvious observation in any government study before or since, the NRC concluded that in electric generation, “life cycle CO2 emissions from nuclear, wind, biomass, and solar power appear to be negligible when compared with fossil fuels.” 1766

The EPA explains it this way: The SCC is meant to be a comprehensive estimate of climate change damages and includes changes in net agricultural productivity, human health, and property damages from increased flood risk. However, it does not include all important damages… The models used to develop SCC estimates do not assign value to all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature because of a lack of precise information on the nature of damages and because the science incorporated into these models lags behind the most recent research.173page 250 Despite these shortcomings, the EPA regards the SCC as a “useful measure to assess the benefits of CO2 reductions.” 174page 250 1780

Center for Health and the Global Environment at the Harvard Medical School estimated the life-cycle costs of coal,176page 250 including its impacts on land, public health, fatalities in coal production, air and mercury emissions, and climate change. The center calculated that the true costs of coal-fired power amounted to nearly 27 cents a kilowatt-hour, more than twice the national average of 11.72 cents that retail residential customers were paying for electricity that year.177page 251 The Harvard report continued: We estimate that the life cycle impacts of coal and the waste stream generation are costing the US public a third to over one half a trillion dollars annually. Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non-fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive. Beyond dollar evaluations, qualitative impacts include harm to air quality, watersheds, land, plants, animals, families, and communities.178page 251 1797

the motive is market efficiency, bang for the taxpayer buck, fewer greenhouse gas emissions, or a “do no harm” energy mix, true-cost accounting should be adopted, used, and continuously improved at all levels of the economy. 1839

Most of us probably can agree that if we share a common purpose, it is to improve the quality of our lives. That objective is recognized in the US Declaration of Independence as our God-given right to “life, liberty, and the pursuit of happiness.” When we get right down to it, improving and protecting the quality of our lives is a fundamental mission of government and many of the institutions of civil society. And just as it is important to undergo regular physical checkups, society needs regular checkups to make sure everything is functioning as it should for our health and well-being. 1860

So, how should our policy makers go about counting everything? Here are a few suggestions: • The federal government should finish developing “sustainability indicators” for the United States. Work on these metrics began more than a decade ago but has never been completed. State and local governments can follow up by shaping the indicators to reflect local conditions and aspirations. • Future presidents should include a genuine progress report in their State of the Union addresses to Congress. Jobs, economic growth, and other traditional measures are no longer enough for a report that truly reflects the state of the nation. • Colleges, universities, national laboratories, and other research institutions should make it a high priority to quantify the monetary and nonmonetary value of ecosystem services. • Educational institutions should teach systems thinking, including the practices of ecological engineering and environmental accounting. • Communities, whether led by civic organizations or local governments, should periodically inventory the condition of the ecosystems that provide valuable services, with a priority on those that help mitigate and adapt to the impacts of global warming. To sum up, our traditional metrics for understanding the nation’s energy profile tell only a small part of the story about how we use energy. We cannot know the full story until we learn to count the true costs and benefits of our energy options. In this as well as in other areas of public policy, it is a good idea to count everything because some place or some time, one way or another, everything usually counts. 1954

The market price for a gallon of gasoline, for instance, does not include the medical bills forced upon people who develop respiratory diseases because of energy-related air pollution. It does not reflect the cost of defending shipping lanes in the Middle East, or of fighting terrorists whose money comes from our purchases of gasoline from oil-producing countries.206 page 253 2027

Nancy Pfund and researcher Ben Healey point out: From land grants for timber and coal in the 1800s to tax expenditures for oil and gas in the early twentieth century, from federal investment in hydroelectric power to research and development funding for nuclear energy to today’s incentives for alternative energy sources, America’s support for energy innovation has helped drive our country’s growth for more than 200 years. 208page 253 2050

Congress already requires the development of a coherent national energy plan. When it created the Department of Energy (DOE) in 1977, it included a requirement that each president prepare a National Energy Policy Plan every two years.215page 254 The law requires that the plan look forward in increments of five and 10 years to describe the energy production, consumption, and conservation needed to “meet the general welfare of the people of the United States and the commercial and industrial life of the nation, paying particular attention to the needs for full employment, price stability, energy security, economic growth, environmental protection, nuclear non-proliferation, special regional needs, and the efficient utilization of public and private resources.”216page 254 In addition, each president is supposed to identify the strategies, policies, legislation, and resources needed to meet the plans’ objectives, including executive actions, legislation, tax provisions, and so on. The bad news is that no one is paying attention to the law. It has been many years, perhaps as far back as the Reagan administration, since a president has presented Congress with a plan that meets the law’s requirements. 2117

none of these meets the detailed requirements that Congress codified nearly 30 years ago. Because climate change already is under way, developing a roadmap to the twenty-first century energy economy would be like planning a road trip after much of it has already occurred. But it is not too late. Research shows that the American people are in general agreement about what our energy mix should be. The climate agreement achieved in Paris establishes the international objective: limiting global warming to 1.5°C above preindustrial levels. The Obama administration has defined the US role: greenhouse gas reductions of 17 percent by 2020, 26–28 percent by 2025, and 80 percent by 2050. So the critical milestones are in place — if the American people insist that there be no backsliding by future presidents. Now we need a map that shows in detail how we will meet each of those milestones. As far as government interventions in markets go, a national energy plan would be the most important of all. 2141

energy subsidies are important because, as writer Jeff Goodell notes, they are “America’s de facto energy policy.”221page 255 They serve as an imperfect substitute for the national energy policy we do not have. 2183

When we design taxes to stimulate economic activity, we are likely to stimulate carbon pollution, too. One option is to use tax revenues from the new economic growth for programs that cut greenhouse gas pollution.224page 255 2206

Doug Koplow, one of the nation’s leading experts on energy subsidies,232page 255 points out that government regulations typically undergo intense scrutiny before they are finalized, including periods of public comment. Energy subsidies do not get that level of scrutiny. He recommends that policy makers conduct detailed analyses of proposed subsidies of more than $100 million to make sure they do not work at cross-purposes with other energy, social, or environmental goals.233 page 256 2256

more than $15 billion in subsidies had the effect of increasing US carbon emissions, while $18.5 billion in other subsidies were meant to reduce carbon emissions, generally by supporting renewable energy production and energy efficiency.235page 256 The tax code was, and still is, at war with itself. Koplow acknowledges that making sense of energy subsidies is not easy. “Assembling an integrated picture of the size and distribution of federal subsidies to energy is a challenging undertaking,” he says. “Many of the non-cash interventions are difficult to quantify, and requisite data needed to do so is often lacking… The government itself currently faces no requirements to compile this information internally.”236page 256 The same issues and reforms also apply to subsidies at the state and local levels, albeit at a smaller scale. In the interest of transparency, governments at every level should itemize their energy subsidies and costs and make them public as part of their annual or biennial budget processes. That is not common practice today. 2275

Global fossil energy subsidies declined in 2014, with nearly 30 countries instituting some kind of reform.238page 256 But among the G-20 nations – the nations with the world’s leading economies – fossil fuel subsidies remained at the equivalent of $1,000 annually for every citizen, even though the G-20 voted in 2009 to eliminate them. The IMF says that in the United States, which proposed the G-20 agreement, fossil fuels are subsidized at $700 billion annually, which is the equivalent of $2,180 for every man, woman, and child.239page 256 2293

  • Nations spent $550 billion in 2013 to help consumers buy fossil energy,244page 256 four times more than their investments in renewable energy.245page 256 They spent another $100 billion to subsidize fossil energy production.246page 256 • The IMF calculates that the indirect costs of fossil energy consumption – mostly its social and environmental impacts – were expected to total $5.3 trillion globally in 2015.247page 256 The IMF also estimates that eliminating fossil energy subsidies could raise government revenues by nearly $3 trillion in 2015, while cutting greenhouse gas emissions 20 percent and deaths from air pollution by more than half.248page 257 The net effect after subtracting higher energy costs for consumers would be to free $1.8 trillion for other purposes.249page 2572321

On the Scientific American blog, writer David Wogan explains that past energy transitions have been characterized by three features: They have occurred out of necessity because an energy resource has grown scarce or because we seek advantage from a better fuel, they have increasingly diversified our fuel mix, and they have tended to decarbonize the mix.257page 258 All three are characteristics of the energy transition underway today. What is different and what makes this energy shift more difficult, Wogan writes, is that past transitions were motivated by observable developments such as the depletion of forests. Until recently, our awareness of climate change has been “based mostly on indirect observations or anticipated outcomes.”258page 258 This is changing. The physical, financial, and security impacts of climate change are occurring more rapidly than scientists predicted and they are becoming impossible to ignore. Rolling Stone offered a “snapshot” of these changes in August 2015: In just the past few months, record-setting heat waves in Pakistan and India each killed more than 1,000 people. In Washington State’s Olympic National Park, the rainforest caught fire for the first time in living memory. London reached 98 degrees Fahrenheit during the hottest July day ever recorded in the U.K.; the Guardian briefly had to pause its live blog of the heat wave because its computer servers overheated. In California, suffering from its worst drought in a millennium, a 50-acre brush fire swelled seventyfold in a matter of hours, jumping across the I-15 freeway during rush-hour traffic. Then, a few days later, the region was pounded by intense, virtually unheard-of summer rains. Puerto Rico is under its strictest water rationing in history as a monster El Niño forms in the tropical Pacific Ocean, shifting weather patterns worldwide.259page 258 Dr. Sylvia Earle, the distinguished ocean scientist who has led more than 100 undersea expeditions, reports on another set of consequences that go largely unseen: The oceans have changed dramatically since she began exploring them in the 1960s: In that time, on the order of 90 percent of many of the big fish have been extracted from the sea. Changes brought on by global warming, overfishing, and pollution have taken their toll on the undersea environment. Coral reefs and kelp forests have been reduced by half, compromising the diets and habitats of the creatures who live there. The decline is heartbreaking.260page 258 2390

We need clear and consistent signals from policy makers that the market for clean energy is solid so that capital moves off the sidelines. As paradigm shifts go, few in history will be judged to be as important, challenging, and historic as moving from an era of digging, blasting, sucking, and burning the ancient remains of plants and animals to an era of harvesting the clean energy all around us in infinite and readily available supply. In the new era, there will be no black lungs and mine disasters, no groundwater poisoned by energy production, no childhood asthma caused by power plant pollution, no ozone days that make it dangerous to breathe, no fish too contaminated to eat, and no vital ecosystems carelessly destroyed. No marine life will be suffocated by oil spills. As one clean energy group puts it, “When there is a huge solar spill, it’s called a nice day.”267 page 259 This is a world well within our reach. The technologies we need already exist. The imperative to use them is more evident every year as sea levels rise, weather extremes grow worse, species go extinct, and the extraordinary costs of climate change become more apparent and inevitable. If some of us have trouble looking ahead to what the world would be like in the grip of global warming, then perhaps we can look back to the future that was entrusted to us. As historian Harvey J. Kaye has written: We need to remember who we are. We need to remember that we are the children and grandchildren of the men and women who rescued the United States from economic destruction in the Great Depression and defended it against fascism and imperialism in World War II. We need to remember that we are the children and grandchildren of the men and women who not only saved the nation from economic ruin and political oblivion, but also turned it into the strongest and most prosperous country on earth. And most of all we need to remember that we are the children and grandchildren of the men and women who accomplished all of that – in the face of powerful conservative, reactionary, and corporate opposition and despite their own faults and failings – by making America freer, more equal, and more democratic than ever before.268page 259 2462

Thousands have lived without love, not one without water. – W. H. Auden 2488

Analysts at the University of California, Davis, estimate that in 2015 alone, the drought would cost the state’s agriculture industry nearly $3 billion and 18,600 jobs.269page 259 2494

In some areas of the state, the withdrawals are causing land to subside as much as a foot each year, damaging roads and wells and causing permanent damage to the water table (Figure 13.1).270page 259 The National Aeronautics and Space Administration (NASA) reports that subsidence is taking place more rapidly than anticipated, including a drop of 13 inches in ground over an eight-month period in a 60-mile-long section of the Central Valley. 2499

In California, water-related electricity use accounts for nearly 20 percent of California’s total power consumption. Water-related energy consumption accounted for 5 percent of the United States’ CO2 emissions in 2005, equivalent to the annual greenhouse gas pollution from 53 million passenger vehicles.274 page 259 2519

Some 780 million people in the world today are water-poor, meaning they do not have access to potable water.276page 259 2530

Intelligence experts expect that by 2030, nearly half the world’s population will live in places experiencing high levels of water stress. We already see incidents of water conflicts and even “water terrorism.” 277page 259 We can expect more. 2537

Thermoelectric power plants: Nuclear, coal, and natural gas-fired power plants produce about 90 percent of the nation’s electricity. In the process and in aggregate, they draw more freshwater than any other activity in the United States including agriculture.294page 261 About 40 percent of the nation’s freshwater use goes to energy generation, according to the USGS.295page 261 Every day, power plants withdraw 140 times the daily water used by New York City.296page 261 The water they extract from rivers, lakes, streams, and aquifers could irrigate the farmland of 17 Nebraskas, according to researchers for the US House of Representatives Natural Resources Committee.297page 261 2619

Water stresses already are affecting energy production. Lake Mead supplies hydropower to California, Nevada, and Arizona, but in the summer of 2014, the reservoir dropped to 1,031 feet – a level not seen since the dam was filled in the 1930s. Electric generation was curtailed by 23 percent that year due to water scarcity. At 950 feet, the dam would stop producing power entirely.299page 261 Since 2004, problems with water supplies have caused at least a dozen other power plants to either shut down or to reduce their power output.300page 262 To the extent that climate change is contributing to water shortages, these problems are self-inflicted. The electric sector has been the largest source of US greenhouse gas emissions, responsible for more than one-third of our emissions in 2013. Coal alone is responsible for 77 percent of the sector’s carbon pollution.301page 262 2633

The EPA reports that water makes up 90 percent or more of the volume of the fluids, and each well requires thousands to millions of gallons of water. As many as 30,000 new oil and gas wells used hydraulic fracturing each year between 2011 and 2014. The agency estimates that hydraulic fracturing used an average of 44 billion gallons of water annually in 2011 and 2012.302page 262 2649

In a draft study issued in June 2015, the EPA reported that between 2000 and 2013, some 9.4 million Americans lived within one mile of hydraulically fractured wells. Some 6,800 sources of public drinking water, serving more than 8.6 million people, were located within those areas.303page 262 In addition, conventional and hydraulically fractured oil and gas wells both produce “flowback” (aka “produced water”), that comes back to the surface, often containing high levels of salt as well as organic and inorganic chemicals, metals, and naturally occurring radioactive materials.304 page 262This wastewater must be carefully managed to avoid polluting freshwater resources. 2655

Another water issue on the horizon is the coal industry’s plan to use Carbon Capture and Sequestration (CCS) to reduce or prevent carbon emissions. Current estimates are that if CCS achieves commercial application, it can increase the water consumption of power plants by as much as 90 percent per megawatt of electrical output.311page 263 I 2687

Nuclear Power: Although nuclear power plants do not produce greenhouse gases when they generate electricity,312page 263 they are the thirstiest type of thermoelectric power generation. However, much of the water they use is returned to the sources from which it is drawn. A more important concern is the depletion of the sources from which nuclear power plants draw their water. An Associated Press analysis in 2008 found that 24 of the 104 nuclear power plants were located in areas that were suffering the most severe levels of drought.313page 263 In addition, uranium mining reportedly has contaminated surface and groundwater supplies in 14 states.314page 263 2692

in areas where water is not abundant. The American Wind Energy Association (AWEA) calculates that wind power saved 2.5 billion gallons of water in 2014 during California’s drought – the equivalent of 200 gallons annually per household.320page 264 Nationwide, wind power saved 68 billion gallons of water in 2014 (Figure 13.5). Not all renewable energy resources are water-conserving, however. Concentrating solar power plants, now primarily located in the southwestern United States, need water for cooling. Their water requirements can exceed those of coal- and gas-fired power plants.321page 264 Biofuels are among the most water-intensive fuels in part because of the irrigation water needed to grow feedstocks. One estimate is that producing a gallon of corn ethanol requires an average of 1,000 gallons of water, much more than is needed to produce other liquid fuels such as gasoline.322page 264 Geothermal electric plants take advantage of heat below the Earth’s crust. The amount of heat 33,000 feet below the Earth’s surface contains 50,000 times more energy than all of the oil and natural gas resources in the world.323page 264 To produce electricity, geothermal plants draw water that has seeped into the Earth and been heated by the subsurface temperatures. In some cases, geothermal plants inject water underground to heat it. Apart from that and some evaporation from steam, most water is returned to the geothermal springs from which it comes.324page 264 How the Nexus Will Affect Our Future On our present course, the energy-water nexus will become not only more important but also more contentious in the years ahead. The energy sector is the fastest growing water consumer in the nation today, in part because of existing government policies. Much of the growth of the sector’s water demands will take place in regions that already are experiencing intense competition among water users, according to the Congressional Research Service (CRS).325page 264 Major trends are causing the energy sector to become even more water intensive. For example, climate change causes heat waves that place higher demands on power production during summer months when water use is highest in many regions. 2723

there are many improvements consumers, communities, and agencies can make in water management with or without federal regulation. For example, they can: • Make water consumption, water quality impacts, and the prevention of water conflicts fundamental elements of the benefit-cost analyses that states, localities, and significant private water consumers use to prioritize their energy choices. • Give higher priority to capturing the dual benefits of carbon sequestration and water conservation. Conservation tillage of agricultural lands is one example. • Eliminate any “use or lose” provisions in laws governing water rights so that the holders of rights are not punished for conservation. They can create ways for the owners of water rights to sell or trade their unused allocations each year. • Price water to accurately reflect the actual costs of obtaining, moving, and treating it. The actual cost should include the energy required to manage and protect water resources. As a result of local political pressure, many municipalities have kept water rates so low that there are insufficient funds for repairing and upgrading water infrastructure. One recent survey of utility managers in the United States found they would have to double their water rates over the next seven years to cover their costs.329page 264 • Prioritize aquifer recharge at the local level. Communities can save both energy and water by creating more permeable surfaces, restoring wetlands, engaging in urban forestry, developing more parks and green spaces, encouraging community gardens and green roofs, recycling wastewater for landscape irrigation, establishing reasonable requirements for wastewater reuse by homeowners and businesses, using natural drainage swales to manage storm water, and encouraging the use of drought-tolerant native species in landscaping. • In rural areas, require or encourage low-tillage agriculture, drip irrigation, and other water-saving technologies. • Expand government community development and technical assistance programs to include water conservation and management training. As an example, they could expand the DOE’s Industrial Assessment Center program to provide water management and conservation assessments to low- and medium-sized manufacturing plants. • Improve the energy and water efficiency of electric generation and transmission. This would involve reflecting the costs in energy prices and requiring electric power plants to pay for the water they consume. • Factor water conservation and protection into plans to upgrade or expand the nation’s infrastructure for transportation, energy, and water. They could consider embedded energy and water in choosing materials for infrastructure work, as well as the impacts that infrastructure could have on water quality. • Provide information and technical assistance to communities on energy-efficient water treatment processes. • Increase federal support of research on next-generation biofuels that require less water consumption to grow and process feedstocks. • Incorporate energy-water nexus opportunities into the twenty-first century business models of energy utilities. • Encourage federal agencies to share their water conservation lessons with local governments and water management agencies. (President Obama has ordered government agencies to reduce water consumption by 36 percent, to cut landscaping and agricultural water consumption by 2 percent annually, and to install “green infrastructure” on federally owned property to help with storm water and wastewater management.)330page 264 American poet Wallace Stevens once said, “Human nature is like water. It takes the shape of its container.” The same will be true of water and energy policies. Both will be shaped by the physical realities that prescribe what is economically and environmentally plausible as well as socially and morally responsible. Every year, public utility commissions throughout our country are making decisions that will determine how electricity generation will impact water… 2771

In 2015, during the Conference of Parties in Paris, the international community agreed to attempt to hold warming to no more than 1.5°C.334page 265 Since then, a number of experts, including a team led by former NASA scientist James Hansen, have concluded that the risks at 2°C of warming actually are approaching the “highly dangerous” level,335page 265 2853

The latest survey by the Solar Foundation428page 271 found that the solar industry alone has created more than 705,000 jobs in companies that build, install, service, and support solar energy equipment. Over five years, solar-related employment has increased by a remarkable 86 percent, the census found (Figure 16.4). 3414

Natural Capitalism: Three prominent experts in energy, environment, and business — Hunter Lovins, Amory Lovins, and entrepreneur Paul Hawkins — published this concept in 1999. Their book, Natural Capitalism: Creating the Next Industrial Revolution, advocated three steps toward greater sustainability:449page 273 1. Buy time by using resources much more productively. The result would be less resource depletion, less pollution, more jobs, lower costs for business and society, an end to degradation of the biosphere, and greater social cohesion. 2. Redesign industrial processes and the delivery of products and services to do business as nature does, using approaches such as biomimicry and cradle-to-cradle analysis. 3. Manage all institutions to regenerate natural and human capital. Hunter Lovins, who later founded the organization Natural Capitalism Solutions,450page 273 argues that international climate negotiators must change their conversation from sacrifice to opportunity – from who will make economic sacrifices to limit carbon pollution, to who will be first to capture the enormous economic advantages offered by clean energy. “The reality is that acting to protect the climate does not impose a financial penalty,” she says. “Being one of the first countries drastically reducing its emissions is not a disadvantage. Both developed and developing nations are moving rapidly to renewable energy sources, not because it is morally the right thing to do, but because it’s the route to prosperity. The numbers show that there is a strong first mover advantage.” The investment advisory company CDP has substantiated that argument. In late 2014, it compared the performance of S&P 500 industry leaders that have climate management strategies and those that do not. The companies managing climate had 18 percent higher returns on investment than those that did not. They also experienced 50 percent lower volatility in their earnings and provided 21 percent greater dividends to shareholders.451page 273 “We hope to shine a light on the link between strong climate change management and measures of financial performance,” CDP explained, “and at the very least, to put to rest the common misconception that taking action on climate change exacts a cost to profitability. Our data shows the opposite.”452page 273 3567

They call it the Framework for Strategic Sustainable Development (FSSD). In plain language, the four conditions are: 1. We cannot remove stuff from the Earth at a rate faster than it naturally returns and replenishes. 2. We cannot make chemicals at a rate faster than it takes nature to break them down. 3. We cannot cause destruction to the planet at a rate faster than it takes to regrow. 4. We cannot do things that cause others to not be able to fulfill their basic needs. These deceptively simple statements are rooted in science and in the idea that natural systems can show human society how to better organize itself. “The FSSD has taken people beyond the arguments of what is and is not possible; beyond politics of left or right wing perspectives,” the organization says. “Instead, the Framework builds on a basic understanding of what makes life possible, how our biosphere functions, and how we are part of the earth’s natural systems.” These organizations and their approaches to capitalism have at least two things in common. First, they advocate a systems approach to economics – a “mindset capable of seeing connections, patterns, and systems structure, as well as a sightline far beyond the quarterly balance sheet or the next election,” according to environmental educator and author David Orr. Second, 3610

On Capitol Hill, incumbent industries use their wealth to “rent seek,” which is the practice of using the prospect of campaign contributions to obtain special favors from lawmakers, often in the form of tax breaks. But a brighter side is emerging. At this writing, the CEOs of 200 companies representing $7 trillion in revenues are members of the WBCSD.455page 273 The American Sustainable Business Council says it reaches out to business associations representing more than 200,000 companies and 325,000 business executives, owners, and investors.456page 273 Business News Daily reports that 66 percent of midsize companies in the United States say they are working to establish or improve their corporate social responsibility efforts.457page 3627

In 1971, Pope Paul VI wrote, “Due to an ill-considered exploitation of nature, humanity runs the risk of destroying it and becoming in turn a victim of this degradation.” 468page 274 Forty-four years later, people worldwide are using 60 billion tons of raw materials each year, the weight of 41,000 Empire State Buildings, according to Friends of the Earth Europe.469page 274 In developed countries, we use up to 10 times more natural resources than people in developing economies do.470page 274 Like Pope Paul VI, Francis writes that 3700

Why Our Status Quo Failed and Is Beyond Reform by Charles Hugh Smith

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that the ultimate sources of poverty are a lack of paid work and productive capital that is owned by the many rather than the few. That entrenched poverty results from a lack of paying work and capital may seem so obvious that it barely deserves mention.  But if we could re-set the system to generate paid work for everyone who wanted a job and enable the accumulation of capital by every worker, we would have taken the one essential step toward solving all the secondary sources of poverty. The conventional 145

automation, paid labor is in decline everywhere. So even if the state and market boost credit and consumption, this will only speed the collapse of systems that no longer function as they did decades ago. 152

Full-time jobs in the U.S. declined from 121 million in 2007 to 119 million in 2014, while the working age population rose by 16 million.  The population of working-age without any paid work is over 94 million.  Out of roughly 250 million people who are of working age, less than half have full-time employment—and 21 million of these work for the government, which funds their paychecks by taxing the 98 million private-sector workers and their employers. To understand the full import of these figures, we need to recall that the U.S. economy has been expanding for seven years, and the federal government and central Bank (Federal Reserve) have pursued unprecedented fiscal deficits and monetary expansion to stimulate the economy since 2008. Despite an excess of the inputs conventional economists expected to generate the desired output of higher employment, the reality is there are fewer full-time jobs than before the state and central bank pursued their policy extremes. Clearly, the status quo policies of deficit spending and monetary stimulus have failed. 269

A Political-Economic Model of Central States Dominated by Elites   Daron Acemoglu and James A. Robinson demonstrated in their book Why Nations Fail that economies organized to benefit elites at the expense of everyone else trap the vast majority of people in poverty. Rising inequality is the ontological imperative of elite-dominated economies: there is no other possible result of elite-dominated economies other than rising inequality and poverty. (Ontology is a word used in philosophy to describe the core features and dynamics of a concept or entity: ontology describes why it cannot be anything other than what it is. An ontological imperative is the core directive of system, what it must do by its very nature.) The mechanism is starkly visible in corrupt economies where elites and the Upper Caste (also called the Clerisy class) of technocrats that serve the elites control all the centers of power: finance, the military, police, judiciary, media and the core assets of wealth creation: factories, mines, railroads, shipping, etc. In these economies, the mechanics of democracy may be acted out for public-relations purposes. Beneath the façade of false choices and bribed voters, the political machinery is still ruled by elites.  Any group that attempts to wrest power away from the elites and their Upper Caste of technocrats is ruthlessly suppressed or marginalized. This is the primary reason why inequality and poverty have remained entrenched in so much of the world: it is impractical for the powerless to wrest power from elites who are adept at bribing key constituencies, shaping opinion with mass media and suppressing dissent with police or military force. Centralization of power is a necessary feature of these elite-dominated societies and economies. Elites cannot organize economies to benefit themselves at the expense of everyone else without centralized power. Centralization is the leverage elites need to establish and maintain control of the nation’s income and wealth. Acemoglu and Robinson identify the rise of non-elite institutions as the key feature of liberal democracies that enabled the expansion of a middle class. The incentives created by these institutions shape the prosperity of the nation. Exploitive institutions do not offer people the incentives to save, invest, take risks and innovate.  Constructive institutions create incentives for the foundation of widespread prosperity: savings, investing, long-term planning, risk-taking and innovation. Unfortunately, centralized, hierarchical institutions fail for three reasons: 1. Those laboring within the institution focus on serving their own interests, eroding the core purpose of the institution. 2. Elites gain control of the institution via concentrated financial and political power. 3. Institutions reward process (following the rules) rather than outcomes, in effect rewarding failure. The ontology of institutions is to dissipate accountability, suppress transparency and increase the income and power of insiders at the expense of those outside the institution.  The dissipation of accountability protects the individuals within institutions from the consequences of failure.  The suppression of transparency protects individuals from criticism.  Expanding the income and power of those within to increase their pensions and perquisites and protect those gains. Ironically, the impulse to institutionalize accountability to limit self-interest creates layers of bureaucracy that add to the cost of maintaining the institution, leaving fewer resources to pursue its core purpose. We see this in colleges and universities, which have added tens of thousands of highly paid administrative staff while slashing the number of professors in classrooms. A more subtle erosion undermines the system as navigating bureaucratic complexities becomes the most valuable skillset of managers.  As managers who excel at protecting the institution’s power advance up the management ladder, they leave those who excel at the core purpose in lesser positions. Institutions hollowed out by… 278

Academically Adrift: Limited Learning on College Campuses, concluded that “American higher education is characterized by limited or no learning for a large proportion of students.” While student loans have soared to over $1.2 trillion, with direct Federal loans ballooning from $115 billion to over $700 billion in a few short years, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college. 324

a thoroughly corrupt system in which institutions have lost their way but retain expertise in enriching insiders. 337

Financialization introduces perverse incentives that distort and corrupt the economy. The huge profits to be reaped from financializing debt leads households and enterprises alike to engage in highly risky speculation and to over-invest in speculation at the expense of lower-risk, more productive investments.  My definition of financialization is: Financialization is the mass commodification of debt and debt-based financial instruments collaterized by previously low-risk assets, a pyramiding of risk and speculative gains that is only possible in a massive expansion of credit and leverage. Another way to describe the same dynamic is: financialization results when leverage and information asymmetry replace innovation and productive investment as the source of wealth creation. When the profits from financializing collateral and leveraging those bets far exceeds the income from creating products and services, the economy is soon hollowed out as the perverse incentives of financialization start driving business decisions and strategies. The elimination of low-risk interest income in favor of speculative asset bubbles leads to a monumental misallocation of capital and the institutionalization of perverse incentives. Financialization effectively drains low-risk income from households and forces savers onto the tilted game board of risky speculation—a game the average wage-earner is unlikely to win, especially when critical information about risk is kept secret by the financial heavyweights who control the game.  This information asymmetry is the equivalent of a rigged card game or roulette wheel: the players are assured the game is equally risky to everyone, but insiders reap all the gains at the expense of those who don’t know the game is rigged. 345

Higher education is a good example of financialization at work.  Rather than innovate to bring costs down to what student can afford, higher education addressed its soaring costs by financializing the cost of attending university. Student loans are packaged into securities and sold to investors (or the government) as low-risk investments. What makes loans to students with little or no income low-risk?  The state promises to extract payments from the students regardless of their poverty. This highlights the state’s partnership with financial elites. Now that the risks of student loans defaulting is unavoidable, the state has stepped in and bought most of the student loan debt from private lenders, transferring the risk to taxpayers while leaving the profits in private hands. This should not surprise us, for as noted earlier, the state depends on private-sector wages and profits for its own funding.  As technology and global competition erode profits, the enormous profits of financialization become the foundation of state funding. 366

A generation ago, the financial sector generated less than 10% of U.S. corporate profits. Now finance reaps over 30% of all profits.  Indeed, many corporations earn more from loans and finance than from their core businesses. Engorged with tax revenues from these speculative windfalls, the state increases its spending.  As a result, the state has become dependent on financialization for its own funding.  The state and central bank have institutionalized the speculative excesses of financialization to further their own power at the expense of the majority whose wealth and income have been strip-mined by financialization. Wallerstein is one of the few who clearly understands the state’s role as enforcer of profitable monopolies and cartels. In an era of declining returns on capital, the state needs secure profits to fund its own revenues. High profit margins are best maintained by the state protecting quasi-monopolies and cartels from competition. If the state fails to maintain cartels, profit margins plummet. In other words, the state isn’t a passive patsy in financialization—it is a willing partner, because financialization funds the state.  As evidence, consider the enormous expansion of property taxes and income taxes that flowed from the housing and stock market bubbles. This is why Wallerstein characterizes the current world-system as “a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success.” Financialization is a process that concentrates wealth and corrupts institutions such as home mortgages and higher education.  As profits from goods and services erode, the state reinforces the concentration of wealth and power as the only available means of securing its own revenues. 374

Neoliberalism—the liberalizing of the economy by relaxing regulatory controls and opening markets to competition—plays a dual role.  When neoliberal policies replace elite-controlled institutions with opportunities that are accessible to the majority, these are broadly constructive. The classic example of liberalization is land reform that breaks up feudal estates into small private farm plots. Freed from the onerous crop-sharing arrangement enforced by the feudal lord, the peasants become more productive and get to keep most of their gains in productivity. This is the basic promise of neoliberalism: by loosening the grip of elites and the state, opportunities are opened for everyone who had been trapped in servitude to elites. But this is only half the story of neoliberalism. In advanced economies, neoliberal policies may not replace elites with broad-based opportunities for all—the policies simply substitute new elites for the old ones. A classic example is control of a town’s water supply.  Neoliberal policies call for municipally owned water utilities to be sold off, on the promise that private firms will lower costs as competition will be encouraged. Yet the outcome of neoliberalism is the water utility is bought by a global corporation that then raises prices because it is a monopoly—there are no other suppliers of water in town.  The existing elite (the managers of the municipally owned water company) has simply been replaced by a new elite (the corporation) that is focused solely on increasing private profits at the expense of the citizenry. The citizens are worse off in two ways: more of their wealth is extracted by the corporation, and they have far less influence over the corporation than they did over the municipal water utility. Neoliberalism is constructive when it replaces elite-controlled systems with broad-based opportunities accessible to all.  But it is destructive when it simply replaces existing elites with new elites. If we understand the state needs private enterprise to earn substantial profits for the state to increase its own spending, we understand why the state partners with private elites. We also understand why the modern state/central bank actively encourages risky, speculative financialization: though it is terribly destructive, financialization is the only mechanism left that generates the profits needed to prop up state revenues. 389

This is the end-game of economies managed by central states and banks: highly destructive financial dynamics are encouraged as the only short-term way left to fund the state and keep the economy from faltering.  The terrible irony is that neoliberal financialization concentrates wealth and power in the hands of elites and pushes the state into a destructive dependence on risky debt-fueled speculation. There is no possible outcome of this system other than collapse, as speculative bubbles fueled by ever-rising debt always implode, destroying all participants. Now that the state is dependent on the profits reaped by speculative bubbles and ever-rising debt, when the bubble pops, it won’t just be the financial sector that implodes—the state itself will fail as well. 409

A common analogy is plucking the low-hanging fruit from a tree. In an economy starved of cash and credit, investments in canals, roads, railways, electrical generation, etc. generate huge returns on the initial capital because the infrastructure enables a vast expansion of secondary activity: with transportation and electricity available to all, private enterprise expands rapidly 430

This scenario is ideal for the state, as growth outpaces the cost of deficits.  The state can continue to borrow freely, confident that tax revenues from the expanding economy will outpace the cost of borrowing. But eventually the low-hanging fruit is all plucked, and high-yield investments become scarce. This exhaustion of high-yield investments characterize developed economies.  In developed consumer economies, corporations find it more profitable to buy back their own stock rather than invest in new goods and services. In response, the central bank lowers the cost of borrowing and floods the economy with credit, in the hopes that borrowing will pick up. Ironically, this flood of cheap credit does nothing to expand productive investments. All it does is create incentives to borrow money for speculation. As the rate of investment declines, state revenues no longer expand faster than the state’s borrowing costs.  State borrowing becomes a burden, as the cost of servicing debt (i.e. the interest payments) crowds out other spending. Central banks have come up with the financial equivalent of the perpetual motion machine to enable more state borrowing. The central bank creates money out of thin air and uses this cash to buy government bonds.  The bonds go on the bank balance sheet as interest-earning assets, and the state gets the cash to spend. 433

satiation, the consumerist economy tempts consumers to borrow money to make impulse buys or chase fads and fashions.  This reliance on consumerism leads to what I call permanent adolescence—the impulsive state of mind of an insecure teen with a credit card and a keen desire to establish a high-status identity by buying stuff. So not only is the status quo’s borrowing from the future to fund today’s consumption bankrupt—so is the strategy of stimulating excess consumption with cheap credit.  The destructiveness of financialization is paralleled by the psychological destructiveness of permanent adolescence. Just as the teen falls into depression when the credit card has been exhausted and the bills come due, nations encounter an equivalent financial and social black hole when they borrow from the future to fund today’s consumption. 458

Happiness and fulfillment are highly correlated to purpose, shared goals, meaningful work, a secure place in society and a circle of friends and collaborators. Two key characteristics of the status quo are at odds with these sources of happiness and fulfillment: the ideology of consumerism, which promises the more we buy, the happier we will be, and the social welfare system of the state, which eliminates the social and economic layers between the recipient and the state itself. In other words, the recipient of social welfare has no need to be productive in a community, workplace or social circle; the money comes directly from the state. The state payments enable consumption, but offer no source of purpose, shared goals, meaningful work or a positive social role in the community. 470

Consumerism and dependency on the state create social defeat. In my lexicon, social defeat is the spectrum of anxiety, insecurity, chronic stress, powerlessness, and fear of declining social status. 480

A recent sociological study compared wealthy Hong Kong residents’ sense of contentment with those of the poorly-paid immigrant maids who serve the moneyed Elites. The study found that the maids were much happier than their wealthy masters, who were often suicidal and depressed.  The maids, on the other hand, had a trustworthy group – other maids they met with on their one day off – and the purpose of providing financial support for their families back home. 485

The loss of purpose, meaning, positive social roles and community are not unique to any one nation or culture; they are manifesting across the globe, despite rising wealth and material well-being. 491

In the status quo, all money is created and distributed at the top of the power/wealth pyramid—by central banks, the Treasury and private banks.  The only way anyone in the bottom 99.5% of the pyramid can get any of this new money is to borrow it from a bank at a high rate of interest. Only the wealthy and powerful have access to the nearly free money issued by central banks.  The financial Aristocracy can borrow essentially limitless amounts of money at 1% and use it to: — Buy assets elsewhere in the world yielding 5% or more, a practice called the carry trade — Buy back corporate stocks, pushing stock prices higher and reaping billions of dollars in profits — Outbid everyone without access to the central bank’s nearly free money for income-producing assets such as rental housing — Loan money to students, people buying auto and homes or charging purchases on credit cards, etc. at rates that that are as high as 10% or even 20%. No one in the bottom 99.5% of the wealth/power pyramid can borrow money for 1% and then use the money to lock in immense profits. If money is created and distributed at the top of the wealth/power pyramid, the only possible result is the rich get richer because they can use the nearly free money to buy wealth-generating assets, and everyone else gets poorer because the only way they can access new money is to borrow it at high rates of interest. No one paying high rates of interest can compete with financiers paying almost nothing for new money. This is why the only possible result of the status quo is rising wealth inequality and poverty. 582

The state will naturally spend this new money satisfying powerful constituencies who influence politicians via campaign contributions and lobbying. When the central bank creates money and lends it at low rates to private banks, it is in essence handing the wealthy low-cost money to lend at high profit margins or use for speculation. In other words, the central bank doesn’t lend money at near-zero interest rates to households; it lends the money to extreme concentrations of financial wealth and power at the top of the wealth/power pyramid. Though central banks claim to be above the political fray, private interests can influence the distribution of the central bank-issued credit money with relatively modest sums of lobbying. This is the foundation of centralized money issuance. If the issuance of money is centralized, a relatively few people control the spigot.  Anyone who can influence these few policymakers gains leverage over the money being issued. The wealthy buy political influence to position themselves next to the central bank money spigot. They have a monopoly on all new money, which flows only to private banks and financiers.  No one below the financial Aristocracy gets a single dollar of the new money. If the system creates and distributes money only at the top of the pyramid, the rich get richer and everyone else becomes poorer as all the income-producing assets end up in the hands of the wealthy. What if money was created and distributed only in the bottom of the pyramid, rather than only at the top of the pyramid? What if banks and financiers could not get any of the new money? The power and wealth would shift from the .5% at the apex of the pyramid to the 99.5% in the bottom of the pyramid. This is why I say: if we don’t change the way we create and distribute money, we change nothing. This raises the question: why would the wealthy and powerful allow the source of their wealth and power to slip from their grasp? The answer is of course: they won’t. 606

Since none of the conventional systems of money creation and distribution address the origins of inequality and poverty, each is explicitly immoral. 664

the only moral mechanism for creating money is to take the mechanism away from the central state and bank and make the creation of money payment for productive labor. How can money be created by labor? The answer is money can be created digitally upon confirmation that the productive work was indeed performed.  Digital currencies have demonstrated that the technology already exists to create money in a decentralized way. What is needed is a mechanism that ties the creation of money to the one thing people mired in poverty have, which is their time and labor. This labor-based system of money creation and distribution runs completely counter to the conventional assumptions about money: that is must be issued by centralized authorities, that sound money (i.e. money that reliably holds its value) is apolitical and amoral, and so on. That these ideological beliefs pass for certainties is certainly convenient for the elites that control money creation and distribution.  In the carefully choreographed universe of the status quo, poverty has nothing to do with how money is created and distributed, even though poverty is the direct consequence of being outside the money creation and distribution machine. The fact that every conventional money system generates poverty is attributed not to the money system but to external factors such as poor soil, an oppressive social system, lack of educational opportunities and so on rather than to the design of the money system itself. I cannot imagine a more perfect protection for elites than the belief that money is disconnected from the mechanisms that concentrate wealth and power at the top of the pyramid. The ideal defense against charges that the dominance of the financial Aristocracy is immoral is to deny that the mechanisms of creating money have a moral foundation. In essence, the argument that money is apolitical and amoral is equivalent to saying: we are wealthy and powerful not because the system is designed to concentrate wealth and power in our hands but because we are lucky, talented and/or divinely deserving. 671

Authors Erik Brynjolfsson, Andrew McAfee, and Michael Spence explain how innovative, practical ideas have become the scarcest form of capital in the digital age in a 2014 Foreign Affairs article, Labor, Capital, and Ideas in the Power Law Economy. What will be scarce in the emerging digital economy are ideas that enable new products and services and radically reduce the cost of producing goods and services.  The authors see innovative ideas as a third form of capital, with traditional capital and labor being the first and second types of capital. In the taxonomy of capital described above, this third form of capital includes the various subcategories of intangible capital: human, social, cultural and symbolic. We can summarize the authors’ analysis in three points: 1. Digital technologies are radically reducing the need for human labor and the value-creation potential of traditional capital (land, fixed assets, finance and labor) globally. 2. Premiums flow to whatever inputs are scarce. Traditional labor and capital are no longer scarce; innovative, practical ideas are scarce. Ideas that enable new products, services, processes, etc. will harvest the majority of value (and profits). 3. This distribution of value/profits follows a power law, i.e. the Pareto Distribution in which the vital few with the third type of capital (good ideas) reap most of the rewards. As a result of globalization and overcapacity, most inputs are no longer scarce, and so the value created by conventional labor and capital is trending down in every sector. This mirrors the analysis of socio-economist Immanuel Wallerstein covered in Chapter One:  for structural reasons, the yield on capital is declining and the cost of human labor is rising. As digital technologies get cheaper and more powerful, prices, the value of human labor and capital decline. Only the intangible capital of new ideas and processes become more valuable. 748

But global high-tech giants are not the only example of the leverage of new ideas and processes. In the developing world, appropriate technologies created by new ideas and processes offer a much smaller-scale source of value creation.  In a village without electricity, for example, capital that enabled the small-scale generation of electricity from a renewable source (flowing water, wind or sun) would have the greatest impact on well-being and productivity. Ideas and tools that enabled the villagers to construct most of the tangible capital themselves and maintain the generator themselves would have more power than a one-time gift of the generator.  The generator 768

capital: new ideas, processes and skills. Productive, practical ideas become part of humanity’s best practices, and the only way to alleviate poverty structurally is to distribute these best practices at near-zero cost and incentivize their adoption. While it is not possible to distribute fixed capital or resources at near-zero cost, the tools of intangible capital—knowledge, information and best practices—can be distributed digitally for near-zero cost.  These forms of capital provide powerful leverage to make best use of whatever capital and labor are available. 775

Cheap credit profoundly skews our appraisal of opportunity costs, as the total future costs of servicing the debt are masked by the modest monthly payments. This intrinsic inability to discover the real cost and value of anything, not just in the present but in the future, cannot be eliminated by regulation. As noted above, what we measure has to be changed at the foundation of symbolic capital. Markets have a third flaw: they are easily exploited by elites seeking income that arises from control rather than from producing goods and services.  Incomes arising from control—of land, borders, the marketplace itself—are known as rentier incomes, as they are a form of rent (or more properly, a tax) paid to elites who create no value.  The fourth and most important flaw is that a market that measures profit as the sole goal offers few incentives for adopting best practices or building capital. The seas are being stripped of fish to maximize short-term profits, while the capital lost when the ocean ecosystem has been destroyed goes unnoticed and unmeasured in the status quo. Since the status quo doesn’t measure life-cycle costs, the future value of what’s been destroyed to reap short-term profits, well-being or sustainability, the result is a destructive tyranny of maximizing profit today. The fifth flaw is that markets are inherently prone to boom and bust cycles, as the exploitation of whatever is profitable unleashes a tsunami of income, debt and external costs (pollution, overfishing, etc.) which crashes as the resource is depleted or undermined by competition from afar. Participants are left with debt and external costs they have no way to pay, as their income has dried up along with the profitable trade. The sixth flaw is that markets have no way to incentivize tasks that do not create a direct and immediate profit—for example, monitoring the community’s reefs to stop exploitation by others. It is presumed the state will naturally step in to perform these unprofitable tasks, but the state—dominated by self-serving elites and state functionaries—has no incentive to pay for profitless tasks serving those without political power, especially if the tasks limit the profits of powerful interest groups. There is nothing in the structure of markets that incentivizes sustainable prosperity for all. The belief that the invisible hand of self-interest will inevitably foster a sustainable economy is magical thinking. Self-interest is indeed a powerful motivation, but it responds to whatever incentives are present. If perverse incentives are present, pursuit of self-interest leads to self-destruction. A transparent marketplace for goods, services, labor, risk and credit is not a stand-alone solution to poverty—it is only one part of a larger integrated solution of sustainable secure income for all, the distribution of intangible capital and productive incentives. The real engine of universal opportunity and prosperity is intangible capital that generates a productive set of metrics, incentives and tools that benefit all rather than the few at the top of the wealth/power pyramid. 911

goes bankrupt. The problem with making profit the sole determinant of value is a great many projects cannot possibly turn a profit, yet they offer tremendous yield and value.  One example is a safe community bikeway.  Studies have found that safe bikeways—bike lanes that are separated by barriers from autos—encourage multi-generational bike traffic that in turn increases local shop revenues. Bicycling removes vehicles from the road, reduces smog, and generates health benefits for bicyclists that reduce social healthcare costs.  Each of these yields is significant; together, they offer outstanding positive returns for the relatively modest cost of building safe bikeways. There is no way to make a profit on building bikeways, unless bicyclists are charged money for every use. Such a fee structure would present a huge disincentive for bicyclists, and undermine the entire purpose of the bikeway. The conventional response to the multiple benefits of safe bikeways is to suggest the state pay for the bikeways to promote the common good.  This idealized view of the central state overlooks the political nature of all state decisions: the state, firmly in the grasp of self-serving elites and vested interests, serves those interests, not the common good. Since the status quo holds rising consumption as the highest economic good, bikeways that reduce purchases of fuel, vehicles and medical services are resolutely negative.  Due to the shortsightedness of what we measure, there appears to be no significant benefit to investing capital in safe bikeways: reducing future healthcare costs isn’t counted, and neither is reducing smog and traffic congestion. Bikeways reduce what we measure—GDP—and so they are anathema to the status quo. The single most important characteristic of state spending is its dependency on private-sector profits and the employment those profits enable.  Even state borrowing is ultimately dependent on private-sector taxes, as the tax revenues pay the interest on state debt. An enormous share of human activity is not profitable, nor does it benefit the elites and vested interests that control state spending. The market economy can only perform work that is profitable; what is intrinsically profitless is left undone.  The state, beset by competing demands on its limited revenues from various elites and vested interests, will spend just enough bread and circuses to keep the populace politically passive. The rest of state revenues are devoted to paying interest on the state’s ballooning debt and rewarding the elites and vested interests that control the state. 968

Though free trade is often touted as intrinsically positive for both buyers and sellers, in reality trade is rarely free, in the sense of equally powerful participants choosing to trade for mutual benefit.  Rather, “free trade” is the public relations banner for the globalization of credit and markets that benefit the powerful and wealthy, not the impoverished. As we shall see, financialization and mobile capital exacerbate global imbalances of power and wealth. Trade is generally thought of as goods being shipped from one nation to another to take advantage of what 18th century economist David Ricardo termed comparative advantage: nations would benefit by exporting whatever they produced efficiently and importing what they did not produce efficiently. While Ricardo’s concept of free trade is intuitively appealing because it is win-win for importer and exporter, it doesn’t describe the consequences of financialization and the mobility of capital.   In a world dominated by mobile capital, mobile capital is the comparative advantage. The mobility of capital radically alters the simplistic 18th century view of free trade. What do we mean by mobile capital? Capital—cash, credit and the intangible capital of expertise—moves freely around the globe seeking the highest possible return. As noted previously, the prime directive of capital is to expand; capital that fails to expand will shrink. If the contraction continues unchecked, the capital eventually vanishes. Globalization is the ultimate expression of capital’s prime directive: expand profits by seeking the highest available return on capital invested anywhere on the planet. 1053

Trying to account for trade in the 18th century manner of goods shipped between nations is nonsensical when components come from a number of nations and profits flow not to the nation of origin but to the owners of capital. 1073

manufactured in five different nations, or that the majority of the value of the device is in the intellectual capital: the software, the interface and the design. 1077

Expanding profits is by moving production to locales with lower labor costs is known as labor arbitrage.  Arbitrage is the process of exploiting the difference in prices of labor, currencies, goods, services, assets, interest rates or credit. 1082

Mobile capital can borrow billions of dollars (or equivalent) in one nation at low rates of interest and then use that money to outbid local entrepreneurs in other nations with few sources of credit. Mobile capital, with its essentially unlimited line of credit, can overwhelm the local political system, buying favors and cutting deals to limit costs and competition.  Local political elites are no match for this influx of money which is so much larger than the local economy.  Local elites are soon co-opted, and people starved for cash income are easily recruited as labor. Local assets—priced for the local economy where credit and cash are both limited—are snapped up on the cheap by global capital, and sold for immense profits. Credit—scarce in traditional self-sufficient economies—offers maximum leverage to global capital, which can borrow money in distant markets at low costs and use the cash to outbid local buyers to snap up local resources that are still cheap compared to the resources in other globalized markets. The influx of credit also fuels a destabilizing explosion of credit-based consumption in the local economy, causing people with little experience with credit to become over-indebted. As the over-indebted default, their land and other possessions are confiscated by offshore lenders, further impoverishing the local populace and enriching global capital. Mobile capital can exploit resources and cheap labor until the resource is depleted or competition cuts profit margins. At that point, mobile capital closes the factories, fires the employees and moves on. Where is the “free trade” in a world in which the comparative advantage is held by mobile capital? And what gives mobile capital its essentially unlimited leverage? Central banks, which issue nearly-free money to banks which funnel the cash to corporations and financiers, who can then roam the world snapping up assets and arbitraging global imbalances with low-interest money. There’s nothing remotely “free” about trade based on capital flows generated by central bank liquidity.   States also play the currency arbitrage game, pursuing policies that cause their currency to lose value, which makes their exports cheaper in overseas markets. Those holding currencies that are increasing in value can in effect buy assets on the cheap in nations whose currency is declining in value. This gives mobile capital double advantage, as it can borrow money in one currency and convert it to another currency that is gaining purchasing power. This mobility of capital is an enormous benefit to the owners of the capital, but it creates extraordinary instability for those who are not as mobile.  When mobile capital encounters anything that reduces profits—higher taxes and rising labor costs, competition or restrictive regulations—it closes factories and fires workers in that locale and shifts to another locale with greater opportunities for high returns. The workers left behind have limited means to replace the lost wages, and the local state often has few resources to repair any damage left by the exploitation of resources.  The advantage of mobility is reserved for capital, and to the relatively limited cohort of workers who can immigrate to other nations to find work. This illustrates two key ontological characteristics of financialized globalization: perpetual instability and a never-ending cycle of boom and bust as capital sparks rapid development in one locale and then moves elsewhere once profits decline. The scale of global capital is difficult to grasp; trillions of central bank-issued dollars, euros, yen and renminbi are sloshing around the global economy, seeking low-risk profits.  Capital has no loyalty to anything but its own expansion, and the damage it leaves in its wake is of no concern to the owners of capital. 1089

There are even less visible consequences to the globalization of markets, capital and labor.  Once goods and services are priced globally, local supply and demand no longer set the local price.  As my colleague Mark Gallmeier has observed, consumer prices can rise even if there are deflationary surpluses in the local economy because price is set by global supply and demand. As a result, measuring inflation and deflation locally is meaningless in a globalized economy. This globalization of price—for goods, services, credit and currencies—continually creates imbalances that fuel a perpetual instability that gradually impoverishes every sector other than global capital, which being mobile, can exploit the imbalances for its own profit. Who benefits over the longer term from the permanent instability and boom-and-bust cycles of this arrangement?     Ownership Capital and Shared Capital   We need to make a critical distinction between two basic types of mobile capital: ownership capital, in which owners of mobile financial capital buy resources and assets to maximize their own gain, and shared capital, which is intangible and can be freely shared with others on a global scale. In general, ownership capital seeks ownership of material assets such as mines, forests, land and factories, and control of intangible capital such as intellectual property, markets and regulations. Where ownership is not possible, capital seeks joint ventures, leases or other means of control that are the equivalents of ownership. In contrast, shared capital is entirely intangible.  An open-source mobile-payment application is an example; the software is offered freely to everyone with a mobile device. The ownership of the rights to the software is less important than its availability and low cost (the lowest cost being free). Broadly speaking, shared capital is digital knowledge, tools or processes—globally accessible best practices.  These include open-source software, freely available instructional videos and networks that enable shared problem-solving. 1122

The difference between a despot who skims $70 billion from his impoverished populace and financiers who skim $70 billion from their proximity to the money spigots of the central bank is simply one of details: the basic mechanism—centralized control of money, credit and the state leveraged by a self-serving elite—is the same. 1181

The ontological imperative of privileged elites is to skim as much of the national income as possible. This is how nations fail: centralized power attracts elites who then steer the state and its central bank to serve their interests, at the expense of everyone below the apex of power. We can now understand Wallerstein’s characterization of the current system: as “a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success.” This centralized marriage of state 1204

poverty. Simply put, there is no profit in alleviating inequality and poverty, so there is no incentive in either the market or the state to address inequality and poverty.  There are also no consequences to those inside the state if its bureaucracies fail to alleviate inequality and poverty. The lowest-cost, lowest-risk method of dealing with poverty is to distribute enough bread and circuses (welfare and Universal Basic Income) to keep the poor politically passive and distracted by cheap entertainment. This is what is incentivized, and so this is the output of the status quo.  Those 1210

The totality of value—future consequences, opportunity costs, the wealth of natural systems, and the value of everything that cannot be distilled down to price by current supply and demand—is not even recognized, much less acknowledged. 1270

Markets have no incentives or mechanisms for creating social orders to replace those that have been dismantled, other than the market itself. 1294

Markets reduce human ecologies—political, economic, social and familial orders—in the same manner.  Both natural and human orders are destabilized and destroyed as the market’s reductionist machine model replaces the ecology model. This mechanistic reduction strips away complex layers of interactions and feedbacks, and replaces this ecosystem with a simplistic moral imperative: whatever yields more profit and expands capital by any means is superior and thus inevitable. Just as the deep-sea trawler operating to maximize profits dumps 90% of its catch as the “worthless” (and cumbersome) byproduct of catching the 10% with high market value, so too does the global trawler of capitalism dump existing social orders as cumbersome  obstacles to higher profits and expanding capital. Since the market has no way to value the fish with no market value, it is rational to dump them overboard.  Since the market has no way to value the ecosystem that has been disrupted, it is rational to destroy the ecosystem to harvest the valuable fish. This dismantling of existing orders is not even understood as destruction; the market reduces the process of destruction to a cost of doing business. Not only do markets not recognize any value in the social orders being destroyed; they are viewed as hindrances to more profitable modes of production. Just as unmarketable fish don’t register as having any value in the natural world, democracy and political legitimacy do not register as having value in the market; indeed, democracy and political legitimacy are reduced to forces that could potentially disrupt the most profitable modes of production.   Given the imperative of the market, democracy and political legitimacy are hindrances rather than treasures, and this is the source of the status quo’s teleological imperative to maintain facades of democracy and political legitimacy in the public sphere.  Acutely aware that the narratives underpinning the social order operate as a powerful secular mythology, the status quo devotes tremendous resources to the manipulation of public perception. This conscious shaping of our experience has been described by author and psychiatrist R.D. Laing as the politics of experience. The goal is to create a compelling shadow-world that projects the mythology of democracy and broad-based prosperity. The cost of generating this shadow-world of fake data, fake prosperity, fake promises, fake freedoms, fake democracy and most especially fake authenticity are a necessary expense, much like dumping the dead fish overboard: it would be nice to dispense with this cumbersome shadow-world, but it is part of harvesting the maximum profit possible. 1301

Marx described the alienation of the worker from the product of his labor, and the resulting loss of meaning.  This psychological insight into work as the fundamental source of purpose and meaning falls on deaf ears in both economic orthodoxies.  Since alienation and meaning cannot be quantified, these essential qualities of the human experience are discounted or simply ignored by the profession of economics. The key point here is that the pathologies generated by the market are not just present in economic structures—they are internalized within each individual as a loss of purpose, meaning, self-worth and selfhood. Once the mythology constructed with fake data and fake narratives is internalized by each participant, the failure to create value in the market is perceived as a personal failure rather than the failure of the system. This is akin to the fish that is about to be dumped overboard as waste thinking that it was his fault that his life was being squandered as a byproduct of higher profits. This internalization feeds a vast self-help industry, as those who has been dumped overboard blame their own inadequacies for their loss of livelihood. While it is self-evident that each participant must accept responsibility for their choices and actions, the sense of being worthless reflects the system’s pathologies. I call this internal impoverishment social defeat, as the person who has been cast overboard as having no value is not just economically defeated, he/she is socially defeated. Stripped of the financial rewards of work, the unemployed are also deprived of purpose, meaning and a positive role in society.   This internalization of failure is convenient for the status quo, as it numbs individuals’ awareness of the system’s pathologies.  The human desire for meaning now serves a market for self-help, where the marginalized bid for inspirational books and therapies. Just as gravity is the rarely noticed force that governs our material world, permanent insecurity is the background force in the world of work, as self-worth and a livelihood are contingent on maintaining value in the market. Once the market for one’s labor vanishes, financial and psychological insecurity are the inevitable result. Once again we must stress that the pathologies of permanent insecurity are not the market’s goal; they are the byproduct of the market throwing everything but maximizing profit overboard as worthless. This ceaseless disruption of the social order generates an deep-seated insecurity that the status quo can never erase. Those whose labor no longer has value in the market are tossed on the rubbish heap of society and supplied with enough bread and circuses (now called Universal Basic Income) to suppress public expressions of discontent. Capitalism excels at destabilizing economic, political and social orders and distributing social defeat to everyone who is marginalized, but it cannot create a replacement social order other than a market in which price is discovered solely by current supply and demand. That this artificial, unsustainable and deeply impoverished system is incapable of constructing a healthy, productive social order is of no concern to those profiting from the ascendency of the market. 1329

Derealization—replacing the true with the fake—is the air we breathe. Thus we have fake data, fake markets, fake competition, fake oversight, fake rule of law, fake democracy and one false choice after another masquerading as legitimate choice. The essential task of derealization is to cloak the dominance of concentrated wealth and power. Simply put, the first priority of concentrated wealth and power is to tear the heart out of classical capitalism: competition in a transparent market in which all participants have the same access and information. This is not just the logic of maximizing private gain—it is an absolute necessity, for only by eliminating competition and transparent markets can those at the top of the pyramid expand profits. Neoliberalism is a powerful tool of derealization, as everything that cannot be reduced to a market is marginalized, colonized or indentured to serve a market. The language of neoliberalism takes pieces of classical capitalism and transforms them into a moral system that is presented as the solution to every social or economic problem. Thus the solution to any problem is to make a market in which maximizing private gain is the highest good. The language of market speculation— maximizing return on investment, etc.—presents markets as a universal problem-solving machine. That these concepts do not necessarily apply to every circumstance in human experience is alien to neoliberalism.  Even more alien is the idea that these concepts act as a sort of linguistic poison that reduces everything in human existence to a speculative drive for private gain. Once a system has been infected by neoliberal terminology, it is effectively derealized: no sense can be made of anything except as the workings of a speculative market that places a premium on maximizing private gain. Once again I must stress that markets serve a valuable role in human economic life. 1370

Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud by David Dayen

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blog called Living Lies. Neil Garfield was a former trial attorney in Fort Lauderdale, and in his biography he also claimed to be an economist, accountant, securitization expert, and former “Wall Street insider.” He had striking features, big eyebrows, and a perfectly cropped, jet-black beard. He looked like a character actor in a 1970s cop movie. Garfield started Living Lies in October 2007. The site featured day-to-day commentary on the mortgage crisis, a large volume of legal resources, and a mission statement: “I believe that the mortgage crisis has produced manifest evil and injustice in our society. . . . Living Lies is the vehicle for a collaborative movement to provide homeowners with sufficient resources to combat bloated banks who are flooding the political market with money.” 575

be done within ninety days of the transaction, 796

The Statute of Frauds, passed in England in 1677, required that all agreements related to land, from leases to conveyances of transfer, had to be recorded in writing, signed and dated by all parties involved in the transaction. Later, notarizations, the ultimate assurance that the proper person signed a document on a specific date and in a particular place, were added. Contracts without written evidence would be unenforceable. The purpose of the Statute of Frauds, laid out in its preamble, was “For prevention of many fraudulent Practices which are commonly endeavoured to be upheld by Perjury and Subornation of Perjury.” It allowed courts to fairly adjudicate disputes over property, and it gave land a specific value, turning it into a tradable and insurable instrument. If anyone could claim property without consequence, nobody would have confidence to buy or sell real estate. In The Mystery of Capital, Peruvian economist Hernando de Soto identifies accurate property records as what separates undeveloped countries from developed ones. “What creates capital,” de Soto writes, “is an implicit process buried in the intricacies of its formal property systems. The formal property system is capital’s hydroelectric plant. This is where capital is born.” Without a landed gentry in America, colonists frequently bought and sold property, prompting the need for a system to codify transfers in law. The Massachusetts Plymouth Bay Colony established a recording law in 1636, mandating public acknowledgment to the governor for all home and land sales. Other colonies followed, legalizing the recording statutes used today. They created land registration offices, typically at the county level, to track property transfers and hold evidence of legal title. These offices designated what instruments needed to be recorded and preserved, along with penalties for failure to record. The information was indexed and available to the public, so mortgage lenders could confirm ownership before they issued loans, tracking the chain of title back to the original owner and ensuring the lack of defects in that chain. All transfers included a nominal fee to the public recording office to cover administrative costs. Like any pen-and-paper system subject to human error, it wasn’t without its occasional rough spots. But it worked pretty well for three hundred years. 943

In October 1993, at the Mortgage Bankers Association annual convention, a white paper suggested the creation of a private electronic database to track mortgage transfers. A subsequent accounting study by Ernst & Young identified hundreds of millions of dollars in savings by avoiding recording fees, leading to the incorporation in 1995 of the Mortgage Electronic Registration Systems (MERS), backed by funding from several major financial institutions, Fannie Mae, and Freddie Mac. By the end of the 1990s, practically all GSE and private-label mortgage securities involved MERS. Despite the lack of public debate or legislative approval, this database commandeered the land recording system for a substantial majority of mortgages in the United States. Instead of filing with county recording offices each time a mortgage transferred—and paying that fee—banks instead listed MERS as the “mortgagee of record” in the initial mortgage assignment. Then, for subsequent transfers, the parties would go to the MERS database and list trades on an electronic spreadsheet. Banks could make unlimited transactions inside MERS; the county recorder only knew about the original assignment. Though frequently listed as legal title holder on borrowers’ deeds, and though named on the assignment in the public records, MERS has no financial interest in the mortgage, does not receive payments from any borrower, and does not receive proceeds from any foreclosure sale. They make their money on the front end from mortgage originators, who pay to use the MERS database. MERSCORP, the parent company, owned a headquarters in Reston, Virginia, and a data center in Texas. They employed around sixty workers. MERS, Inc., the name on all the mortgage documents, was a shell company with no actual employees. Yet at the height of the housing bubble, most of the existing mortgages in the United States, more than sixty million, listed MERS Inc. as the “mortgagee of record.” 965

Law professors such as Christopher Peterson of the University of Utah identified a couple of major problems with MERS. First of all, it operated like a tax evasion scheme, depriving local governments of recording fees by transferring mortgages internally. The far bigger problem was that the MERS database served as the repository of all knowledge about the various transfers from originator to trustee. Thousands of people could access the MERS database, which proved far more susceptible to human error than the recording office. Banks failed to record transfers within MERS in a timely fashion, if at all. Nobody took responsibility for flushing out errors or double-checking transfers. With millions of loans, that project could hardly be managed by a large team of operatives, let alone the few employees at the MERS data center. Law professor Alan White of Valparaiso University surveyed a sample of MERS loans and found that only 30 percent matched the ownership record in the public domain. MERS didn’t so much track mortgage transfers as it pretended to track them. If the borrower missed payments and the servicer decided to foreclose, MERS acted in one of two ways. In some cases they carried out the foreclosure process in their own name, as the mortgagee of record, despite the fact that they had no material interest in the loan itself. Alternatively, like in Lisa’s case, they quickly made an after-the-fact assignment to the trustee, which under the pooling and servicing agreement is supposed to hold legal title on the loan. The difference depended on state laws surrounding foreclosures, whether the note was specifically endorsed to some other entity or not, and whether local courts had caught up to the fast-moving scheme. Either way, MERS operated under questionable legal foundations. In depositions, MERS claimed to be merely acting as “nominee” for the lender while also claiming to hold legal title on the mortgage. They would argue their role as mortgage holder whenever possible but deny liability when pressed. In a March 2009 bankruptcy case in Nevada called In re Hawkins, MERS brought foreclosure action in its own name and as a nominee for others simultaneously. On page 9 of their brief in the Hawkins case, MERS asserted the “right to enforce the note as the note’s holder”; on page 8 of the same brief, they asserted “authority to act for the current beneficial owner of the loan or its servicer.” MERS didn’t even seem to know what MERS did. (They lost that case, incidentally.) As Peterson wrote in a law review paper, “To grant MERS standing based on legal title held by someone else is to treat the notion of legal title as some magical nonsense where ownership means nothing other than a willingness on the part of courts to let financiers seize homes in whatever manner is most convenient for them.” 980

Christopher Peterson, the Utah law professor, found that MERS sold their corporate seal on their own website for $25. Thousands of low-level workers across the country who worked at mortgage servicers or their law firms became “vice presidents” and “assistant secretaries” of MERS, despite never working for or receiving pay from them, so they could sign documents purporting to assign mortgages. Under the membership agreement, MERS empowered these “corporate officers” to execute whatever documents were necessary for loans in the MERS system. 1010

Three centuries of American land title operations had been outsourced to a shell company created by big banks so they could save a buck—and they were using it to circumvent established procedures and kick people out of their homes. Every step of the process involved an alphabet soup of companies blithely ignoring the law to maximize profits. Originators neglected underwriting standards and served up predatory loans to anyone with a pulse. In securitization, banks chopped up the loans in faulty ways that clouded chain of title, and apparently didn’t convey the notes properly. The same banks took bad loans and knowingly passed them on to investors to increase their profit margin. When this all crashed, servicers, foreclosure mill law firms, and trustees continued to neglect legal standards, using document fabrication and shady third parties to rush foreclosures through the system. In fact, foreclosure fraud was necessary to stay one step ahead of the origination and securitization fraud. Chain of title is a long-standing concept in contract law based on the principle of privity, under which nobody can sue on a contract to which they are not a party. In any other legal context, from shoplifting to murder, breaking the chain of evidence would lead to a judge tossing the charges. If evidence in a judicial proceeding can be faked and nobody challenges the fakeries, the legitimacy of the system breaks down. Anyone can be swept up and condemned to eviction based on false documents or inaccurate testimony. 1015

The notes and mortgages in securitizations never made it to the trusts, and mocked-up documents submitted to county recording offices, bankruptcy trustees, and courts in foreclosure cases constituted an elaborate game to conceal that fact. Nye also identified how banks would offer for sale interests in mortgages that they did not own. Banks would “double-pledge” mortgages into a loan pool and also as collateral with the Federal Reserve to obtain additional borrowing. It was as if a baker sold you a cupcake and then sold the same cupcake to the person in line behind you, letting you two fight it out over who gets to eat it. Instead of documenting chain of title on each mortgage transfer and keeping assignments and notes in the individual loan file, investment banks made copies of the original documents, and when they needed to, they had foreclosure mills fill in the blanks with the necessary names and signatures. They couldn’t really do it any other way: if the rules of evidence for all other trials also held in foreclosure cases, the cost of litigation would be enormous. You would need original promissory notes and assignments from every link in the securitization chain, along with certified testimony from each document custodian. But nobody preserved the records. Nobody tracked or verified evidence. One industry hand told Nye it was like taking a criminal suspect’s lab specimen from the evidence room and letting someone else pee in the bottle. From a legal point of view, the chain of custody of hundreds of thousands if not millions of loans was fatally corrupted. And Nye’s family trust had numerous investments in mortgage-backed securities through mutual fund holdings. He was helping fund this mess. When you combine the spoliation of the data with servicers driving borrowers into default, anyone with a loan, current or not, could find themselves wrongly evicted with false documents. But the Great Foreclosure Machine was sloppy; you could uncover its traces. And Nye wasn’t just willing to look. He wanted to expose it to the world. As someone frequently quoted in the press, Nye knew how to get media attention. He presented his findings under the names of Pew Mortgage Investigations and Americans Against Mortgage Abuse, two nonprofit organizations that consisted mainly of Nye Lavalle, in long reports with provocative titles. “Predatory Grizzly ‘Bear’ Attacks Innocent, Elderly, Poor, Minorities, Disabled and Disadvantaged!” excruciatingly detailed the schemes of Savings of America, EMC, and Bear Stearns that led to foreclosure on the family home in Dallas. The next report, “21st Century Loan Sharks,” took as its modest goal “to defend and protect Americans and the American dream of homeownership from unlawful, fraudulent, criminal, unethical and illegal acts.” In that report, Nye described the modern financial industry as a white-collar mafia, using software and lawyers instead of guns and knives. “Well-known banks and mortgage companies in Florida,” Nye wrote, “are providing perjured testimony, false affidavits and frivolous pleadings in cases involving mortgage foreclosure.” Nye described a litany of false affidavits entered into courts by Florida foreclosure law firms, where they claimed control of documents the trusts never received, claimed ownership over notes when the entity merely serviced them, or claimed “to support knowledge of facts not known by the affiant.” This was a novel finding, that signatories on foreclosure documents had no understanding of the evidence they claimed to authenticate. Nye came to this realization while going through affidavits in the public records. The same names kept coming up over and over again, at a pace that suggested little or no examination of the loan files. Plus they signed multiple affidavits swearing to be vice presidents of different banks in different parts of the country. They were often the witness in one document and vice president in another. Finally, the signatures were inconsistent, with initials on one affidavit and full names… 1135

In 2000 Nye helped sponsor a conference of the National Consumer Law Center in Broomfield, Colorado. 1186

The same year, Nye got to spend fifteen minutes with Arthur Levitt, chairman of the Securities and Exchange Commission at the end of the Clinton administration. He was in south Florida for a speech and Nye somehow secured a meeting. Levitt listened intently and agreed with Nye on virtually every point. But when Nye finished, Levitt leaned back and said, “I have as many lawyers at the entire SEC as one major law firm representing the banks.” Levitt described a ten-year lag between identifying a financial fraud scheme and its ultimate exposure to the nation. “It won’t come out for ten years, and the banks know it. By then they’re already on to the next scam,” Levitt sighed. 1192

while major banks, accounting firms, and mortgage servicers accepted Nye’s comments and vowed to address them, only one company, the mortgage giant Fannie Mae, took it a step further. Fannie did business with enough lenders, servicers, and law firms that changes to their practices would have ripple effects throughout the industry. Nye corresponded with several Fannie Mae executives, including CEO Franklin Raines. Eventually Fannie Mae hired an outside law firm, Baker Hostetler, to verify Nye’s claims. Baker Hostetler conducted seventeen separate interviews with Nye over a six-month period. The deal for his participation was that Nye would get to review the final report and make comments, but when the time came, Baker Hostetler asserted attorney-client privilege and shielded it. Nye was blocked from reading a study based on his own work. Years later, the New York Times’s Gretchen Morgenson published the 147-page report, which was authored in May 2006, at the housing bubble’s peak. With the saccharine title “Report to Fannie Mae Regarding Shareholder Complaints by Mr. Nye Lavalle,” Baker Hostetler corroborated most of Nye’s allegations. The author, Mark Cymrot, distanced himself by noting, “Mr. Lavalle is partial to extreme analogies that undermine his credibility.” But he agreed that Fannie Mae’s foreclosure attorneys in Florida routinely filed “false statements” and affidavits, that MERS filed “sham pleadings” in cases across seven states, and that “Lavalle has identified an issue that Fannie Mae needs to address promptly.” But the report added one critical caveat. “Mr. Lavalle’s assertion that Fannie Mae faces tens of billions of dollars of unenforceable mortgages and damages from class action lawsuits is overstated in our view,” Cymrot explained, because borrowers were unlikely to robustly defend themselves from foreclosure. Most homeowners didn’t have the resources. Plus Fannie Mae was insulated, one step removed from the attorneys who filed the false documents. Reaching Fannie would require multiple lawsuits, and borrowers would simply run out of money. There was an eerie parallel to the infamous Ford Pinto memo. According to a 1977 exposé in Mother Jones magazine, Ford Motor Company discovered a design flaw in the fuel tank of its Pinto model that made it susceptible to explosion in a rear-end collision. But the company refused to fix it, because a cost-benefit analysis determined it would be cheaper to pay off individual lawsuits than to redesign assembly lines and repair the cars sold. They deliberately kept the public at risk rather than spend the money. The Baker Hostetler report for Fannie Mae wasn’t as explicit, but it made the same point: it would cost more to unwind the many problems with foreclosures than to keep everything in place and deal with borrower lawsuits on a case-by-case basis. As a result, Fannie Mae took no action on Nye Lavalle’s claims. They certainly didn’t make public the documented evidence of fraud. 1226

Nye left a trail a mile wide, so anyone could see what he called “the fraud of our lifetime.” When the truth came out, as he knew it would, the corporate accountants, bank directors, judges, and federal regulators could not say they weren’t informed. What would really bring down the whole charade, Nye thought, was the Internet. Without a way for people to talk to each other, banks could squash dissenters. But if victims could coordinate, and expose the fraud for themselves, everything would come crashing to the ground. 1254

she also affirmed plenty of summary judgments, ruling for the plaintiff without a trial, based on glancing at the motions and supporting evidence for a few seconds. Veteran defense lawyers later told Lisa they almost never saw a summary judgment in any other area of the law; the judge would usually figure there had to be a fact worth proving in the case file. But in the foreclosure division, summary judgments were almost the norm, with homeowners evicted with all the effort of buying a soda. In the afternoon were the trials, which were seldom, because virtually no homeowner mounted a challenge. If foreclosure defense attorneys showed up, most had little trial experience and would jump at any deal they could get, no matter how piddling. A trial with counsel often did not last more than a few minutes; as long as the judge heard the magic sentence “Your honor, the defendant is in default on their mortgage,” material facts seemed not to matter. Pro se litigants put up more of a fight, but the judge appeared exhausted, if not outraged, by their mere presence. Even if the defendant managed to get the case withdrawn, the judge would almost never grant dismissal with prejudice, so plaintiffs could always refile. Servicers could try over and over again to foreclose, only needing approval once; homeowners lose any case and they lose their home. Some began to use a nickname to describe Florida foreclosure courts: the “rocket docket.” Lisa took notes in a composition book, then made her way to the file room on the third floor. This long, narrow room had a desk separating visitors from the clerks, with paperwork-lined shelves behind them. By this time Lisa had several files to check, not just her own. A couple of her new online friends were local, with cases in the Palm Beach County system. Her babysitter’s in-laws had a problem with an underwater home. 1279

own documents to recognize what to look for in others. And many of the same discrepancies were evident: assignments dated after the foreclosure filing, the use of special document processing companies, the ubiquitous presence of MERS. She also pulled a couple of dockets she had just seen in the courtroom, tying together the motions and rulings. On many occasions the plaintiff’s complaint purported to have the promissory note attached, but it was nowhere in the file. Whitney Cook and Christina Trowbridge, the vice president and assistant secretary for MERS on her mortgage assignment, kept popping up on other homeowners’ documents. Sometimes Cook and Trowbridge were representatives of MERS, sometimes JPMorgan Chase, sometimes Chase Bank, sometimes U.S. Bank, and sometimes Chase Home Finance. It cost a dollar a page to photocopy files, and Lisa had no budget for this project. So she transcribed what she could and copied only what was absolutely necessary. The next week she brought in her Acer laptop and a portable scanner and started to scan the documents herself. The file clerk stopped her and said that was against court policy. “What is the policy?” Lisa asked. The clerk said she would discuss it with her supervisor, and Lisa heard nothing for months. All the while she scanned on the sly. That summer of 2009, Lisa became a familiar presence at the courthouse. On Fridays she dressed professionally, always accessorized with a signature scarf. The rest of the week she would arrive in hospital scrubs. The cancer institute was a mile down Dixie Highway. Lisa estimated it took twelve minutes to walk from work to the courthouse, or seven minutes to run. Twelve minutes up and twelve minutes back gave her thirty-six minutes out of her lunch hour to scan files or observe hearings; if she ran, she’d get a bonus ten minutes. At first Lisa stopped by once a week; after a while she was there practically every lunch hour. There was always another theory to test, another case to watch, another file to check out. And she got really good at researching and identifying patterns of fraud. Bailiffs started to recognize Lisa, along with attorneys from either side. She would meet homeowners in the hallways and tell them to observe court proceedings, talk to other borrowers in trouble, work together to solve the crisis that had befallen their communities. The only way to fight back, Lisa believed, was by relying on each other. Amid the suffering of the 1930s, communities banded together to fight foreclosures, particularly in rural areas. T.H. Watkins’s chronicle The Great Depression explains how farmers would disrupt their neighbors’ foreclosure auctions. They would bid low, no more than a few dollars. Anyone who attempted a more robust offer would feel the cold hand of the biggest farmer in the yard on his shoulder; that bid would be summarily withdrawn. The winning bidder would sell the farm back to the original owner for the pittance. As Watkins writes, “So it was that in the fall of 1932, an $800 mortgage on Walter Crozier’s farm outside Haskins, Iowa, was satisfied for $1.90, or that the horses, cows and chickens offered for sale at Theresa Von Baum’s farm near Elgin, Nebraska, went back to her at a nickel apiece, for a total of $5.35.” Sustained action led to several foreclosure moratoria throughout the Midwest. Farmers simply would not allow their neighbors to get swallowed up by the side effects of rampant speculation and greed. When it began in late 2006, the foreclosure crisis didn’t find the same level of public solidarity and organized resistance. Decades of neglect of the civic square weakened traditional activism, and the relentless depiction of delinquent homeowners as irresponsible deadbeats kept many silent, turning their shame inward, asking what they did wrong to deserve foreclosure. That made it difficult to campaign for their rescue. And back in the 1930s the bank had a community face; now homeowners were not fighting the savings and loan in Bedford Falls but a thicket of servicers and depositors… 1295

The Obama economic team also resisted a policy called cramdown, which would have allowed bankruptcy judges to modify terms on primary residence mortgages, as they can other debt contracts. Liberal lawmakers believed this threat of bankruptcy modifications would give homeowners needed leverage to negotiate relief. But although then-Senator Obama endorsed cramdown on the 2008 campaign trail—banks even held meetings to prepare for its eventuality—his administration pressured congressional leaders against including it in must-pass bills like the economic stimulus. When it came up as a standalone bill, a dozen Senate Democrats sided with the industry and against cramdown, and Senator Dick Durbin, the bill’s sponsor, remarked about Congress that the banks “frankly own the place.” But they appeared to own the White House too. Liberal lobby groups complained that they would meet with senators on cramdown, and then Treasury Department bigwigs would come in afterward and lobby against it. Concern for fragile bank balance sheets outweighed concern for homeowners. After losing the cramdown fight, housing activists focused primarily on the denial of modification requests. Mortgage servicers repeatedly lost paperwork, gave contradictory information, and showed little interest in granting mortgage relief. The banks blamed homeowners for sending incomplete financial documents, but the breakdowns were deliberate. Servicers turned HAMP into a predatory lending program, squeezing borrowers for every payment they could get and then foreclosing anyway. After keeping people in trial modifications for a year, servicers would suddenly reject permanent relief and demand the difference between the trial and original payment, under threat of eviction. Bank of America employees later testified they were given Target and Best Buy gift cards as bonuses for lying to homeowners, denying HAMP modifications, and pushing people into foreclosure. 1337

In Miami, Ana Fernandez had her foreclosure sale vacated on February 11 (just days before Lisa got served) because Chevy Chase Bank could not prove it held the promissory note. Samuel Bufford, a federal bankruptcy judge in California, began to demand valid documentation in any case involving securitized loans. Judge Walt Logan in Pinellas County, Florida, stopped accepting any foreclosures precipitated by MERS. New York State Supreme Court justice Arthur Schack of Brooklyn halted numerous foreclosure cases with irregularities as varied as the same representative signing documents on behalf of two different banks in the same case, or a bank initiating foreclosure before they owned the loan—symptoms of securitization FAIL. Over a two-year period, Judge Schack rejected 46 of 102 foreclosure cases that came before him. “If you are going to take away someone’s house,” Schack told the New York Times, “everything should be legal and correct.” But Living Lies commenters were also tempered by pervasive horror stories about people who did everything right and played by the rules. In August, Anna Ramirez of Miami came home to find all her belongings out on the lawn and a stranger telling her to get off the property. Without warning, Washington Mutual sold her home at auction; she had never missed a payment. Miami-Dade County police officers tossed out the family, who had to collect their things and stay with friends for a few nights while Ramirez explained the situation to a judge. The bank eventually claimed the sale was a “mistake.” Across town, physical therapist Tony Louzado was fighting two separate law firms, each one suing him on the same note, with both plaintiff banks asserting standing to foreclose. These scenarios should be impossible. When borrowers close on a mortgage, they sign dozens of documents designed to verify chain of title, document exactly how much the borrower will pay every month, and detail what happens in event of late payment or default. The mortgage and the note get filed at the county recording office. The borrower receives title to the property and even purchases title insurance to guard against defects in establishing ownership. There should be no question about the owner of the loan, the purchaser of the mortgage, and the very detailed steps of the process, all put into fine print in a binding contract. When multiple lenders filed foreclosures on the same note, or when a bank tried to auction a home when the borrower never missed a payment, it spoke to a deep rot in the property records system. If Lisa Epstein showed up at the courthouse claiming to own someone’s home, the judge would sanction her. If a bank did the same, with no more reliable evidence, why should they get a free pass? 1377

a little something called the rule of law. To argue that it didn’t matter whether documents were accurate as long as the homeowner didn’t pay the mortgage was like saying as long as the murder suspect was guilty, it didn’t matter whether the cops planted the gun on him. 1401

The problem I have is the ‘Officers’ of MERS that did the assignment are actually employees of JPMorgan Chase.” The original lender, AmNet Mortgage, transferred the mortgage to Chase on April 20, 2009—a notable activity, since AmNet was out of business at the time. The commenter said he found the signing officers on his document, Chase employees, acting as MERS vice presidents on behalf of several other lenders in county databases. “In my opinion there is some major fraud going on here,” Fraud in FL wrote. Lisa replied within two minutes. “My story is so similar to yours,” she said, noting the presence of MERS and Florida Default Law Group. “How did you look up the court records on the mortgage?” Alina Virani, a paralegal and frequent commenter, stepped in to counsel Lisa. “You can search your county clerk’s website,” she wrote, pointing her to the recording office where public documents are kept. Lisa didn’t know documents were available outside the courthouse. This meant she could continue her research anywhere with an Internet connection. Lisa immediately clicked onto the website for Palm Beach County’s clerk of courts, discovering she could examine dockets and official records, including assignments of mortgage and deeds of trust. She couldn’t search every document filed in a case, like the affidavits. But this would be a tremendous time- and money-saver. “It looks like Alina answered your question,” Fraud in FL wrote back the next day. “Let me know if you want to trade notes. Knowledge is power . . . Michael.” Lisa replied with her email address, and she and Michael began to correspond. Meanwhile, Florida media began to uncover foreclosure problems. Susan Martin of the St. Petersburg Times published an exposé of Nationwide Title Clearing, a document processing company inexplicably owned by the Church of Scientology. Martin unearthed documents from Brian Bly, an employee at Nationwide Title Clearing, alternately signing as vice president of Option One Mortgage, Deutsche Bank, and Citi Residential Lending. Martin tracked Bly down to a trailer park in Clearwater. Along with his coworker Crystal Moore, they signed dozens of mortgage assignments in the Tampa Bay area, as per corporate resolutions that authorized them to sign for various lenders and “fix” document issues. “They may sit there all day for a week and sign,” admitted Jeremy Pomerantz, Nationwide Title Clearing spokesman. Michael, the “Fraud in FL” commenter, left a message on Susan Martin’s story explaining how widespread the practice was, in his experience, and not limited to Nationwide Title. Susan Martin wrote back and even tracked him down at Living Lies, asking for more information. Throughout the summer, Lisa traded motions in her case with Florida Default Law Group, seeking discovery of documents. She also tried to strike Whitney Cook’s affidavit of amounts due and owing, on the grounds that Cook represented JPMorgan Chase in the affidavit but MERS on the mortgage assignment. Florida Default Law Group withdrew that affidavit and then filed one with all the same information, this time signed by someone named Beth Cottrell. On LinkedIn Cottrell identified herself as an employee of JPMorgan Chase, but in the document she signed as a vice president of Chase Home Finance, a separate legal entity. So Lisa found another moonlighter working in a high-level capacity for multiple corporations. She added Beth Cottrell to her list of searches. 1406

Alina Virani started an email group for attorneys, paralegals, experienced homeowner victims, and pro se litigants. Lisa was invited, along with Michael, aka “Fraud in FL.” A paralegal with a real estate background, Alina encountered foreclosure complaints in her daily work and thought they were completely subpar, with critical documents missing and written arguments contradicting themselves in the space of a few paragraphs. On the email group, participants could share press clippings, research, and case law in one place, aiding attorneys who wanted to represent homeowners properly. But Alina insisted on keeping that group private. First of all, she didn’t want to publicly reveal their litigation strategies to the world. Second, most group members weren’t attorneys, and Alina feared violating statutes outlawing the unlicensed practice of law by giving advice. Finally, there were many scammers at foreclosure-related websites, “rescue” specialists promising to fix everything for a thousand dollars up front. Alina didn’t want her resource center infiltrated by crooked lawyers with nefarious ideas. So she closed the loop. Lisa thought the email group solved only one of the problems. Yes, she could communicate with other researchers and work on projects. But she couldn’t reach out to the newly foreclosed, the confused, the lonely. Without someone urging them on, they would only hear the dominant cries of “Deadbeat, deadbeat,” and become too cowed to fight back. Those people needed a lifeline. The only hesitation Lisa had was a reluctance to enter the spotlight. She hardly wanted to become the face of foreclosures in America; she never really wanted to be known to anyone but family, friends, and patients. But the times demanded that she step up and do this work. 1485

September 2009 represented a turning point in the foreclosure fraud story. The Kansas Supreme Court decided the case of Boyd Kesler, who sold his house in bankruptcy to his original lender, Landmark National Bank. A second lien on the home was held by a separate lender, with MERS, the electronic database, named as the nominee, and no assignment recorded at the county office. The court ruled that since the MERS loan was never recorded, the lender was not due proceeds from the bankruptcy sale. In other words, MERS had no interest in the property. By implication, the electronic registry could not foreclose on Kesler’s loan, either; it was as if the lien didn’t exist in the eyes of Kansas. The Arkansas Supreme Court made a similar ruling. If replicated across the country, it would question the true ownership on millions of mortgages. 1526

you wouldn’t believe how many hats these people wear. I have seen hundreds of documents all using the same players assigning mortgages over to the lenders they work for using MERS as their shield.” Lisa, who was in touch with Michael through email, sent him a message asking him how he found the mortgage documents from Arizona. Michael sent her back an explanation of how he searched and what he looked for in the documents. “Would you think about putting together a guide,” Lisa wrote back. “Because this is great information. A lot of people are going to be asking you for this. It’s going to be a lot easier if you just write it up.” She offered to post the guide on her website. 1537

Michael even found Barbara Hindman’s direct office line and called her up. He never got her on the phone, but on voicemail she called herself a “document executor.” Michael’s mind was racing. Why should he give a couple thousand dollars a month to Chase? Because they said so? Who truly owned the loan? How many people were losing their homes from scams like this? And most of all, why would banks like JPMorgan Chase keep doing this despite a public-record paper trail for anyone with a laptop to locate? Did they think nobody would notice? The next question became whether Chase assigned mortgages to themselves on a widespread basis. Over the next several months, Michael searched public records in every county in Florida. New York and Ohio also had excellent public records portals online, along with some counties in Illinois. And Michael kept finding Chase documents with Barbara Hindman and Shelley Thievin, usually with the same notaries and witnesses, all out of the same office in Jacksonville, which must have been some kind of document factory. Even when the lenders assigning the mortgage were out of state, the assignments had the Jacksonville address. The more clever assignments were backdated to make it look like they were executed at the proper time. But the names of the signers gave things away, along with the notary stamps: Michael found documents with impossible dates, because the notaries hadn’t yet become notaries at that time. Michael began to notice patterns among the documents. He saw the same combinations of names doing the signing, the same telltale mistakes in the documentation. And it didn’t stop with JPMorgan Chase: Bank of America, Wells Fargo, Citigroup, all the big banks had the same evidence problems, including employees signing for different banks, suspicious-looking signatures, the works. 1681

despite no prior experience, he was driven to dig through the public records almost every night, accumulating this dossier of a great wrong perpetrated on the public. The same banks that precipitated the crash and got paid off in the bailout were getting even richer off the leftovers. He saw it as the biggest transfer of wealth the world had ever seen. After a couple of months Michael found Living Lies and started commenting under an alias. Michael built a separate life for his foreclosure fraud persona, walling it off from his everyday existence. He created a special email address for foreclosure fraud work. He established a phone number through Google Voice (the number ended in 5437, or LIES). And he set up boundaries, working on the issue during the week but keeping weekends free for the family. He thought he could compartmentalize, dividing the husband and father from the foreclosure fighter. In June 2009 a process server finally delivered foreclosure papers to Michael and Jennifer. JPMorgan Chase was listed as the plaintiff, with Florida Default Law Group, the same foreclosure mill as in Lisa’s case, representing them. Michael had met with foreclosure defense attorneys, but he felt he knew more about what was happening than they did. So even before they got served, Michael planned to have his wife act as a pro se litigant (only she could do it, because Michael wasn’t on the mortgage). He assembled hundreds of documents from counties across Florida, with the same signers as in his case, to present to the court. He couldn’t wait to see the faces of the bank lawyers. Jennifer filed a motion to dismiss, kicking off a protracted battle for their home. Around this time, Michael set up Google Reader, a website aggregator, to track every news article related to housing, mortgages, and foreclosures. He would crawl through the headlines every day, looking for whatever stood out. He used Facebook, Digg, FriendFeed, and a Twitter feed, @4closurefraud, to spread what he found. Tweeting media stories and blog posts, Michael gained a thousand or so followers who thirsted for foreclosure news. Michael would dive into comment sections of the stories Google Reader helped him find, pointing out document fraud and encouraging people to discover the truth. It was his few minutes a day to spread the message, a tentative foray into activism. But comment sections of mainstream media sites, notorious as the seedy back alleys of the Internet, weren’t receptive to idealism of any kind. It was like holding an atheism rally inside a church. “Deadbeat” was the favored term of response. Or “pay your mortgage.” The commenting project connected Michael to Susan Martin, the St. Petersburg Times journalist who wrote about Nationwide Title document signers Brian Bly and Crystal Moore. Michael wrote in the comments: “I have researched this in my county records and this is being done to hundreds of documents per month. In most of the cases I have seen, the ‘vice president’ assignors of mortgage are actually employees of the lender it is being assigned to.” Susan Martin asked Michael for evidence. He sent back a stack of assignments from Hillsborough County (in the Tampa/St. Pete area, Martin’s home base). “Hope this is enough to get you started,” Michael said. Susan appreciated the research but asked Michael, “How would this story be different from the one I already did on employees of Nationwide Title Insurance signing as vice presidents of various companies?” Michael responded that Nationwide Title was just a cleanup gang; JPMorgan Chase was doing it in-house with their own employees. “They are literally stealing homes that they have no right to for personal gain,” he wrote. Susan saw his point but had other stories to handle. She told Michael to keep in touch. 1696

Presented here is a guide to looking up public records online for possible forgeries, fabrications and fraud when facing foreclosure. . . . During the housing boom, lenders passed around mortgages as if they were whiskey bottles at a frat party. Notes were lost, destroyed, sold into multiple pools. Mortgages were not recorded and exorbitant fees were collected by the big firms on Wall Street. Now that the bubble has burst, “lenders” are trying to collect on loans they do not own, in most cases never lent a dime on the transaction. . . . They are steamrolling the courts because hardly anyone is contesting their foreclosures. So I started digging around in the bowels of the Internets [sic] to see where this rabbit hole led. Using Florida as an example, the guide described precisely, complete with screenshots, how to search official records online. Michael displayed a mortgage assignment and annotated it with questions. Next to one signature, Michael wrote, “MERS as nominee for First National Bank of Arizona, Barbara Hindman, assigning mortgage over to JPMorgan Chase while employed by JPMorgan Chase?” He pasted in Hindman’s and her partner Shelley Thievin’s work histories from LinkedIn to prove they actually worked for Chase. To spot Hindman and Thievin in multiple documents, the guide explained, you simply reverse-engineer the record searches, using the keyword of the foreclosing entity. It wasn’t just Barbara Hindman and Shelley Thievin; the guide included assignments with Beth Cottrell, Whitney Cook, and Christina Trowbridge, all of whom appeared on Lisa’s mortgage documents. One document, which Michael dubbed the “Triple Play,” had Bill Koch, signing for MERS as nominee for Pinnacle Financial Corporation, assigning the mortgage over to . . . Bill Koch, of Select Portfolio Servicing. Michael imagined a conversation in court, where the homeowner’s lawyer questioned this activity:        DEFENDANT: But your honor, he works for the company he is assigning the mortgage to. Isn’t that a conflict of interest, fraud?        PLAINTIFF: He may be employed by the company that the mortgage is being assigned to, but at the time of the assignment he was acting as a representative of MERS. Other examples “appear to be blatant forgeries where they don’t even take the time to match signatures,” Michael wrote, illustrating this by comparing signatures of the same officials on multiple documents. Placing them side by side revealed wide varieties between signatures, allegedly from the same person. Michael explained how to check dates on the assignments, to see if they were filed after the notice of legal proceeding, a proof of fabrication. He instructed how to look up the notaries and check their business address against the address of the foreclosing agent. “I have found notaries that work in the next building over from the pretender lender foreclosing agent,” suggesting an unsavory relationship of notaries signing masses of documents without scrutiny. The guide included dozens of suspect signatures, misdated documents, and shady transfers. “There are thousands of them!” Michael exhorted, with “thousands” crossed out and “possibly millions” substituted. Summing up, Michael urged readers to perform their own searches and report back what they find. “Follow the Guide, research these matters deeper, and collaborate with others. . . . Let’s use the Internet in what it was intended for, exchanging raw data between researchers. All the information is there. It just needs to be pieced together.” On October 11 Michael posted the guide on Scribd, where you can upload large documents. Lisa immediately posted it on the front page of Foreclosure Hamlet. Michael promoted the guide everywhere—on Twitter, Facebook, and in the comments at Living Lies. “Any feedback is welcomed, good and bad. . . . If anyone needs help finding information on your ‘vice president’ or ‘assistant secretary’ just let me know.” Two days after Michael posted it, Karl Denninger, a popular (and… 1733

Holding banks accountable for proper chain of title wasn’t a trick or a technicality; it was the only way to put an end to the thievery. The banks had no place on the moral high ground, especially because their lack of attention to who actually owned the mortgage and note threatened every homeowner in America, regardless of whether they catered to the prevailing standard of being “responsible.” 1837

What made foreclosure defense such a slog was that each state—each circuit, even—had particular procedural rules. A defense might work on one judge but have no chance in the next courtroom over. Still, the banks’ game plans were identical, whether they pursued foreclosure in California or Florida or Montana: conceal their fraud. “They’re pushing you to the wall. They are doing everything they can to avoid an evidentiary hearing,” Garfield explained. “They are doing everything they can to avoid appeal. . . . They will use every means to intimidate you. They will use every means to fool you.” While Garfield warned homeowners to avoid scam mortgage rescue specialists or substandard lawyers, he charged for access to the conference, asking that people come back more than once. Garfield also marketed “securitization audits,” a forensic analysis that would track down the trust containing a particular mortgage. Garfield’s rivals discounted the importance of these audits in court: the key evidence was not the trust location but the assignments and notes. Sometimes foreclosure relief specialists attacked each other more vociferously than the banks. Vulnerable homeowners had to negotiate a thicket of would-be saviors promising relief for a fee, and it was hard to know whom to trust. But Garfield’s I’m-on-your-side pitch proved persuasive. “I’m on a mission here, I don’t need to do this at all,” he would say. After Garfield wrapped up, a few other speakers covered securitization, Florida foreclosure procedures, and other topics. 1841

Whitney Cook could not be working for ten different banks simultaneously, and people had to know she was claiming this. So Lisa initiated a rule. She would send five letters every night to law enforcement, regulatory, political, and media figures across America, presenting her findings and urging them to investigate the Great Foreclosure Machine. It didn’t matter how big or small their office or jurisdiction. She would start with Barack Obama and work her way down. The campaign sprang from one of Lisa’s old habits. She used to write thank-you notes to the clerk at the dry cleaner’s or the waitress at the local diner, the invisible members of society who helped her inch through life. For years afterward, whenever Lisa walked into certain grocery stores or restaurants, she’d get treated like a visiting dignitary; the simple act of gratitude provoked an outpouring of kindness. Instead of thanking those anonymous Floridians, now Lisa wanted to fight for them. The first letter went to the Florida Supreme Court and became a template for all the others. “By way of introduction, I am a working mother and also a pro se litigant fighting a residential foreclosure, in a state that ranks among the hardest hit,” it began. “May I prevail upon you to read this lengthy letter, which I agree, may be too much to ask? I hope to shed light on what is befalling millions of us out here across the nation.” Lisa outlined the details of her case: the initial serving of papers by U.S. Bank, which she had no prior dealings with; her efforts at research, despite the lack of legal training; the fraudulent affidavits, unrecorded mortgage assignments, doctored notes, and sham pleadings submitted by Florida Default Law Group. She explained how the note was endorsed (using the legal term “indorsed”) to a party other than the bank doing the foreclosing. She showed how a notary in Ohio purported to witness in person the signing of a document from a company with an address in Texas. She described other affidavits with signers attesting to personal knowledge of facts that hadn’t happened until several months after the date on the document. She laid out the situation with Whitney Cook signing for MERS on one document and JPMorgan Chase on another. She ticked off all the financial institutions involved in her loan (“U.S. Bank NA, J.P. Morgan Mortgage Trust, Chase Home Finance, JPMorgan Chase Bank NA, MERS, DHI Mortgage . . . one could benefit from an organizational chart!”) and the mounting absurdities of the documents they spat out. “I naively had assumed fabricating evidence wasn’t a widely accepted practice, as surely it was punishable by appropriate jail time,” she concluded. Lisa attached the source documents from her case, along with other samples featuring the same signers representing themselves as officers of different banks. “May I assure you that my case is neither special nor unique, as I review hundreds of similar, local cases weekly,” she wrote. Lisa tied this fraud to the ongoing suffering of the Great Recession, and expressed shock at judges rushing through foreclosure cases without respect for due process, against defendants challenged to obtain counsel with limited resources. “What most galls me is that these ‘pretender lenders’ are working the odds to unjustly enrich themselves, betting through their rapacious law mills that the low-lying fruit—those who easily cave and do not contest foreclosure no matter how illegal or unjust—will far outnumber those who put up a credible fight.” Every night Lisa postmarked the letter to another five people. If a newspaper article reported on foreclosures, the writer would go on the list of recipients. If a lawyer or a politician or a regulator gave a quote in the story, they would go on the list. She included federal banking regulators, the congressional oversight panel for the Troubled Asset Relief Program, state attorneys general, the Justice Department, the Federal Reserve, members of Congress on the relevant financial services committees, and anyone… 1857

the guide told the story: banks assigning mortgages to themselves, names repeatedly showing up as executives of multiple financial institutions, phony notarizations, blatant forgeries. The key point Michael wanted to get across was that this represented the beginning of the trail, not the end. There was enough intellectual firepower in the room to find enough irregularities to capture public attention and bring this whole scheme crashing to the ground. The Internet enabled them to collaborate, to use publicly available evidence to go where the traditional media and the judicial system refused to tread. 1923

Mortgage servicers negotiated modifications with borrowers and simultaneously placed them into foreclosure, an activity known as “dual tracking.” They used the HAMP program to create false promises and push homeowners deeper into debt. 1944

becoming modern-day ghost towns, a visual depiction of the aftermath of fraud. Parts of Port St. Lucie, Michael’s home base, looked just as bombed out. Lisa’s recent obsession was the imminent paralysis of the land transfer system once the cycle of false documents and inadequate standing to foreclose reached its conclusion. Buyers could purchase a home the seller had no right to sell. Titles would be permanently clouded. Properties would become monuments to the bubble, frozen in amber. Florida represented the greatest opportunity to force a reckoning, for one reason: banks still had to come before a judge and prove they could foreclose. The other hard-hit sand states—California, Arizona, Nevada—had non-judicial foreclosure processes. Only in Florida were the courts involved. 1960

Lisa and Michael’s lack of experience with political and social movements allowed a certain naïveté to creep in. They were appropriately cynical about Wall Street’s land grab depriving millions of a basic human need and profiting massively off economic dislocation, but they had no problem thinking they were just a few allies away from fixing it. Moreover, they believed that if someone in power prevented banks from using fraudulent documents, their sharp executives would surely devise a reasonable solution that gave people a fair shot at saving their home. And then Michael and Lisa could go back to their lives. 2037

According to rule 1.420(e) of the Florida court rules of civil procedure, if there’s been no docket activity on a case for at least ten months, any “interested person,” whether party to the case or not, can file a notice of lack of prosecution. “You have to send a certified copy of that notice to all the parties in the case,” the attorney said. “And if they still don’t file anything in sixty days, you can set a hearing for dismissal. And the judge has to dismiss it. Says it right here—the action shall be dismissed.” Lisa discovered her newest project. She did some research, finding Chemrock v. Tampa Electric, an opinion out of the Florida First District Court of Appeals. Tampa Electric filed a motion to dismiss for lack of prosecution, under rule 1.420(e). Within sixty days, Chemrock filed a motion in opposition to the motion to dismiss for lack of prosecution, but the district court sided with Tampa Electric and tossed the case. The appeals court ruled that any filing in the sixty-day grace period would have to be “an attempt to move the case toward conclusion on the merits,” not just a dummy motion to restart the clock. Everything checked out: not only the rule but case law supporting it. Lisa called up Michael and said she wanted to run reports throughout the state for all cases with no docket activity for ten months, and then file motions en masse. Maybe they could get local law school students to help, telling them that if they wanted to acquire experience, this was a way to appear before a judge and get a case dismissed. “This is it,” Lisa enthused. “All we need is a practice case to see how this goes.” 2079

Lisa filed the notice that month: PLEASE TAKE NOTICE that it appears on the face of the record that no activity by filing of pleadings, order of court, or otherwise has occurred for a period of 10 months immediately preceding service of this notice, and no stay has been issued or approved by the court. Pursuant to rule 1.420(e), if no such record activity occurs within 60 days following the service of this notice . . . this action may be dismissed by the court on its own motion or on the motion of any interested person. . . . Lisa Epstein, Interested Person Lisa added a “Suite 508” to her 2096

comments to the Florida Supreme Court’s task force on foreclosures. The Florida Bankers Association bluntly stated, “Virtually all paper documents of the note and mortgage are converted to electronic files almost immediately after the loan is closed. . . . The reason ‘many firms file lost note counts as a standard alternative pleading in the complaint’ is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file.” This was an amazing admission. First, the pooling and servicing agreements for the securitization trusts explicitly stipulated that only notes and mortgages with “wet-ink signatures”—that is, original documents—would make a transaction valid. The Florida Bankers Association unwittingly admitted that, as a matter of course, these original documents were never delivered. Second, for months Lisa watched lost notes become miraculously found whenever plaintiffs were challenged to produce them. This happened in Lisa’s own foreclosure case, with the “original note” conjured up months after the foreclosure action. How could they be found if they were destroyed? Either the Florida Bankers Association was lying or the notes were fraudulent. Robert Bostrom, executive vice president at the mortgage giant Freddie Mac, made an even blunter statement in a comment that Michael found: “Typically, the plaintiff in a foreclosure action does not own the underlying note or loan that is secured by the property subject to the foreclosure proceeding.” This is precisely what Michael had spent the better part of a year trying to prove! Information of this nature would acquit a shoplifter. If the chain of custody of evidence cannot be established and the prosecuting attorney cannot produce the stolen items, the case falls apart. And this was not a bottle of nail polish but someone’s home, the store of most of their wealth. Michael and Lisa encouraged defense attorneys to introduce these comments in their cases. And they wanted to prove that victory was possible against the banks, despite their power and prestige. So they ticked off a series of recent wins. Homeowner Antonio Ibanez just reversed his foreclosure in Massachusetts, after U.S. Bank failed to execute the assignment of mortgage until after the foreclosure sale. Federal bankruptcy judge Robert Drain canceled a $460,000 mortgage debt for a borrower in White Plains, New York, because PHH Mortgage couldn’t prove their claim. Even a bankruptcy judge in Idaho objected to an incomplete chain of title routed through MERS. Defense attorneys hadn’t entered law school to facilitate the Great Foreclosure Machine, so they were eager to pick up new strategies to fight back. 2116

Starting in the mid-1980s, he began to see improper fees, misapplication of payments, and other unlawful activities. His Chapter 13 bankruptcy clients would get charged for monthly property inspections that were never carried out. Servicers also ignored the bankruptcy stay, a designated stoppage of debt collection during the bankruptcy process. And they would try to recapture fees in asset sales. Max hooked up with a forensic accountant named Kevin Byers, who discovered that servicer software was actually programmed to violate the bankruptcy stay, so that servicers could try to collect windfall revenue. Servicers could also change nonrecoverable fees to recoverable ones with a couple of keystrokes, and add them into payoff statements. Unlike other bankruptcy attorneys, Max had trial experience, and he believed he could fight these improper charges in court. The bankruptcy judges were initially indignant. “Max, are you on a crusade against the banks?” they would ask. In his calm manner, Max explained that his client wasn’t behind on the court-ordered payments; the servicers were just tacking on charges using their software codes. The presumptions of industry innocence lingered, but Max did start to have modest success, because the servicers would rather pay him off than correct their systems. 2205

Over the next several years Max came to discover the lost note affidavits, faulty mortgage assignments, missing transfers, and dubious signatures that infected courts nationwide. He theorized that passing authenticated, notarized documents along every link in the securitization chain and into the trusts was too costly for the fly-by-night originators that sold the loans, let alone everyone else involved. So they didn’t do it. When the borrower defaulted and trustees needed standing to foreclose, they would call special fix-it companies. Max wrangled a copy of a quarterly newsletter put out by Fidelity National Title Group called The Summit. Fidelity actually created the main servicer software platform used to dial up profits. It had a subsidiary called Fidelity National Foreclosure Solutions. And The Summit described how the Document Execution team at Fidelity National Foreclosure Solutions generated whatever assignments or promissory notes were needed for its clients, after the fact. Team manager Dory Goebel explained how “FNFS has signing authority for a number of our clients” and how plaintiff attorneys could simply request any mortgage document and receive it within twenty-four hours. “The Document Execution team is set up like a production line,” Dory explained. “On average, the team will execute 1,000 documents per day.” There was even a flow chart showing the trail, from document request to fabrication to return to the foreclosure mill law firm. In 2008, Fidelity spun off its mortgage division into a public company called Lender Processing Services, or LPS. When foreclosures exploded, LPS controlled most of the market in servicer software and third-party document fabrication. Max began to speak at national seminars about these issues. He also questioned whether the parties trying to claim payment from his bankruptcy clients actually established a proof of claim. He would use these challenges as legal leverage to secure better terms: reduced principal, forgiven past due balances, whatever. And he started to win. “Max has a better record than Roberto Duran, 103–0,” said one observer. Bankruptcy judges, who were accustomed to proofs of claim, began to understand Max’s arguments. When the big cases started to move, bankruptcy judges were well ahead of state and federal courts. 2220

April Charney attended one of the initial events, on a scholarship. In day-long strategy sessions Max counseled a cool, almost laconic strategy in the courtroom. Since the plaintiffs had nothing but false documents to use, he recommended having them present their evidence before jumping on it—letting them “dig their own grave,” in his words. An entire wall of the classroom displayed settlement checks from Max’s cases, a testament to his success. Eventually Max brought in expert guests, including Dick Shepherd, former general counsel of Saxon Mortgage; Margery Golant, a foreclosure defense attorney who previously worked at mortgage servicer Ocwen and two different title insurance companies; and Kevin Byers, his forensic accountant friend. With insight from those who spent their careers on the other side of the table, defense lawyers learned how to anticipate opposing counsel’s arguments. Max also handed out materials on a thumb drive for each attendee, including a file called “Max Gardner’s Top Road Signs of Bogus Mortgage Documents.” By 2010 this would include sixty-six independent features of false documents, including a list of 295 names, a roster of fraudulent document signers from around the country. Once participants graduated from bankruptcy boot camp, they would get access to Max Gardner’s private email listserv, which included case files from a growing number of lawsuits, all stored and indexed. Competing attorneys in the same field rarely collaborated like this, but boot camp graduates operated like a networked foreclosure defense practice, using the listserv for strategy and information sharing. Between 2005 and 2010, six hundred lawyers from forty-seven states attended boot camp and discovered this new support system. They all returned home ready to take on the mortgage industry. One of these lawyers was April Charney. April set out to prevent every foreclosure in her case file, because the plaintiffs possessed no legitimate evidence that they owned the loan with a right to enforce it. 2244

“free house.” But April directly challenged that point. Societies constantly make legal rules that cannot be violated, even if they lead to a guilty person going free. Police cannot coerce a confession and have that be admissible in court. They cannot falsify evidence. Even failing to read criminal suspects their rights should result in dismissal. Nevertheless, judges who would have no problem throwing out a criminal case if they found planted evidence wrestled with the moral and psychological implications of giving homeowners a windfall. Everyone had to follow the law, except for banks, which could wave a piece of paper and get a foreclosure affirmed. To April, stopping these foreclosures represented a critical step to preserving the whole concept of justice. April 2264

She went to Ohio, California, Minnesota, Missouri, South Carolina, wherever she was asked. She never took money for her seminars, charging only enough to recoup the cost of the facility. And she required that everyone taking the class perform twenty hours of pro bono work. Between 2004 and 2008, as foreclosures became a growth industry, fifteen hundred lawyers took April’s seminars. Like Max Gardner, she also maintained an enduring relationship with those she trained, inviting attorneys throughout Florida and the nation onto two listservs where they could collaborate, share pleadings, and develop strategies. Between April’s and Max’s listservs, young attorneys could access the accumulated knowledge in foreclosure defense with the click of a mouse. 2271

In 2005 she got Judge Walt Logan to throw out twenty-four Florida cases in which MERS attempted to foreclose without possession of the note. But an appeals court reversed the decision two years later; the banks had the means to keep trying until they found someone to wave cases through. The stops and starts angered April, who believed that any judges allowing foreclosures to advance by plaintiffs without standing failed to uphold their constitutional duty. But she was gaining a following; the New York Post dubbed her “the Loan Ranger.” 2279

Matt thought of foreclosure defense as the subsistence farming of the legal profession: the $500 retainer he charged would barely cover expenses, and clients couldn’t pay much more. When he realized he could get attorney fees from the banks instead, it changed his life. A couple of key moments stuck out. Once Matt sat in a judge’s chambers before a hearing, reviewing a mortgage document. The judge pointed to one of the amount-due figures that looked improbable, and the plaintiff’s attorney interrupted, “We can change that right away and give it back to you.” Matt wondered how much of the document could be legitimate if the attorney could alter it by snapping her fingers. Later he hired a law school clerk, who ran down a provision in the rule book requiring plaintiff’s attorneys in foreclosure cases to attach internal records for the borrower. Matt didn’t believe him, but after looking it up himself, he agreed. Matt took it to a local judge, who immediately responded, “Weidner, what the fuck are you doing?” “Look at the rule book!” After the judge found the rule in question, he said, “Holy shit, you’re right!” Not even judges with extensive experience in foreclosure cases knew the required steps to take away someone’s home. And they didn’t really have to know; until the crisis, most cases went untried. In fact, when Matt took April Charney’s seminar, with her insistence that securitized mortgages constituted the largest criminal scheme in the history of mankind, most of the lawyers in the audience feared that judges would find such defenses frivolous. Lawyers often try to build relationships with judges; they don’t want to be seen as wasting the court’s time. If they believed they would lose and that judges would consider them ridiculous for even bringing the case, they would stay away from filing. Matt didn’t see it that way. April inspired him that the rule of law was at stake. He watched April’s 2005 trial, in which Judge Logan threw out all those cases where MERS tried to foreclose in its name, as the smoke heralding the fire of the collapse. If the judges paid attention, the foreclosure crisis might have been avoided. And he’d be damned if he would keep quiet out of concern for career advancement. April Charney’s insistence that lawyers collaborate rubbed off on Matt. He met Greg Clark, a title attorney in Clearwater, who worried that broken chains of title would make existing homes unmarketable, creating ghost properties without resale potential. “The judges can do whatever they want,” Greg told Matt. “But I’m a title attorney. This is unfixable.” Greg assembled a group of local attorneys in St. Petersburg, and Matt joined up. They called themselves Jurists Engaged in Defending Title Integrity, or JEDTI. 2289

motto: “The light of truth, the strength of defense, the heart of passion, and the leadership that follows from integrity.” Matt built a website to market his law practice, and colleagues convinced him to include a blog. In fact, before Lisa and Michael published their blogs, Matt Weidner started his own, in July 2009. Matt filled the blog with the kinds of rants he couldn’t say out loud in court: contempt for the Great Foreclosure Machine and the judges’ nonchalant acceptance of bank attorney lies. 2314

Tom realized that he’d better research foreclosures. He read English case law, like the 1677 Statute of Frauds, and dove into the various requirements for bank repossessions. Early on, Ariane kept alerting Tom to outlandish add-on charges from mortgage servicers for things like property inspection. Tom would ask for documentation to prove the charges, and the creditors would immediately drop the claims, saving his clients $5,000 to $10,000 by making a phone call. That made the Ices recognize they couldn’t trust bank figures. Ice Legal rapidly changed focus from bankruptcy to foreclosure defense. The main judge in the Palm Beach County foreclosure division at that time, Jeffrey Colbath, personally asked Tom to take cases, saying that homeowners needed lawyers. The evidence Tom encountered looked suspicious: bad signatures, vice presidents signing for multiple banks, the whole bit. He and Ariane got sucked down the same rabbit hole as so many other lawyers, victims, and activists, scouring the public records, amazed by the systemic misconduct of the nation’s largest financial institutions. So when Tom first went into court on a foreclosure case, despite no experience in this area, he felt enormously confident that the judge would nail the other side. But it was the exact opposite. The judges were where Tom had been a few months earlier: if the homeowner didn’t pay, there was no defense. Tom observed cases across the state and decided that the best way to fight was to litigate. He started with the process service defense. When a defendant is served with a summons, the process server must include four separate items on the document: their initials, their ID number, date, and time. Ariane was doing document intake, and the information was consistently missing. Tom at first balked at the idea, saying, “I don’t see a court getting excited about this.” Ariane said, “Come on! Tell me why you can’t raise that!” Upon further research, Tom learned that defendants weren’t getting served the papers. The point of the notations was to prove whether process servers did their job. Foreclosure mill law firms often owned the process servers, and therefore had an interest in failing to inform defendants about their court cases—it meant uncontested foreclosures and pure profit. Investors in mortgage-backed securities paid for process service, and they had no way of knowing whether the charges were legitimate. 2340

Ice Legal obtained an affidavit from Liz Mills, a process server whose name appeared on hundreds of papers in Lee County. She swore that she had never visited Lee County in her life. Ice Legal prosecuted many of these cases, finally prompting the companies to bother to serve papers correctly. There were other defenses. The standard mortgage contract included paragraph 22, which required that the borrower get written notice of default and guidance on how to cure it before filing for foreclosure. This was the delinquency letter defense April Charney had been using since 1992, but even in 2008, servicers failed to provide all the required elements on the letter. The Ices, along with lawyers across the state, made numerous paragraph 22 defenses. Plaintiff’s attorneys attacked Tom for his motions, which they said clogged the courts and delayed the inevitable. But simply by doing some real lawyering, Tom succeeded in breaking the stranglehold that bank attorneys had over the foreclosure process. Ice Legal spent most of 2008 and 2009 in discovery, filing motions to compel depositions. They wanted to talk to the employees who signed assignments of mortgage and other documents, to see if they could live up to their claims. Tom and his colleagues traveled across the state to locate judges who would order depositions. Ice Legal lawyers were prepared to go wherever necessary to depose employees, even after the judges would ask, “You really want to fly to Michigan for this case?” Tom and Ariane hired a couple of paralegals whose entire job consisted of answering emails about the four hundred or so deposition requests the firm had open. Everyone spent long nights at the office. And gradually it paid off. 2367

Gardner stood outside a courtroom, in heated conversation with the vice president for a big mortgage company. “Do you understand what’s going to happen?” the vice president thundered. “You’re going to destroy the country. And if you don’t stop, we’ll just go to Congress and get the laws changed!” 2461

found an interesting essay called “An Officer of Too Many Banks.” It cited case law where judges threw out foreclosures because the signing officer represented multiple banks in the same complaint. “In thousands of foreclosure cases, key documents may have been fabricated by employees of mortgage servicing companies who have falsely held themselves out as bank officers. . . . [I]n 2010, the issue of the validity of Assignment is likely to finally come under examination by regulators, courts, lawyers and distressed homeowners.” It was familiar stuff to Michael, but he put the story up at his site. The author of the piece was Lynn E. Szymoniak, Esq. 2498

National Association of Certified Fraud Examiners, in a course taught by retired FBI agents, Lynn became a real white-collar crime buff. She liked working backward from the claims forms, analyzing documents, partnering with private investigators. She learned how to find fraud, and became quite adept at it. The white-collar cases put Lynn in close contact with numerous FBI and U.S. attorney’s offices, in particular several officials in the Middle District of Florida, in Jacksonville. She even taught a class in insurance fraud at the FBI Academy in Quantico. She and the fraud investigators would drink together and trade stories. The FBI agents would always refer to “Lynn’s people” when talking about liberals—she couldn’t shake her bleeding heart—but they all got along. After working for a few other firms, Lynn opened her own law practice in Boca Raton, building an office with Mark that grew to twenty-five employees. 2552

Korell Harp may have committed identity theft, but somebody had stolen his identity, using it to sign mortgage documents that were submitted to courts as evidence to take people’s homes. To take Lynn’s home. Plus the documents were notarized in a state where none of the companies involved had any branch offices. And the dates were all wrong. 2635

She found fictitious assignments prepared not just by DocX but by its parent company, Lender Processing Services—the company Max Gardner tracked down in that newsletter about the Document Execution team. LPS produced the documents out of offices in Jacksonville, Florida, and Dakota County, Minnesota. Lynn found assignments prepared by employees at the servicers and foreclosure mill law firms, too, claiming to be corporate officers of the banks. The Great Foreclosure Machine had many elements, but almost every assignment Lynn looked at, no matter who generated it, exhibited telltale signs of fraud. Ninety percent of the documents had errors, by her estimates. How many innocent people were going into foreclosure based on lies? 2709

Special interests depend on a disorganized public. They don’t want people understanding what lawmakers decide in ornate committee hearing rooms. Keeping the masses preoccupied with their own struggles is critical for unmolested profit-taking. For all their successes, Michael and Lisa’s reach was relatively limited. 3470

A native of Argentina, Iuspa-Abbott recalled how breakdowns in the Argentinian legal system in the 1970s led to dictatorship and chaos. She believed the system was being similarly corrupted in the United States. 3614

Fabricated foreclosure documents were the cover-up; failing to transfer mortgages to the trusts was the original sin. And Lynn was hearing that the trusts had almost none of the paperwork in their files. Where trustees should have delivered 25,000 documents, they were delivering twelve. Lynn learned through a Bloomberg report that prosecutors in the Jacksonville office interviewed April Charney in connection with the case. The U.S. attorney told Charney they were working on formal grand jury depositions for employees of Lender Processing Services and DocX. 3748

banks knew they’d been caught. That last straw was when Old Republic National Title Insurance announced it would not insure title on properties foreclosed upon by companies that used robo-signers. The company simply couldn’t guarantee who owned the homes. And without title insurance, nobody would risk a purchase. 4160

Michael got passed notes from a conference call between Citigroup and Adam Levitin, a law professor from Georgetown University and expert on securitization. Citi gave the document the subtitle “Foreclosures Gone Wild.” Levitin forthrightly told Citi executives that the affidavit issue was secondary to the big question of whether loans “were never properly transferred at each step of the securitization process.” This transfer failed to take place “in many instances,” Levitin said, raising questions about loan ownership as well as “the validity and tax exempt status of the trusts.” Citi even acknowledged that “it is unclear in many cases where the actual paperwork rests today.” Michael uploaded the conference call notes, and Citigroup immediately threatened legal action. Eventually Citi did get the notes scrubbed. But Michael gave readers a brief window into the anxiety in the C-suites. 4369

Lisa was an unofficial, unpaid, unknown research volunteer for the fifty-state investigation. And unrequited, too; most offices didn’t even acknowledge receipt. 4546

America is a punitive nation, the most incarcerated nation on earth. If you’re caught stealing a soda or smoking a joint, we’ll put you away for way too long. But if you commit systemic crimes—if you hand out millions of fraudulent mortgages, package them into fraudulent securities, fail to complete fraudulent securitizations, engage in fraudulent servicing, and evict homeowners with fraudulent foreclosure papers—you can get away with it. Many have theorized why the banks would be so cavalier as to break the housing market just to make a few extra dollars. And the answer is proven by the outcome: because they knew they could, without serious consequences. We don’t have a justice system with the will to convict everyone, regardless of wealth and power. And that ensures that the wealthy and powerful will keep committing crimes. In Jacksonville, determination against concerted resistance from Washington led to the only major prosecution for foreclosure fraud. Lorraine O’Reilly Brown, founder and CEO of DocX, which produced over a million fraudulent assignments and affidavits for mortgage companies, was indicted in November 2012 on conspiracy to commit mail and wire fraud. Apparently this was a conspiracy of one, because the indictment claimed Brown directed the document forgery and fabrication scheme “unbeknownst to DocX’s clients.” In other words, mortgage servicers contracted Brown to fake evidence so they could prove standing to foreclose, but they were shocked that she would, you know, fake the evidence. Servicers may not have known the precise mechanics of the DocX fraud, but that’s because they wanted a layer of plausible deniability. LPS wiggled out of criminal indictments by paying $35 million in a non-prosecution agreement and cooperating in the Brown conviction. According to the complaint, LPS was unaware of this DocX scheme and fired Brown when they discovered what was occurring, despite performing the same fraud at multiple other facilities. It’s not like Brown invented robo-signing. In fact, the indictment confirmed that “surrogate signing,” authorizing temps to forge the names of senior employees on foreclosure documents, was illegal, though LPS defended it as legitimate for years. 5653

A 2014 report in the American Journal of Public Health linked high foreclosure rates with increased suicides. The foreclosure crisis generated the largest ruination of middle-class wealth in nearly a century. Former congressman Brad Miller calls it “an extinction event” for the black and Latino middle class. It contributed massively to the soaring inequality of what some call the new Gilded Age. 5850

The End of Traffic and the Future of Transport: Second Edition by David Levinson, Kevin Krizek

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Last annotated on June 12, 2016

What is certain in the future is that humans will maintain desires. Whether for stuff, skills, smarts, esteem, solace, security, salvation, spirituality, space, scenery, love, or socializing, these desires and the way they are accessed change with the times. What is paramount for the transport business is the ease by which these desires are achieved—a term in the industry referred to as “accessibility.” Most desires have historically been satisfied by moving stuff while traversing distances across physical geographies. People transport themselves to collect some things; they expect other things to come to them. They seek to access (or possess) things they care about it. 79

transport systems are being augmented with a range of information technologies. Fresh flows of goods and information provide a foundational aspect. We discuss large scale trends revolutionizing transport: dematerialization, electrification, automation, the sharing economy, and big data. The culminating chapters provide strategies to shape future debates about infrastructure. 88

The first part paints a picture about the End of Traffic: data, history, and trends. We focus on what has actually happened (Chapter 1), why what is happening is a good thing (Chapter 2), the underlying causes (Chapter 3), how the inevitable conflicts between the timeframes of change keep transportation practice lagging far behind imagined transportation potential (Chapter 4).   The second part examines upcoming processes that will shape the future of transportation or its consequences: Electrification (Chapter 5), Dematerialization (Chapter 6), Autonomy (Chapter 7), Mobility-as-a-Service (Chapter 8). While these changes are still mostly too small have been measured in the system statistics. we have begun to see the tip of the iceberg in their transformative potential. In Chapter 9 we look at how even the laggard transit modes will be affected. Then, we consider changes to land use (Chapter 10). 117

First we address adaptive re-use strategies for land uses that comport with the expected transport changes (Chapter 11). Second we prescribe new design aspects and priorities for rights-of-way consistent with the end of traffic (Chapter 12). Third, we recommend pricing strategies to accelerate the end of traffic (Chapter 13). These might happen, but they cannot happen without active public direction (unlike the technology changes of dematerialization, electrification, sharing, automation, and cloud commuting, which are on trajectories if not entirely independent of public policy interventions, mostly so). Our last chapter charts paths forward for how transport will redeem itself (Chapter 14).   There are things that might happen on their own (with a minimal amount of public policy interference). There are things the public can make happen through directed policies. There are things the public can prevent from happening with policy. We think the culmination of results presents an optimistic perspective, though some have referred to the ideas stated herein as “refreshingly unromantic.”15 This scenario has causes and effects, and can be compared with a status quo scenario (where traffic neither rises nor falls much) and one where traffic resumes its once seemingly remorseless march upward. We then offer priorities to accelerate these trends. Why delay a positive outcome like the End of Traffic? 125

Cars, and improved transport generally, made it easier for more people to reach more places in less time. Extending reach means more choices, more specialization, more division of labor, and more economic activity. Faster travel and more direct routes are half of this. Where people locate relative to the places they want to go is the other half. 170

With more people attaining automobility, increasing distances (to attain larger lots and bigger buildings for less money) were compensated by faster speeds. So things became less convenient for the carless — the farther things are spread out, the less effective is walking or public transit — and thus the more people got cars. The growth in infrastructure supply fed the growth in demand; 173

Evoking the idea perhaps first popularized by Lewis Mumford,19 Tony Downs, in his 1992 book Stuck in Traffic, described what he called the “Iron Law of Congestion.”20 By expanding capacity (i.e., building a road), much, though rarely all, of the additional capacity gets used in the short term by people switching routes, modes, and time of travel. Longer term impacts (i.e., development or behavior change) further reinforce the phenomenon.21 22 177

The race to the summit of Mount Auto persisted for almost a century. But more recently— since the mid 2000s—climbers have been ambling around atop this peak of Mount Auto, asking “now what?.” Clouds have obscured their vision for years. Reports from the Department of Transportation, at least in the US, say they are losing elevation. Quarterly figures (Figure 1.1)23 reveal that vehicle travel per person dipped for most of the 2000s and the early 2010s (total vehicle travel has dipped too, but not as severely owing to population gains). Per-capita vehicle travel is roughly where it was in the late 1990s and total vehicle travel only surpassed the 2007 peak in 2014 even with steadily increasing population. Context helps put the significance in perspective. These trends follow 90 years of steady, almost uniform increases in the amount of automobile traffic. Barring a few exceptions owing to economic downturns or energy shocks, vehicle travel increased almost every year in the US for the entire twentieth century! 184

The amount of time spent in travel has declined six minutes — from 74.4 minutes to 68.4 minutes per day. And as shown in Figure 1.5 and 1.631, at a more disaggregate level, persons born in the most recent cohorts are traveling shorter distances than people born earlier at the same point in their life.32 We are not talking just about Millennials; this is true of Generation X as well. 216

Little is going up. Data are telling us that Americans are driving less. In the absence of further external events (economic, technological, demographic, or social), the curve appears to have peaked, or at least plateaued.33 221

Less Traffic is a Good Thing   My automobility is your traffic. And if demand (the number of cars making trips) outpaces supply (the amount of roadway available), then congestion results. Such dynamics are efficient to a point; they help spread the cost of road construction and maintenance over more drivers. In the absence of any other drivers, you would not enjoy a road network. Exceeding a threshold, however, congestion kicks in, thereby causing delays. The most widely experienced negative outcome from auto-mobility within the transport realm is wasted time. But angst, frustration, and of course, being late for dinner are other effects.   More generally, using cars imposes negative costs beyond inconvenience for the carless and congestion for the motorist. In economic terms, we refer to this as the Full Costs of travel. The Full Benefits are largely internalized, those who travel get them. The costs are partially internalized — travelers pay for their own time, their car (which is often a significant share of income), their gasoline, their insurance, and some of the cost of infrastructure. They don’t pay for all of the cost of infrastructure just like transit fares don’t cover the cost of transit service. The costs additionally produce externalities that are not fully accounted for out-of-pocket by drivers when traveling. 263

Cars crash. Cars collide — with each other, and crash into pedestrians and bicyclists and buses and trains and inanimate objects, and just about anything you can imagine. These crashes still kill over 30,000 Americans (and over one million people globally)36 each year, and maim countless others. 277

Estimates of deaths from motor vehicle pollution are on the same order as the number of fatalities from crashes now, although the deaths due to pollution affect a different segment of the population, disproportionately the old and the young. There are other sources of pollution besides the tailpipe. When your tires wear down, where does all that worn out rubber go? (Hint: you might be breathing some of it).38 The Global Burden of Disease Study39 for 2010 produces the results shown in the adjoining table. Those numbers include only fine particles (PM2.5) and ozone. Using those numbers, air pollution is worse than crashes in terms of total deaths,40 but not in terms of years of life lost.41 Car crashes are feared more than air pollution from traffic, but emissions are not something to be sanguine about.42   Noise annoys. All noise has real economic, physiological and mental health effects; the effects of car noise tend to be even more acute. Hundreds of studies confirm that prices for homes near freeways (and airports) are lower than otherwise similar homes farther away, suggesting the damage of noise pollution.   Cars consume lots of space. One estimate of the total paved surface devoted to roads and parking in the US puts it at 43,000 squares miles (111,000 km2), just a bit larger than the state of Virginia. Paved area has environmental implications: less pervious surface to filter water, more pavement to absorb heat; direct costs: paving roads and parking, asphalt and concrete production and construction; and opportunity costs: land that is paved for roads and parking cannot be easily used for something else, money spent paving that land cannot be used for something better.   Cars isolate. From spatial, psychological, and equity perspectives, cars isolate people more than other modes.43 Straightforward geometry suggests that lower development densities prompt more driving between destinations and lower accessibility for modes like walking. From an equity standpoint, the argument is more clear. The land use structure in many suburban communities, for example, favors car use, which is more expensive than other modes. This prices out some who become the carless. Thus, an auto-dependent land use system makes driving a necessity; it has even been thought of as a right, not to be lightly taken away by municipal court. Automobiles stratify society and exclude the less mobile.44 Psychologically, cars effectively put a barrier between the user and the environment. The enclosure of the car physically isolates the driver from her surroundings. Some cities have become so stratified that mass transit is the only space where individuals from different socio-economic strata cross paths. 287

Deaths per 100,000 people45     Road injury + other transport injury Total air pollution Deaths per year 15 36 Years of life lost per year 653 565       3. 320

while population growth in the urban core may be higher in percentage terms (than it was and than the suburbs), it is still smaller than suburban growth in absolute terms, owing to the suburbs’ much larger base.   American cities are now more pleasant than just five years ago. This has less to do with urban policy, 353

Travel patterns differ by age group, but those who do not work daily do not make work commutes daily. While some of the now available non-work time is made up with out-of-home activities requiring travel, that does not require peak hour travel, and so imposes fewer stresses on the transport system. 392

Communications Technology (ICT) is a broad term encompassing a broad category, it is fair to say what used to require physical travel has diminished. There is reduced need to be in particular places to get work done; and, there is nothing magic about the five-day workweek. Both are relics of the industrial age.  399

Telecommuting continues to rise, more as a complement to office work than a substitute (e.g., to check email upon awakening or going to sleep), but even as the occasional substitute, people can work from home either sometimes or regularly.   Figure 3.463 shows daily telecommuting dropped in the past decade (2000/01-2010/11) according to a recent survey in the Minneapolis-St. Paul region, but non-daily telecommuting (once a week or more, once a month or more) rose. 420

“In 2014, on days they worked, 23 percent of employed persons did some or all of their work at home, and 85 percent did some or all of their work at their workplace, … In 2003, the first year for which comparable data are available, 19 percent of employed persons did some or all of their work at home, and 87 percent did some or all their work at their workplace on days worked.”64   Enabling factors such as broadband internet, ubiquitous mobile smartphone technology, and employer attitude are necessary for significant amount of at-home work. The tax code also helps. Taxpayers can write-off home offices for part-time at-home work. 426

Relative to the 1990s, high quality, inexpensive, point-to-point video-conferencing is widely available, also with relative instantaneous transfer of data. It is still not good enough though, due both to standards (real-time video-conferencing should have higher priority than downloading torrents of movies), and more importantly, less than full deployment of broadband communication in the US. Even so, like roads, demand will eventually expand to fill whatever supply internet service providers deploy.   Thus video-conferencing has yet to cause at-home work to overtake commuting for even the majority of office workers. It is not expected that these technologies will have much effect for most non-office workers (about half the US workforce), though other technologies may. 436

Preferences for lifestyle (how much time, on average, will people want to spend inside versus outside the home), technology (how quickly can the product arrive), and countless other factors also shape choice of in-person shopping vs. delivery.   On the other end of the spectrum are goods like fresh food that people like to inspect or touch before purchasing. Culture plays a role. Having lived for a year in Italy, Kevin knows few (if any) self-respecting Italians who would conceive of having an unknown person select tomatoes on their behalf — fish and meat products are not far off. Americans, on the other hand, have relegated themselves to commoditized food products, even tomatoes.77 488

recognizing rigidity helps us understand when various changes might take place.   Fast Change   Matching the prospects of decreased driving with the wonders of technology provides fuel to buoy optimism. Trends are bending around vehicle use, overall travel, and technology. Ray Kurzweil,106 for instance, observes that technology advances at an accelerating rate, and is deployed more widely more quickly today than yesterday. Horace Dediu has made a similar point less breathlessly.107 108 701

In general, the short-term forecast of new technologies tends to be overly optimistic about rates of adoption, market size, and its ability to displace business as usual. However, society at-large has swiftly transitioned from pens to keyboards; from keyboards to mice to swiping fingers across screens; and to voice-responsive headsets, phones, remote controls, and free-standing devices interacting with the digital world. Most people now live in an always-on world via smart phones or otherwise.110 By using the TouchID sensor on an iPhone accompanied by three light touches with an index finger, it is possible to order a car from a taxi (ride-sharing) service (e.g., Uber, Lyft) to pick you up in a matter of minutes and drive you anywhere. Employing the same gestures, dinner is literally on-tap this evening, delivered fresh. You can now have semi-reliable video chat with friends or family across the world while walking across town. 716

Medium Change   There are an estimated quarter-billion cars and light trucks (including pickups, minivans, and sport utility vehicles) on the road now in the US. The average car on the road is 11 years old. By comparison, in 1933, in the depths of the Great Depression, the turnover sales rate of the auto fleet was over 14 years. So what are the odds that your next vehicle will last over 20 years?   The private automobile fleet in the US turns over slowly. This frustrates those used to the fast change of Silicon Valley. Cars are not used most of the time, and thus fail to wear out and don’t need quick replacement. If instead of 250 million vehicles operating 1 hour a day, suppose society had 125 million vehicles operating 2 hours per day, or 62.5 million vehicles operating 4 hours per day. Vehicles would be replaced 4 times as often (assuming they wear out with use), and the average age of vehicles on the road would be under 3 years instead of over 11 years. In contrast, David has had 7 (different generations of) cell phones in the past 11 years.111   Newer cars have several advantages. They are more fuel efficient, pollute less (both because they use less energy and because they have better pollution control), are safer, have better user interfaces (we hope) and are more in-sync with changes in information technologies. Society wants fewer cars because that requires less space devoted to the storage of cars (parking), and makes driving less likely.   Efficient use of capital, keeping vehicles in motion 24/7, is a hallmark of large, expensive fleets like shipping, airlines, railroads, and to a lesser extent trucks. Furthermore, a single owner of the fleet can achieve larger economies of scale. United Parcel Service controls almost 100,000 vehicles world-wide,112 allowing them to innovate in use of alternative fuels. Transforming this mid-speed technology to faster moving is an opportunity that new technologies portend, an opportunity we discuss in Chapter 8: Mobility-as-a-Service.   Slow Change   In contrast, roads are among the slowest changing of any technology still in active use. In 2014 Kevin and his family lived in Bologna (in Northern Italy, just over the Apennines from Florence). The street on which he lived for a year was the via Emilia; this exact road was built in 187 BC by the Romans. It was a main trunk road then and still is today. Once laid, roads do not move. They continue to define the urban fabric.   After the 1666 fire destroyed most of London’s buildings, the city could not change its street grid despite an able plan from Sir Christopher Wren. Too many arrangements (such as property rights) depended on the old layout of roads. The new buildings were built where the old structures stood, rather than in the void of empty roads. The same was observed after the San Francisco Earthquake, and the bombings of German and Japanese cities in World War II.   The life-span of buildings obviously varies a few years to centuries; commercial structures in the US hover around a half century.113 Property rights inevitably change slower than that, thus it is not unreasonable to think that streets are not going anywhere soon. Yet, there will be opportunities to reconfigure how the roads themselves will be used. 725

“The future is already here — it is just not very evenly distributed” — William Gibson 114 757

Transitioning Toward Electric Vehicles   In 1900, over one-quarter of the cars produced in the US were electric, but that only amounted to 1200 vehicles.115 116 Electric vehicles (EVs) competed with steam and gasoline for market share. Observers believed each would find niches, a “sphere of action” they would dominate: electrics for the wealthy wives of businessmen and professionals who wanted to travel in town, gasoline for the longer distance trips, and so on. Yet by 1905 electrics comprised fewer than 10 percent of all vehicle sales. By 1918 Henry Ford’s gasoline-powered Model T was dominating automobile sales.117 The rest, was, as they say, history. EV sales, even when growing slightly, comprised a smaller and smaller share of the market. 771

Sales of EVs, shown in Figure 5.1,119 remain in the thousands, while the US market is about 13 to 14 million cars and light trucks per year.120 That has not stopped Musk from claiming most new cars will be EVs within 20 years. Tesla’s newest Model 3 has obtained over 400,000 pre-orders, just two weeks after announcing the car, and more than a year before the first delivery.121 Indeed, Battery EVs are following the same trajectory of growth as Hybrid EVs a decade earlier. And while Hybrid growth was quite rapid in its early years, it has significantly slowed in recent years. Market shares for hybrids in 2013 are only 0.3% above what they were in the 2009 peak.122   In favor of rapid adoption is the potential of a policy-push strategy. The US, or individual states, and other countries may implement cap-and-trade for refineries or carbon taxes.123 California, notably, already has a cap-and-trade system which implicitly raises the price of gasoline, to date by a bit more than a dime a gallon.124 In such a scenario, battery vehicles will be more popular because the alternative has become more expensive, though the degree of price increases in gasoline affect the popularity of the alternatives, and a dime ain’t much. 823

Moore’s Law, which predicts doubling of computing power every two years or so, does not apply to batteries. However, there are gains in energy density, which has been estimated at doubling every 10 years or so. Over the last six decades, the maximum energy density of rechargeable batteries has increased tenfold.126 At this rate, it would be 2030 before the target of 500 Wh/kg will be reached (where range for batteries is comparable to range for gasoline engines), recognizing the gasoline engine will improve over that time as well.127 Not much can beat the energy density of liquid petroleum. 845

Like fusion power, fuel cells have been five years away from deployability for more than two decades. 861

Another interesting strategy is Dynamic Wireless Power Transfer. Charging coils embedded in the pavement transfer electricity to on-board batteries while the vehicle is in motion. This allows the battery to be much smaller since it is recharged more frequently. The most obvious initial application is for electric buses, which return to fixed points (bus stops) regularly. Over the longer term, one can imagine freeway lanes configured for charging, particularly on intercity highways, to solve much of the range issue. This is a potential source of revenue for highway agencies. While there are technology trials, this is still speculative, as installation would tend to be expensive, and no agency wants to undertake a widespread installation until there is a fleet ready to use (and pay for it), and few will want to depend on this without a network being in place. However it could ratchet up if a home wireless charging standard for EVs becomes standard, and so EVs already have the technology to be wirelessly recharged. It should be noted that this would flip two of the greatest weaknesses of EVs (range and charging time) into a strength compared with the Internal Combustion Engine since the range would be anywhere with wireless charging, and the time would be used for something else simultaneously. 863

Adam Boies writes:135 “emphasis on fuel efficiency in the light duty and heavy duty vehicle fleet is likely going to drive the weight of the vehicle segments in opposite directions. Light duty vehicles are likely to get lighter, especially as different ownership models allow for dedicated light duty vehicle fleets that focus on fuel efficiency for personal mobility. Heavy-duty vehicle fleet operators are likely to lobby for increased vehicle weight limits … in order to reduce the energy intensity of goods deliveries. The growing disparity in weight between the two vehicle classes may necessitate increased safety measures to reduce the severity of crashes between the disparate vehicle classes.” 901

Battery powered buses will likely win this competition, as the economies of scale with battery production for automobiles will have significant positive spillovers for buses. New technologies such as in-road wireless chargers, especially located at bus stops, provide the additional promise that batteries need not be too large (or heavy), as the bus can periodically sip electricity from the grid while boarding and alighting passengers. 962

Roads have historically been the principal form of movement, for humans or things. But their utility is being overshadowed by data sent over digital networks. There are two foundational issues at play in these dynamics.   The first has to do with the noun being transported. Nouns may be things in the form of physical matter that one can feel, smell or touch. Alternatively, nouns might merely be data (e.g., bytes).148   The second is the transport network. Sometimes in the form of physical roads (in the traditional physical notion, the corridors that separate buildings and connect places across space). Other times, data is transmitted across digital networks cables or radio waves. 1025

Societies have built roads, expanded roads, built neighborhoods, expanded neighborhoods. Transport planning has been consumed with finding the best ways to connect matter moving along physical networks. 1035

Skyping with video calling, or broadcasting live with Meerkat or Periscope). 1039

Google’s cars are map-dependent, operating where the roads have been mapped out in detail, so that they can compare what they see with what they expect to see158—a strategy with obvious strengths and weaknesses.159 1104

In Fall of 2015, the electric vehicle automaker Tesla remotely upgraded its most recent model year cars (about 50,000 vehicles) with “auto-pilot”, making them semi-autonomous (late Level 2, early Level 3).160 Elon Musk, the CEO of Tesla, says he expects fully autonomous vehicles within 3 years (i.e. by 2018).   David took a test ride with a Tesla owner running the vehicle in Autopilot. As countless internet videos attest, Teslas are able to function in hands-off mode some of the time. They use adaptive cruise control to follow the vehicle in front at a desired speed constrained by a fixed following distance and use lane markings to stay in lane. They change lanes automatically at the request of the driver (who must hit the turn signal).   As of Fall 2015, none of these functions can be safely performed in a Tesla running 1107

Teslas do not presently drive independently via a map from origin to destination the way Google’s test cars do. There is no obviously linkage between satellite navigation and mapping and the control function. Teslas appear to be map-independent, and controls are through on-vehicle sensors. They are an indicator of a future to come, but which has not yet arrived. 1125

We may get special AV lanes on highways as an interim step before all lanes on all highways are for AVs only, and before non-AV cars are prohibited. 1144

Delphi, an auto parts manufacturer spun-off from General Motors, drove an automated Audi 3,500 miles (5,600 km) cross-country in March of 2015, with hands-off control 99 percent of the time.163 In fact, Delphi’s forerunner (GM Subsidiary) Delco sponsored a similar trip in 1995 by Carnegie Mellon scientists, where the computer navigated 98.7% of the time.164 1147

The time to perfection is far from clear, but one day, soon-ish, you will awake, give a voice command to a car, and never again touch a steering wheel, gears, accelerator, or brakes (which won’t be available for your use anyway)— and so will everyone else. You will step into your car, tell it where to go, and not think about traffic. The window in front of you will be a heads up display giving you information and entertainment, while allowing you to see the road coming up. 1154

Today, many of the necessary features include lane-keeping, adaptive cruise control, and automated braking technologies are already standard on high-end cars, as is automated parking assistance. 1158

The Cadillac SuperCruise, which can be described as somewhere between Level 2 “combined function automation” and Level 3 “limited self-driving automation” is projected to be on the market as early as 2017 (its actual use will likely be on the relatively controlled environment of the freeway). The Tesla Autopilot, with similar capabilities, is already available.   To give a rough timeline, we anticipate Level 3 (“limited self-driving automation”) autonomous vehicles by 2020; then Level 4 to be available in 2025. Level 4 might be required in new US cars by 2030 and in all US cars by 2040. 1163

autonomous vehicles will go from their current status of essentially 0% market share to an end state of 100% of all new car sales (i.e. autonomous capability will be a requirement of new car purchases) by 2030. Furthermore, older human-driven vehicles will be phased out except for special purposes (car shows, races, parades) during the 2030s. Self-driving cars in specific contexts (e.g. freeways or isolated campuses) are expected enter the market before 2020. In other words, human drivers will eventually (around 2040) be prohibited on public roads most of the time, just as horses no longer gallop down our streets. 1172

Automated vehicles are probably already legal in most US states (New York requires hands on the wheel),167 so the burden of proof is on those who want to slow them down. Several states, Nevada, Florida, California, Michigan, Virginia, and the District of Columbia, have passed special enabling legislation enabling testing of fully autonomous vehicles on public roads. 1179

Safety. Autonomous vehicles, powered by sensors, software, cartography, and computers can build a real-time model of the dynamic world around them and react appropriately. Unlike human drivers, they seldom get distracted or tired, have almost instantaneous perception-reaction times, and know exactly how hard to brake or when to swerve.   Cars would be much safer without the “idiot” behind the wheel. AVs promise an “idiot savant” (i.e. a computer), with special skills for the routine boredom of driving. With full deployment, it is possible to plausibly imagine a reduction from tens of thousands to hundreds of deaths per year in the US.   Vehicle Form. Autonomous vehicles promise a Cambrian explosion of new vehicle forms. Evidence for this is already emerging. Google has proposed and built prototypes of a new, light, low speed neighborhood vehicle designed for slow speed (25 mph or 40 km/h) on campuses. The UK has four pilot programs starting. Singapore is testing similar vehicles.   This has important implications. For example, cars can be better designed for specific purposes, since, if they are rented on-demand or shared, they don’t need to be everything to their owner. 1199

Today there is a car-size arms race, people buy larger cars, which are perceived to be safer for the occupant even if more hazardous for those around them, and taller cars, which allow the driver to see in front of the car immediately in front of them. Both of these advantages are largely obviated with autonomous vehicles. The car-size arms race ends. 1211

The low mass of neighborhood and single-passenger vehicles will save energy and reduce pavement wear, but also cause less damage when it (inadvertently) hits something or someone. Combining the low mass with the lower likelihood of a crash at low speed will magnify its safety advantage for non-occupants in this environment, compared with faster, heavier vehicles, which privilege the safety of the vehicle occupants.   These savings will be passed on to consumers. Insurance companies will recognize the lower risks and lower rates. This will help drive adoption of autonomous vehicles. Alternatively, the auto-companies themselves may choose to accept liability for autonomous vehicles in autonomous mode, as some are already proposing.   Parking: Autonomous vehicles would save space on parking too. Cars can drop off passengers in front of destinations and go elsewhere to park as needed. Subsequently they can pick them up at origins. This requires reconfiguration of drop-off and pick-up areas to avoid large queues. Parking stalls can be narrower and parking decks shorter if people are not required to use them. Cars can be packed more tightly in such parking facilities. Further those facilities will be farther from the high value real estate locations. 1214

If skinny cars emerge, designed for one-passenger, or several passengers in tandem, enhanced by the stability provided by automation, lanes can be narrower still, or be shared with two such cars.   Thus, capacity at bottlenecks should increase, both in throughput per lane and the number of lanes per unit road width. These cars still need to go somewhere, so auto-mobility still requires some capacity on city streets as well as freeways, but ubiquitous adoption of autonomous vehicles would save space on parking and lane width.   Cars without people. Autonomous cars can drive without people at all. They can be used for pickup and delivery, in addition to the dead-heading from drop-off to parking, or from drop-off of one passenger to pick-up of another, or for recharging or refueling. All of this can increase total travel on the road.   Mobility for the Immobile. Automated cars will enhance mobility for children and people with disabilities. Parents, friends, and siblings need not shuttle children around; the vehicle can do that by itself (assuming increasingly protective parents would allow such). The child is securely identified with camera and biometrics, and parents can even monitor their child with an in-vehicle video camera—yielding an environment far more secure than the school buses and carpools children currently ride. 1229

Human travel will be much more point-to-point, with far fewer pick-up and drop-off passenger trips required, as those can be off-loaded to the vehicle without a driver. Deadheading autonomous vehicles, driving around without a passenger to pick up their next family member may become common, though logistics and shared vehicles can minimize the amount of this.   Costs. The capital costs for autonomous vehicles are likely to be higher than traditional cars, at least at first, until driver-facing technologies (like the steering wheel, brake and accelerator pedals, and so on) can be removed for cost savings, as the sensors and computers add some cost compared to existing systems. Those additional costs decline over time, as learning curves, paying off R&D, and mass production all lower expenses.   In contrast, fuel costs should be lower, as autonomous vehicles are likely to be more efficient, both due to less congestion and more optimized driving styles ranging from smoother acceleration to various hypermiling techniques like drafting to reduce drag.   Labor is a significant share of costs in transport, for vehicles such as taxis, buses, and trucks, which today require a driver. With automation that labor cost vanishes. We imagine a transitional phase where remote control drivers in a traffic center simultaneously monitor and manage multiple vehicles for situations when autonomous vehicles are not fully trusted. We expect those operators to be bored. The elimination of labor cost benefits taxis, buses, and trucks which had held higher costs relative to their competitors like driving alone and trains.   Delivery services with online purchasing will become even more cost-competitive compared to traditional retail. Transit will either be more cost effective than it is now, or be able to offer lower fares, or some combination of the two.   Right-of-Way Retrofit. To accommodate specialized low speed neighborhood or campus vehicles, most places will require retrofits to enable a connected network of low-speed routes. Retrofitting cities for transport has a long history as cities and transport technologies co-evolve. Cities, which had originally emerged with human and animal powered transport, were retrofitted first for streetcars, and then for the automobile, and in some larger cities for subways. We have also redesigned our taller buildings for escalators and elevators.   Some places where retrofits might be required and feasible include cities laid out and built before the automobile. Much of the street grid can be retrofitted (‘calmed’) to disallow high-speed traffic. Similarly, retrofits are technically feasible anywhere there is space to install a slow network in parallel with the existing fast network, for instance, with barrier separated lanes on wider suburban roads.   Vehicle diversity applies not only to a larger variety of motorized vehicles of various sizes, but also to a greater variety of transport using the existing streets, which today are highly segregated with cars (both moving and parked) dominating the street and pedestrians the sidewalk. Slow speed, light weight vehicles make ‘shared spaces’, which don’t differentiate between the road and the sidewalk much more palatable.   Roadspace Reallocation. It follows that if transport systems require reduced lane width and have adequate capacity, transport agencies can reduce paved area and still see higher throughput. Today, most roadspace is not used most of the time, but road agencies cannot just roll it up when it is not being used.   However, on freeways the space can be deployed more dynamically to increase either safety (by increasing spacing) or capacity (by reducing spacing), simultaneously adjusting speed and spacing accordingly. Dynamically reversible lanes are possible once humans are out of the loop.   On local streets, roadspace no longer required for motor vehicle movement can be reallocated to other uses (pedestrians, bicyclists, transit, parks and so on). But for purposes of reliability and safety, bikes, bus-rapid transit, and the newly… 1244

Our colleague Yingling Fan in a recent paper summarizes a number of these activities in the Word Cloud shown in Figure 7.4.171 Reading, talking, and watching are dominant categories. Eating and personal care are likely rising categories in people’s own AVs. With new heads-up displays (HUD) in vehicles we imagine new forms of information and entertainment (and advertising) designed for the windshield, projected on glass, but able to be seen through as well. Travelers in their own, customized, space without concern for the navigation task will not only be more productive (have higher utility than) drivers who need to pay attention, but also train passengers, or those who use Mobility-as-a-Service, who don’t own their mobile space, as illustrated in Figure 7.5.172 This will further increase people’s willingness to travel.   Status. Just as owning a car was once a class signifier in the US, and remains so elsewhere in the world, and as owning a particular model of car (like a Prius or a BMW) persists as a signifier, we can expect that during the transition period owning an autonomous car will be a class-signifier. It indicates at once that you are wealthy enough to own a new car, and technologically sophisticated enough to trust your life to it. While eventually we expect this to be uniform, early adopters will have very different economic and social characteristics from the population at large. During the long transition, those who cannot afford such cars may come to be vilified as the cause of crashes. 1295

Transport Network Companies such as Lyft and Uber compete with taxis. But with their added labor, such services are too expensive for most people for frequent mobility.173 In contrast, autonomous vehicles total costs will be significantly lower, making it feasible that larger numbers of people replace their personal car (which is parked 23 out of 24 hours) with one that comes on-demand. 1312

The US Virgin Islands collectively have between 10 and 20 auto fatalities annually. At an official USDOT value of statistical life of $9.1 million, that is at least $91M per year. In 11 years, the experiment would pay for itself if in fact it eliminates fatal crashes the way autonomous vehicles are expected to, leave aside any other potential benefits.   The advantages of an island are that it is a closed system, it can be fully mapped, and no one can drive on or off. A real island with real people would demonstrate how these interactions occur in use. 1325

Those physical things that were only periodically needed, were rented or borrowed (e.g., library books, fertilizer spreader, pickup truck, inflatable castle). Items privately owned became dated and often antiquated. Those items that were rented may have been run-down from use, unless the fleet or stuff received considerable turnover.   As physical objects (rather than virtual) one person’s use prevents someone else’s use. Still, most of the time, nobody was using the object. Cars, for instance, typically remain unused 23 out of 24 hours in the day. 1346

But big (and real-time) data creates marketable assets from under-used possessions. People still need physical things (those things comprised of atoms), but increasingly they demand virtual things (composed of bits, as described earlier). Either way, both are increasingly shared. Dubbed collaborative consumption, the basic idea is that things can be shared rather than individually owned (e.g., one rents hotel rooms and cars rather than buying condos and vehicles when on travel; it is now common to rent music, videos, and books).   Previously cars, taxis, and hotel rooms were rented from companies which could achieve large economies of scale. Now it is possible to rent couches and cars and rides from individuals with excess capacity. The degree to which economies of scale trump the network effects of distributed suppliers awaits to be seen. 1356

Like most automakers, BMW is entering the carsharing market with DriveNow. Ian Robertson with the company says “As a mobility provider, the BMW Group is not simply an automobile manufacturer.”184 BMW also combines carsharing with leases, so for instance, you can lease a small EV during the week and get access to a larger vehicle on the weekend.   The importance of carsharing is not as a replacement for rental cars, which are still standard in their traditional market of airports and auto replacement during servicing — though that may change as well. Carsharing also is not cost-effective as a replacement for daily commuting trips. However if you walk, bike, or take transit to work, it might be good to replace owning a car, or second car, for the occasional (say weekly) trips that are too far to practically walk or bike, and too inconvenient to take a transit system that serves downtown well and little else. In crowded urban areas where paying for parking near your home is a real financial burden, carsharing is more promising than most of America where parking is practically free.   The car-shedding question remains: how many households will surrender a second (or first) car for the occasional trip?185 Is the market thick enough that the likelihood of finding a car nearby is high enough that it is reliable enough to use? With Car2Go there is no guarantee there will be a car within walking distance. Efforts to rebalance the fleet can be costly. This is where other services (taxi, transport network companies, transit) come in as backups. This is also where autonomous vehicles can be important.   Nevertheless, people prefer not to think about every transaction. If they are charged per use, they use less. But they are less happy and more determined to get a car of their own to avoid transaction costs. Cars of course have costs of their own, but they are less frequent and less obvious. If the charges are invisible though, people may not think about them. Just as we went from terminals and mainframes to personal computers, and internet cafes to internet at home, we went from trains and transit to private transport once we could afford it. The cost savings will have to be considerable for most people to want to go back. But habits are easier to form in the young. An urban college student who joins Car2Go may keep it after they graduate while they remain city-bound. 1389

‘ridesharing’ is a warmer and fuzzier name for modern taxi services.188 The terminology for this service is still in flux, sometimes the terms ‘ridehailing’ or ‘ridesourcing’ are used rather than ‘ridesharing’ to cool and de-fuzzify it.   You might have thought ridesharing was the same as carpooling. And it is, if you think of modern ridesharing drivers as your friends giving you a lift (or in the name of one company a Lyft), not for money, but for a voluntary donation or paying for half the costs, like the carpooling service and app Carma enables. 1420

These social dynamics matter to services like Lyft. In contrast with traditional taxis, the passenger sits shotgun (in the front row passenger seat), and is expected to have a conversation with the driver (which happens in some taxis, though not always). Anecdotally, it appears people who drive for Lyft are more likely to be (though not universally) American citizens or long-term residents, and since they own their own car, less likely to be poor, recently landed immigrants who comprise the taxi drivers in many cities.   Lyft is in many ways simply an app with a back-end (rather, ‘cloud-based’) dispatch service. 1434

The competition from the new entrants has driven taxi companies to step up their game, a number of the services listed are better interfaces to traditional taxi. Drivers are already simultaneously on multiple networks, so the expected pickup time doesn’t vary much from one app to another. Waze, a subsidiary of Google, is testing a true peer-to-peer, real-time, no payment ride-sharing service. Shuddle, KangaDo, and HopSkipDrive aimed to be the “Uber for kids.”194 (Though Shuddle is now deceased).195 Lift Hero targets seniors. SheTaxis and Chariot for Women aim to be an “Uber for Women.”196 1464

At the personal level, The “Quantified Self” suggests that the outputs of many new sensors will be fed back to the individual traveler. Yingling Fan of the University of Minnesota suggests that information about travel can lead to behavioral interventions.210 She identifies three stages: awareness: informing the traveler of their environmental impacts, motivation: describing the benefits of change, and action: providing the tools to change behavior (e.g. making it easy to rent a bike or take transit). Health apps of various kinds are an early version of this, showing the user the number of steps taken so far, or modes that they used. 1556

the direction is clear: the world is in the process of transforming from one of ignorance and static plans to one of planning (and re-planning) travel on the fly with confidence. Plans are more dynamic. With more confidence, people can freely venture farther afield, away from their familiar haunts, in search of the novel. Agencies can now better monitor conditions and make better short-term predictions. Congestion and late buses will be less of a surprise. Cumulatively, increased—and shared—information is mobilizing people in unforeseen ways. 1563

with more widespread use of information technologies, ownership and possession are no longer necessary prerequisites for on-demand mobility. Widely called the ‘sharing economy’ or ‘collaborative consumption,’ its manifestations in transport: carsharing and ridesharing are viable if not widespread. Couple these technologies with autonomous vehicles discussed in the previous chapter, and one arrives at what we term ‘cloud commuting’ — the convergence of ridesharing, carsharing, and autonomous vehicles.211   More formally, this range of options can be termed Mobility-as-a-Service (MaaS). While nascent today, clearly big players are placing big bets that this will be a big change in how people travel. It is this which explains Uber’s $62.5 Billion valuation.212   A vehicle from a giant pool of autonomous cars operated by organizations based ‘in the cloud’ would be dispatched to a customer on-demand and in short order, and then would deliver the customer to her destination (be it work or otherwise) before moving on to the next customer. Even more efficiently, it might pick-up or drop-off some additional passengers along the way and may offer customer specific features.213 214   We quickly run down implications as MaaS emerges.   Smaller, more modern fleet. The customer benefits by not tying up her capital in vehicles, nor having to worry about maintaining or fueling vehicles. The fleet is used more efficiently, each vehicle would operate at least 2 times (and as much as 10 times) more distance per year than current vehicles, so the fleet would turnover faster and stay more modern.   Fewer vehicles overall would be needed at a given time. It is likely customers would need to pay for this service either as a subscription or a per-use basis. Advertising might offset some costs, but probably not cover them. This includes both advertising to the customer in the car and using the car as a moving billboard.215 However retail stores (if they survive) might subsidize transport, as might employers, as benefits for customers or staff.   Coverage, logistics. Like traditional fixed-route transit, MaaS will function better in urban areas than rural areas. Response time will be shorter (potentially faster than getting a parked car); size and variety of the vehicle pool will be greater; parking in high value areas becomes less troublesome. MaaS will also fit better for nonwork rather than work trips, as the regularity of work increases the value of either vehicle ownership or regularly using micro- or macro-transit versus renting by the trip.   Autonomy solves the localness problem facing existing carsharing services, since the cars come to you. Like current bikesharing systems, there would need to be load balancing features, so the cars were pre-dispatched to areas of anticipated demand, and maybe coordinated carpooling at peak times.   Costs. Automation also structurally transforms the labor costs of ridesharing services.216 It allows a variety of vehicles to serve customers, rather than a single, literally least common denominator model. An interesting aspect of this from the perspective of travel demand is that with MaaS, people will probably pay by the trip, either directly, or through choosing the right plan of service roughly proportional to use. While the average cost of car ownership, now a quite significant share of household expenses, goes to zero for those who join this system, the out-of-pocket marginal cost per trip rises quite significantly. The implication is fewer trips assuming people give up on vehicle ownership. People paying by the minute or the mile will want to reduce trip distances.   Electrification. Autonomous and shared vehicles will interact with electrification. A rental service of self-driving autonomous vehicles, that are ordered on-demand may provide you a fully charged electric vehicle for your trip. Much like the Pony Express, which swapped horses rather than requiring riders to wait for their own horse to rest, the service may provide a replacement vehicle mid-trip rather than requiring you to… 1571

Nationally 35% of the US population are renters and 14% are apartment dwellers.221 1641

Transit’s ascent was enabled by the electric streetcar, first deployed in Richmond, Virginia in 1887 by Frank Sprague. It’s widespread distribution was as a product of electricity harnessed by Thomas Edison, Nikolai Tesla, George Westinghouse and others, and the modern railroad, developed beginning in 1825 with George Stephenson’s steam-powered Stockton and Darlington Railway. The transport climbers in the US came upon false summit of Mt. Transit in the 1920s; the real one was discovered two decades later with transit’s peak during World War II when oil and rubber were rationed, crimping the automobile’s use, shown in Figure 9.1.222 1649

Most future of technology discussions thus far have focused on the role of the Internet or energy. Advances in vehicle technology forms a perfect third.   Many dimensions differentiate transport modes.224 Key elements include the degree of personal control of personal space,225 freedom and flexibility of schedule, and proximity of the vehicle boarding and alighting location to actual origin or destination (convenience). In this chapter we differentiate macro-transit from micro-transit. 1663

high development intensity (to be successful) and high frequency of service with high capacity to invoke high ridership to pay for them. When these systems are appropriately placed within the urban fabric, they do wonders for mobility. These systems will retain their prominent role in large central cities.   But many questions and challenges also surround macro-transit systems—issues which vary for existing versus future systems—which differ from system extensions. Rail transit is rigid. Recognizing that rail can help influence development patterns, fixed rail’s lack of flexibility limits its ability to adapt to uncertain futures. In the absence of new cost-saving tunneling technologies and changes to environmental and planning review regulations, rail will not have the ability to quickly and suitably address transport problems in emerging corridors.   To some advocates, inflexibility is an asset rather than a liability. 1675

In short, public expenditure per transit user far exceeds public expenditure per highway user, and has failed to significantly reverse long-term trends.   Fixed-rail transit is far less flexible than bus (or micro and traditional bus transit, MaaS, or the automobile) and thus far less attractive when not traveling to downtown or other high demand locations. The key decision is whether to build 1692

Considering lifecycle costs (including fuel/energy production, infrastructure, maintenance, manufacturing and operation), e-bikes are estimated to be 12 times more cost-effective than buses, 7.2 times more cost-effective than urban rail systems, and 13.2 times more cost-effective than cars.300 Improvements in battery technology and renewable energy sources can only enhance these numbers. 2314

The e-bike has the potential replace everyday trips made in cities and metropolitan regions across Europe, even when hilly or windy. Yet, such advantages will only materialize if the latent demand for e-cycling is addressed via infrastructural investments with respect to safety and security.301 2320

one point is well founded: roads are overbuilt for today with declining per capita travel, and way overbuilt for tomorrow with autonomous cars making more efficient use of capacity. Travel patterns in the US do not warrant more net road pavement. 2342

for every lane mile added, more than a lane mile should be decommissioned or reused elsewhere. 2346

Accelerating the End of Traffic via Pricing   By just traveling around most communities, even a naive eye can detect three characteristics endemic in most urban transport systems:   Roads deteriorate.303 There are both mundane reminders—the pothole you hit every morning—and tragic ones like bridges that collapse. There’s more to daily travel than just getting to work. People shop, go to services, visit friends and the sort. Non-work travel has temporal flexibility but most of it happens during peak periods because travel appears free (i.e., it looks like it is un(der)priced). Your car travel has affects society as a whole. It pollutes the air, creates parking problems, increases crash risk—what economists call negative externalities. But these side effects are rarely paid for by the traveler (i.e., drivers don’t pay for their full cost).   In countries with advanced economies that have ubiquitous vehicles and networks, there is a fundamental disconnect between allocation and funding. The link between who uses what infrastructure at what time and who pays for that use is broken. 2358

Still, states in the US can and should raise the gas tax prior to using property taxes or general revenue to pay for roads. It is something that can (and should) be done immediately. This should be coupled with assurances that the money gets spent on maintaining the valuable parts of the existing system, not building wasteful new facilities. It will have the effect of raising the cost of automobile travel (and lowering other taxes), and thus deterring total travel by a small amount.   Today combined gas tax, vehicle license fees, and existing tolls cover about half the direct costs of roads—and the other half comes from General Revenue—states could, as a first step, double the federal and state gas tax rate (from approximately $0.50 today to $1.00/gallon (~$0.25/liter)) and replace general revenue sources with user fees.308   Furthermore, insurance is also a fixed cost that people don’t think about on a per mile basis. Pay-as-you-drive insurance fixes that. Just $0.60/gallon (~$0.15/liter) at 20 mpg (11.75 liter/100 km)) on top of the price of gas would go a long way to further reduce travel. This imposes no net additional cost on average; it just changes in the basis of the cost drivers already pay.309   Covering other costs, such as paying for the damage that pollution costs (including greenhouse gases) would require an increase of roughly a $0.50/gallon (~$0.125/liter) in the gas tax.310 This is a much more complicated step in the US. It asks the gas tax to be something more than just a highway user fee whose revenue is fully spent on roads. What goes unrealized is that this money could offset other taxes and be revenue neutral.   Electrification. The onset of electrification or other alternative fuels prompts discussion of the inevitable: moving away from the gas tax altogether. Outstanding questions are when and whether states and the federal government switch to something better like direct road pricing, or something worse, like funding from general revenue. 2385

Expanding an existing per mile charge over time, from an initial base of EVs, and later all new cars and trucks, would be much easier than establishing it on all vehicles all at once.   All traffic congestion is unnecessary. The technologies we discussed thus far— particularly vehicle automation—help increase capacity and efficiency. There can be more vehicles on the networks and ride sharing helps increase the efficiency of vehicles on networks. Other trends, particularly the use of information technology as a substitute for travel for shopping and work purposes will reduce the demand for travel.   But nothing can compare to the potential of road pricing to end traffic congestion as we know it. 2412

Price is not itself a good, but rather a technology that provides information about the value at which people will exchange one good or service for another.312 2421

It would be a shame to see public policy fail to enter the modern era, where prices vary in time and place, to reflect the real costs of travel. Most other goods have prices that vary with demand. When demand is up for gasoline, the prices rise. When supply rises, prices fall. The price matches consumer willingness to pay with supplier willingness to accept. Getting on-board with this concept sooner rather than later can simultaneously solve the problem of funding and allocation, reducing if not eliminating congestion.   When travelers drive an untolled road in the US, they still have a price to pay: their time and the monetary costs of operating an automobile, including gas taxes. But such prices contain little information, and do not represent the costs they impose on the system (their marginal costs). The cost of fuel does not reflect the cost of traveling during the peak (except to the extent that fuel consumption is higher in stop-and-go traffic), or the cost of traveling on costly or critical facilities. The price travelers face is neither real-time nor real-space, but rather an abstracted expectation of some fraction of average costs.   Money can be transferred and store value, time cannot. Thus congestion delay is a loss. If instead of charging time by having travelers waiting in a queue, the road agency charged drivers a congestion toll equivalent to the delay they imposed on others, that loss could be eliminated.   Tolls create revenue. Road owners can take some of that money and use it to operate and maintain existing infrastructure. Tolls may create a surplus. That surplus can be returned to the general public (for instance, through lowering some other tax or providing an annual road dividend — make the rebate as progressive as you like, it doesn’t matter from a transport perspective). Surprising as it may seem, society as a whole would be better off. 2423

To date, the public is skeptical when they are unfamiliar with road pricing, but supportive after seeing it in action. Returning congestion pricing revenue back to the neighborhoods where it was generated may help.313 Phasing pricing in one Electric Vehicle at a time seems an obvious strategy. 2440

HOT Lanes are compatible with road pricing systems that do not entirely eliminate congestion, as they provide higher reliability (just as FedEx offers alternative rates for same-day, overnight, and two-day delivery).315   HOT Lanes will also be important because they are likely to be the first roads to be entirely automated. Given their isolation from other lanes and the premium price, they can be automated much sooner than other roads, which will continue to serve mixed human and automated traffic for at least another decade past the onset of select lanes for automated cars. 2447

In the case of dynamic tolls they are intended to ensure the toll is high enough to prevent congestion.316 However with the dynamic toll, travelers don’t know the toll until they are already on the freeway, about to decide between using the priced lane or not. Almost everywhere else, the price on a road is guaranteed ($0) with variable travel time.   The driver faces either uncertainty on price with certainty on time, or certainty on price and uncertainty on time. Ideally, there should be an option to have certainty about both of these.   First-come, first-served is not the only way to allocate space. Nice restaurants don’t allocate table space that way during prime time. Parking structures do not. Theaters do not. Airlines do not. Private race tracks do not. Public roads need not.   At its most primitive level, for instance, every day the commuter pre-purchases a ticket (electronically, on a smartphone app or over the web, or via an in-vehicle communication system) to use a particular road segment (for instance between exit 400 and exit 401) during a particular time slot (say between 7:45 and 8:00). The ticket cost is known in advance before departure, like a plane ticket. The road agency would only sell as many tickets as the road would accommodate (without congestion) at that period. The ticket would be validated electronically through some form of Electronic Toll Collection.   Roads are unlike airports with spacious waiting areas. Travelers might arrive with their vessels at 7:44 or 8:01; but the road agency does not force the car onto the shoulders. More likely, the agency could charge a penalty which increases with deviation from the purchased window. So if the charge were $2, there might be a $0.10/minute surcharge added for each minute early or late the traveler was.   If the system were deployed universally, congestion would be a rarer occurrence.317 Furthermore, the system would know whether the traveler or the agency was the cause of the earliness or lateness. If there were non-recurring congestion, the agency might waive the penalty. 2457

But travelers don’t want to map out their route every day. To simplify, the agency could just sell a ticket allowing travelers to be ‘on the roads’ (as opposed to being on a specific road), and let individual travelers sort out the best path. The losses from not micro-managing prices spatially are relatively small, compared to the gains from spreading traffic out by time of day. Traffic information providers like Waze, TomTom, and others will help advise travelers, or their autonomous vehicles directly, what routes to take.   In this case, the traveler pre-purchases a ticket to use any metropolitan area road between 7:00 and 7:30 am. The total number of passes is limited by system capacity. If the purchase is made far enough in advance the price is lower then if the ticket were purchased just-in-time. But few people want to plan their schedule that far in advance, or log-in daily spending even 5 minutes to buy tickets for a 20 minute trip.   Here the road agency managing the system can be a little bit more clever. They could sell various types of season passes (just like transit agencies). A traveler might buy an unlimited use pass for a premium, but there would be a limited number sold to residents in each zone. Or they could buy a more limited use pass at a lower price. And of course, travelers would buy these as recurring subscriptions, billed to a credit or debit card account. Like utilities, most people would just pay their bill, but some travelers will respond to incentives at the margins.   People without passes could take their chances with same-day tickets which might be more expensive when traffic is on the edge of congestion, or cheap if traffic is low that day. Once properly set up, these passes replace existing revenue sources for the agency.   How should the road allocate these passes? Clearly it should not just give them away. But setting a fixed price and selling them does not real allow discovery of demand patterns. Here auctions might be appropriate. For instance, the passes would be available at a posted price (‘buy-it-now’), but the agency would also accept lower bids. Suppose there were 100 passes, there would be a bidding period, and at the end of the period, the top 100 bids would win and the price would be set at the willingness to pay of the 100th bidder. There are many variations on auctions (what we described is referred to as a Dutch Auction). Each have different advantages for buyers or sellers in terms of maximizing revenue or price discovery or fairness. Certainly there are trade-offs between efficiency and equity, and some users will be priced off the roads — if they weren’t, what would be the point? There will also be some uncertainty if passes are auctioned, especially as price discovery takes place. The degree to which this is a problem or a feature remains to be seen. We believe it can all be made to work, as other market goods do. Concerns about equity can be ameliorated by giving funds or transportation vouchers to people with low income. 2478

With institutional reforms, reconfiguring state and local DOTs as public utilities rather than departments of government, the logic the public applies to roads will change, from one of a public service paid by the pot of general revenue to a fee-for-service proposition paid for by direct user charges.   Many traditional utilities share with transport systems the characteristic of having a networked structure. Most, if not all, of these utilities are operated on the basis of payment-for-use. Utility pricing varies regionally. Some locales vary prices by time of day, and users often have the option of choosing different rate plans. Utilities can manage demand by altering infrastructure, repackaging services, substituting technologies, and changing the price of service.319   Australia and New Zealand are demonstrating that it is possible to transfer the utility model of governance to road transport. 2505

subject to rate regulation, and implements a more direct, user-pays system of financing. While planning and scope of service decision will remain political, the utility model could depoliticize management of the existing transport system. One expects from experience with other utilities, toll roads, and road concessions in other countries that it would be politically necessary to have some public guarantee of an upper bound on the rates a road utility could charge, as provided by a regulatory agency. The risk is that an upper bound on revenue would be too tight, resulting in financial losses, as occurred in the then private mass transit sector throughout in the US in the early to mid 20th century. Still, public utilities have a “mean level of trust” of 42%320, which is much higher than the trust in the federal government, hovering in the 20% range in good, peaceful years.321 Interestingly, private utilities may provide better environmental outcomes, as they are easier to regulate than public agencies.322 2514

people, most of whom don’t think about transport finance much, assume that gas taxes go to general revenue — which is true in many countries, but not in most states or the federal government.323 While marketing and education campaigns would help, there are fundamental issues of trust. This is an institutional problem, which can be rectified by separation of roads from the executive branch into a public utility. 2525

We argue here that congestion exists, governments should price roads to encourage use in the off-peak and discourage use in the peak. The revenue obtained should first and foremost be used to operate and maintain existing roads. Furthermore, it should largely replace existing funding sources (fuel taxes, vehicle taxes, property taxes). Surpluses should then be returned to taxpayers.   Prices need to be systematic, not just on specific routes, to maximize system efficiency. Random sets of underutilized toll roads fail to advance this aim because ‘free’ roads remain congested. Pollution and noise and crash risk all need their own externality charges. This will collectively reduce the vast waste in existing system, and turn roads into a highly efficient freely flowing system, with cars incentivized to carry multiple passengers, and travelers motivated to travel when it is less congested. 2545

All of this is likely to be best implemented by changing how roads (and transit) are governed. A logical first step is to implement pricing on vehicles that do not now pay the full gas tax. Continuing to roll out HOT Lane Networks will accelerate the adoption of automated vehicles, by providing a network that can be transitioned rapidly into an all-automated network where vehicles will find a more predictable environment and capacity and throughput increased significantly. 2552

Vehicle travel in fully industrialized countries is falling, slowing, or stagnant.328 Per-capita vehicle travel in the US is roughly where it was in the late 1990s. And vehicle miles traveled, the number of miles that cars move, is roughly where it was in the mid 2000s. The significant change is that these trends follow 90 years of steady, almost uniform increases in the amount of automobile traffic. Barring a few exceptions owing to economic downturns or energy shocks, vehicle miles traveled increased almost every year in almost every setting for an entire century! The automobile regime, in its current form, is demonstrating considerable signs of instability. 2558

When we ask “What Killed America’s Traffic?,” we identified some of the important ones, which include the price of fuel, the declining workforce, changing driver license regulations, telework, online shopping, and virtual connectivity with friends.   These last three reasons for traveling less by car (and overall) are due to information and communications technologies (ICT) substituting for travel. They are not mainstream transport explanations. Varying demographic sectors use ICT in different amounts. Just as your parents or grandparents once did, and may still, receive a physical issue of the newspaper while you read online, your children are more likely to be early adopters of future technologies than an older you, your parents, and grandparents. And the habits formed while young likely persist over time. 2565

Like it or not, after six decades of quiescence in the automotive sector, vehicle automation is coming. Self-parking cars are already here, self-driving cars are in test-mode on real streets in mixed traffic, and the auto industry predicts mainstream use on roadways by 2020. Big changes are close enough in our horizon that we can not only see it, we can smell it. Admittedly one cannot smell tailpipe 2591

The process of decommissioning the last human-driven car335 will be a long evolutionary one, but probably will not happen prior to 2040. Before that though, HOT Lane Networks will be converted to automated-only operation. 2600

Daily Travel? Taken to an extreme, these conditions suggest a future where travel—a daily 1 – 2 hour set of chores of getting to things and having things come to us—might be be a thing of the past. Driving to work five days a week and driving to the big box store for detergent are both disappearing. The Amazon Dash button336 demonstrates how we might take care of some of this. Parents will soon be able to order a self-driving car to take their children to soccer practice. Relying on descendants of apps like Skype and FaceTime and Google Hangouts, workers will meet colleagues periodically at both offices and random third places. 2603

While metropolitan travel might drop, absent war or economic collapse — both quite real possibilities — international travel will continue to rise for decades. The consequences of that on the environment depend on progress in the aviation sector, particularly the use of biofuels.   Demise of Traditional Modal Warfare? New vehicles possibly portend the end of modal warfare as is currently conceived. Cambrian explosions of new and attractive combinations of modal travel will mitigate the car versus bus and car versus bike strife that have riddled discussions. Transit and cycling advocates continue to lambast car-oriented planning and policy priorities. The antagonism between the two draws from a great struggle that has been playing out in the twentieth century between Mass Motorization and Mass Transit.337 It is a conflict that continues to this day and has spawned a morality play in the culture wars. While transit and cars mostly serve different markets, at the margins they compete for users, roadspace, funding, and the hearts and minds of travelers. They are competing on old turf though.   While limited resource issues still suggest a zero-sum game, new modes and new fusions of existing modes will change the calculus. Transit advocates, fortunately, can now stop trying to put the (transit) genie back in the bottle because the bottle itself has now changed radically. Given the demise of modal warfare, more reliable transport services will form around the passenger rather than the facility or vehicle. On the other hand, the battles between the new modes could be quite significant, as we see with Uber’s largely illegal invasion of cities and the varying public sector responses, from acquiescence to arresting drivers.   ————————   In ‘the more of the same’ category, extrapolation of historical trends gives more travel. Generally as the cost of travel declines, travel increases.   Value of time. Automation changes the value of time. Today’s cars require active driving with hands on the wheel and eyes looking forward, periodically checking the rear-view mirrors. Like transit today, tomorrow’s cars allow the passenger to pursue other activities. What this means is you may be less concerned with a few extra minutes in motion, since you are able to do something more pleasurable than watching traffic (though as a Transport Planners 2612

If you read or watch or type or listen or talk or shave or apply make-up or eat or drink, (far too much of which happens now while driving) you can do so without concerning yourself about exactly what your car and its neighbors are doing. You would still prefer not to be in motion, but not by nearly as much as today.     Mobility-as-a-Service. Autonomous cars make the so-called new mobility options most useful in cities; they may be more useful in less dense suburbs than transit is today. Instead of owning a car, renting on demand is more viable. The right-sized car can in principle be summoned at any time. Instead of paying a fixed cost of ownership once (independent of use), and a variable cost that includes only fuel and time, imagine an alternative world where the cost of car use pays for the fixed cost of ownership on a per trip basis. If a driver is paying by the minute when the car is used, instead of paying for a car loan or lease by the month, the incentive structure the driver faces changes. This would significantly raise the out-of-pocket costs, thereby discouraging driving. It also makes driving better and less frustrating as there will be fewer cars on the road. It might also lower the total cost of transport, since individuals would no longer have so much capital tied up in vehicles, and would drive more efficient cars, less often. This is independent of, and multiplicative with, any reductions in vehicle use that could arise with increased ride-sharing enabled by logging your planned trips in advance. This counters the historical trends, and argues travel will be less frequent and more thoughtful. The daily pattern of transit for routine trips and MaaS for special trips becomes feasible.338   Land use effects. We identified two possible land use effects. Increasingly driverless cars will make it easier to drive by reducing the cognitive burden on the driver. An initial effect, assuming people continue to own their cars, is the ‘out’ scenario. People would travel farther, to places they are less familiar with, and move to places farther from their place of work. They would thus be able to get more real estate for the dollar. Today’s commuter rail passengers travel farther (and longer) than auto users, and autonomous vehicles, where the passenger can do something else while traveling are more like commuter rails than are today’s cars. Such cars can deposit drivers in front of buildings and park themselves, reducing the amount of time that drivers spend parking and accessing and egressing their cars, which would naturally lead to longer distances. Autonomous vehicles are likely to be safe at higher speeds, since humans won’t be driving, which will also lead to longer distances in the same travel time. They expand mobility for those who are now restricted (the young, the disabled, and so on). But electrification will likely affect perceptions of accessibility and land use effects.339   The other scenario—’up’—depends on the success of Mobility-as-a-Service within cities, and will lead to urban intensification as city-dwellers shed their cars and obtain mobility on demand from MaaS providers and micro-and macro-transit systems.   Vehicle fleets. Obtaining better capital utilization out of the surface transport fleet through MaaS will reduce the lifespan of cars by using fewer vehicles more intensively, and wearing them out sooner. 2634

As technology continues to advance with greater rapidity, this becomes increasingly important. The difference between a 2030 and 2020 model car likely will be far greater than the difference seen between any decade since 1920 and 1910.   Perceptions of cities. Hybrid-electric and electric vehicles will be more common, if not the only vehicles allowed on city streets. The smell and sound of the city will change, 2663

There is already emerging evidence that they produce less overall carbon emissions than lower density areas with greater distances and fewer shared walls. But they might soon be as good (if not better) for the individuals residing in them, with less overall pollution per capita and perhaps lower pollution intake than suburban areas. (The suburbs will fight back with solar power though).   Outside of cities, there will be less change. Mobility-as-a-Service is less practical the farther one is from other people, since dispatching the car takes time. Because of great distances, speeds will be higher. Thus, the privately owned automobile will remain important for rural, small town, and suburban markets that cannot justify the fixed cost of high capacity transit services nor have a thick enough market to enable vehicles on-demand within a timeframe customers will accept. However that auto or light truck will be automated, and will eventually be electric as well. 2670

Key aspects of the future will happen on its own, regardless of policy intervention; other dimensions can or will be accelerated by policy intervention. By 2050 an estimated two thirds of the global population will live in cities (10 percent of the world’s population will live in ‘mega-cities,’ larger than 10 million).341 Urban personal transport will be more multi-modal. The appropriate mode, as always will depend on the trip. But technology will change which modes are appropriate for which trips. We imagine different scenarios in different places.   For the shortest trips, within and between buildings, on campuses, and in neighborhoods, walking will remain dominant.342 Escalators and elevators will remain as alternatives to staircases, but moving sidewalks are likely to be rare, limited to special environments like airports. Standard bicycles have stood the test of time for a century; being relatively cheap and environmentally efficient, their overall stock may rise for trips in the 1-5 km range; newer and modified forms of electric bikes will rival more traditional forms of transport for longer distances.   But the bulk of urban personal transport vehicles using ‘everyday streets’ will likely be comprised of small ultra-light, smart, battery-based vehicles that would be hired (not privately owned), both MaaS transport for the fully customized point-to-point trip and micro-transit for less cost, semi-customized shared rides. Cars that drive themselves change how people use them.   These combinations will most profoundly affect medium distance trips, possibly feeding traffic to fixed route systems. Mixing vehicles of different sizes and desired speeds will always remain a challenge; mixing with automation raises the stakes. Though in many ways this is transitional. Humans will eventually be fully removed from the driving loop, when additional controls can ensure different types of vehicles mix safely.   These smaller battery powered vehicles—along with walking and cycling (electric bikes or other)—would seamlessly integrate with macro-transit: large scale, fixed route, high-capacity public transport systems. Higher volume mass transport will remain important, particularly in existing and emerging high density markets. Today’s largest cities support busways and rail transit, and those will remain in markets with heavy demand. Between cities, rail, intercity bus, and airplanes will continue to provide travel options.   Inside dense cities and even major suburban corridors where the geometry is favorable, the driverless bus will compete with the driverless car on price, assuming pricing is fairly representative of service cost. MaaS transport finds a middle ground here. Flexibility is aided by designing networks and land use patterns that can be served by transit as well as MaaS transport, rather than one that is served exclusively by autonomous vehicles.   Modal options will function, if not seamlessly, with fewer seams than today. Payment and access would be nearly instantaneous via smart phones, watches, or biometrics. The overall system will more closely integrate the digital with physical transport. Software will intelligently work out solutions in real-time. It will be safer as evidenced by fewer and less severe crashes. Yet, as the system is tuned more toward efficiency and away from hyper-safety, it is likely to be perceived as more frightening (for motorists and non-motorist users alike).   In contrast, the suburban, exurban, small town, and rural transportation landscape will look more familiar, with private, but now autonomous cars, shuttling people about. Traffic lights will be slowly dimmed. There may be less shuttling as going to work and going shopping diminish in frequency, but these are slow, almost imperceptible changes, until one-day we wake up, and realize the world is different from how it once was.   Cumulatively, auto-mobility will be redeemed from the many externalities it causes today (death, pollution, noise). Cars will continue to take more space and require more energy than… 2685

Post-script 1: What Happened to Traffic? Dateline: September 2030   Remember traffic? It was only 15 years ago that residents across the globe complained about getting stuck in traffic. Normal ‘around town’ errands were ensnared in snarled intersections. Remember when it sometimes took three times longer to cross town than it ‘should have?’   But even back then—and largely unnoticed by the naked eye—new transport patterns were taking root. The significance of these patterns, however, failed to be realized. Car traffic peaked around the year 2000 and has fallen fairly steadily ever since. A few keen observers picked this up, but many transport agencies were in denial at the time. Back then, analysts offered two possible futures:   • The first forecast that per capita vehicle travel would pick up on its upward path based on the previous century—a forecast reminiscent of the proverbial ostrich with its sand-encased head.   • A second acknowledged that per capita vehicle travel remained flat, but one where overall traffic grew with population increases. Major transport providers asserted the need for new and wider roads, despite falling traffic overall. More capacity demanded new resources, requiring additional revenues. Many claimed that though private vehicle use was falling across the developed world, on average, it wasn’t falling in their jurisdiction. And, there were still unsolved problems that don’t go away just because travel isn’t increasing.   Most public officials failed to anticipate what actually happened. This third future was one where per capita vehicle travel fell significantly. Even acknowledging the initial dip in travel (at least in the US), some attributed it to gas prices and the “Little Depression” of the second Bush Presidency. What went largely unrealized was that travel began dropping before the economy tanked. 2742

Today, half-days on Wednesdays are common for many office workers, with only Tuesdays, Wednesday, and Thursdays as interactive collaboration days. The “flipped” office, where people were expected to do “paperwork” at home on their own computers, and only show up for collaborative work and meetings is now standard. Office buildings were reconfigured to be mostly meeting space, with some interim work spaces that became more like cafes or pubs than the cubicles satirized in the comic strip ‘Dilbert’ and the movie ‘Office Space’. But we soon discovered they were overbuilt. After the commercial real estate bubble popped, many office buildings were torn down or adapted into living space, others still sit vacant. With less daily office grind, there were fewer daily office trips for workers. 2767

Remember the long-term career? On average, our parents and grand-parents stayed in the same industry (if not the same firm) from high school or college until age 65 or so. Now in 2030, half the population doesn’t enter the regular workforce until age 30. The other half leaves well before age 60. They work three different ‘full-time’ jobs over the course of a year. Individual firms used to cultivate employees, paying for training. Now a 10-year series of unpaid (or low-wage) internships while simultaneously attending school online or part-time and engaging other pursuits is the norm. Over time, the workforce has continued its drop as technology-enabled worker productivity reduced the value of older workers. With fewer people working, there were fewer work trips. Remember shopping? Physically traveling to a store used to be the norm for everything. Then came catalogs. Catalogs morphed on the Internet (remember the Amazon.com boom?). Acquiring things now is now clearly a combination of the occasional physical trip to the store (likely for nostalgia-sake or simply entertainment), letting ‘bots and virtual agents do the work for you, or the mainstream ordering online. With less window shopping and a decline in advertising, the culture became less materialistic. “Going shopping” continues its long 30 year drop, and consumption of material goods has declined with it. Internet Ad-blockers, Netflix, and other time-shifting technologies diminished advertising in people’s lives — though ads did not disappear, many companies now want to coat road surfaces with new digital ad-delivery technology – a proposal that is splitting the Coalition Government in a few states, and desperate road agencies are looking favorably on sponsored roads. Decentralized manufacturing, including 3-D printing on-demand, has begun to replace long-distance shipping of many goods, which can now be made locally. With less demand for shopping, travel to stores dropped.   Remember owning a car? Owning your own Pontiac Firebird (or better yet, a Corvette) meant having “made it” before the turn of the century, at least in the US. Soon after, entrepreneurs launched car-sharing programs, where it was possible for many people, especially in cities, to let go of ownership of their cars. Instead of having a high cost of owning a car but a very low cost per trip, now there is a higher cost per trip, making people think twice, and drive less. The taxi—the ultimate in shared vehicles—was transformed so that everyone with a car (and under the age of 30) could become a taxi driver sometimes. This too has begun to fade with the rise of driverless cars, many operated as part of a large fleet. With fewer trips by car, traffic dropped even more.   Remember gas stations? While they haven’t entirely disappeared, they are getting scarce, aren’t they? We used to pour liquid petroleum into the tanks of our cars, and burn gasoline for energy, creating smog and greenhouse gases as unwanted byproducts. Today all new cars are electric, and the gas guzzlers are being removed from the roads. It will take decades for the environment and climate to recover from the more than a century of pollution.   Remember how transit sucked? Most areas built before 1950 in the US (now housing roughly one-third of the US population) have seen significantly improved transit service, with real-time information about arrivals and schedules. With more urban residents and fewer cars, the demand for transit picked up. Agencies were able to run more buses with the uptick in demand, further encouraging bus use and people abandoning their cars, and now bus-powered urban transit agencies (some of which have a few legacy rail lines) are one of the few profitable branches of government. New autonomous buses have reduced labor costs significantly, and now widespread solar electric power has lowered energy costs. Transit organizations now see ridership levels they last saw in the 1940s. With good transit service, people now make more trips by traditional transit and new micro-transit modes.   Some warn… 2773

This doesn’t mean there won’t be any traditional transport engineers, just many fewer in the developed countries. Agencies can of course use the released staff time to design in more detail, to higher quality, and so on. Or agencies can redirect the efforts of new engineers to address the resulting problems, to sectors that are continuing to grow, to new opportunities, to different transport problems. Future transport engineers can think about how to better use scarce road space in cities to serve people rather than vehicles. The profession can move beyond the mindless application of arbitrary level of service standards that have besot our communities. 2815

models are typically only estimated on the most recent survey, rather than on trends or changes. The underlying behavior is not permitted to change, only what it responds to. Yet we now have evidence that some underlying preferences do change over time. It is not simply a matter of getting the demographics or incomes correct. For instance from the 1960s to the 1990s female labor force participation increased. Thus the number of work trips and non-work trips (substituting out-of-home for in-home production) both increased in that period. But that increase has played itself out. Thus the increases it was associated with have peaked. This reflected changing preferences. While hindsight is 20/20, we don’t know if underlying preferences can be modeled accurately prospectively (we are doubtful), but we do know failure to account for them will lead to model inaccuracies.   What changes are going on now that are not considered in travel demand forecasting? A brief (and very incomplete) list below: • Vehicle technology shifts (driverless vehicles) • Preference shifts (and economic scarcity) among young travelers • Changing driver licensing requirements • Vehicle ownership vs on-demand vehicle rental (car “sharing”) • Telecommunication increasing substitution for work, shop, and social travel • Telecommunication complementarity for work, shop, and social travel   None of this is easy to model, certainly not within the existing framework of urban transport planning models, even more modern activity-based models. In many ways it is easier to do macroscopic than microscopic forecasting. The question is, if some kinds of forecasting are impossible (we can forecast traffic pretty accurately two weeks from today, but not the first Tuesday of 2044), why do we do it? Is there a human-need to fill the void of future uncertainty with authoritative assertions?   Speculating about the future is useful, it opens up pathways. Developing scenarios is useful, it challenges assumptions. Thinking about the lifecycle process and markets helps frame the possible, the plausible, and the likely. Studying history (and past forecasting methods and errors) provides humility and insight. Visions (and alternative competing visions) help establish what we want. Developing a communal hallucination can organize individual activities to become the ideal (or nightmarish) self-fulfilling or self-negating forecast. Planning needs more methods for thinking about the future than single point forecasting.    2907

typical accessibility measures look at the shortest travel time path. The shortest travel time path by car assumes you store a vehicle where you live (on your property) and park it at your destination (on its property). With autonomous vehicles picking you (and only you) up, the start and end points might be the same for you. If you share a ride, there will be deviations adding to your travel time (but presumably reducing your out-of-pocket cost). But because these are dynamic, there will be variation from day-to-day that is greater than today’s variation due to traffic or transit schedules. If you walk to a car rental (as today’s car2go operates) (rather than being picked up taxi-like) that adds an additional access cost. Paying per trip also adds an out-of-pocket cost that today is mostly ignored. Or it might be a combination of time and money. Instead of how many places can you reach in 30 minutes, how many places you can reach in $10 out-of-pocket costs by mode might be the relevant factor. 2940

While the previous section presented the arguments the industry has put forth on why there are not enough roads, this section instead makes the argument we have too many.   We cannot (choose not to) afford to maintain the infrastructure we have. Also worth noting is the lack of economic development impacts352 of most new investments. Learning from history, if demand has peaked, supply is probably also at the peak of what we can economically support. This was true of rail in the 1920s, at which point the mileage of rail networks (both intercity and urban) declined. This may now be true of roads, with peak travel occurring, as we see rural areas continuing to depopulate, some places considering gravelization,353 some urban freeways being taken down and not replaced354. It is clear we under-price what we have, so naturally that leads to more consumption than if we properly priced things. It is also clear the roads sector (and some other transport sectors) are in the mature phase of development, and roads have at best diminishing returns on investment, if not zero or negative returns. It is also clear that most roads are mostly empty most of the time, and that we build many roads far wider than are needed, so wide they can be used to store cars 24 hours a day.     We would conclude, that in general, we do have too much road infrastructure.   In the absence of a policy change, the edifice complex, infrastructure infatuation edition, will continue to suck away considerable funds that could be better spent on other things. 3024

People Get Ready: The Fight Against a Jobless Economy and a Citizenless Democracy by Robert W McChesney, John Nichols

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Last annotated on May 29, 2016

The point is to shape progress, not as customers or consumers, not as clicks to be counted or employees struggling to synch ourselves into automated workplaces, but as citizens engaged in a democratic process of organizing a new economy that reflects our values and our needs. 166

More and more middle-class workers were going to lose their jobs and there was little on the horizon to suggest there would be new jobs for them. This would be, according to Schmidt, the “defining” issue of the next two to three decades.1 254

New York Times columnist Bob Herbert put it, where “millions of hardworking men and women who had believed they were solidly anchored economically found themselves cast into a financial abyss, struggling with joblessness, home foreclosures, and personal bankruptcy.” It wasn’t just the result of the 2008 Great Recession. “From 1990 to 2008 the life-expectancy for the poorest, least well-educated white Americans fell by a stunning four years,” notes Herbert. “For white women without a high school diploma, it fell by five years.”5 281

Americans, Rolling Stone writer Matt Taibbi tells us, have “become numb to the idea that rights aren’t absolute but are enjoyed on a kind of sliding scale [and] we’ve also learned to accept the implicit idea that some people have simply more rights than others. Some people go to jail, and others just don’t.”7 290

Political science research by Stanford’s David Broockman and the University of Michigan’s Christopher Skovron concludes that on core policy issues legislators routinely think their own constituents are considerably more conservative than the polling data shows they actually are. This is true across the board but especially pronounced among conservative legislators. “The typical conservative legislator overestimates his or her district’s conservatism by a whopping 20 percentage points. Indeed, he or she believes the district is even more conservative than the most right-leaning district in the entire country.” Why? “Politicians feel much more accountable to the wealthy, party leaders, or interest groups than to rank and file voters’ preferences,” and “politically active citizens tend to be wealthier and more conservative than others.”10 304

Most reform proposals are dismissed as impractical and relegated to the netherworld of the loony-Left before they can even see the light of day. The reason for this is clear: the United States is not a democracy, if by democracy we mean a government of the people, by the people, and for the people. That is the Big Lie of the official discourse. If anything, it is a “citizenless” democracy, an oxymoron if there ever was one. The only voice that matters in American politics, the voice that shouts down every other, is that of the wealthy few 311

Princeton’s Martin Gilens and Northwestern’s Benjamin I. Page have conducted exhaustive research on American politics. Their conclusion: “The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.” If that is not clear enough, they add: “When a majority of citizens disagrees with economic elites or business interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.”12 316

“Indeed, under most circumstance,” Gilens writes in another recent study he conducted, “the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.”13 The problem here is not just that government policies are indifferent or hostile to those without great wealth. The two great and immediate existential threats to human existence—militarism and environmental catastrophe—proceed largely unchecked by public policy, regardless of popular concerns, and despite the fact that they affect rich and poor alike 322

This is because very powerful interests see demilitarization and shifting away from fossil fuels as existential threats to their present lucrative positions, and no powerful interests have a direct stake in seeing the problems forcefully addressed. In the calculus of citizenless democracies, 328

This is what one would rationally expect in what political scientist Sheldon Wolin characterized as a “politically demobilized society, that is, a society in which the citizens, far from being whipped into a continuous frenzy by the regime’s operatives, are encouraged at virtually every turn to be politically lethargic.” It is a society in which people get precious little from the government, where austerity and rollbacks are the order of the day. Citizens are constantly reminded of the “political futility” of popular involvement in politics.15 “There is a widespread sense,” the scholar Tony Judt wrote in 2010, “that since ‘they’ will do what they want in any case—while feathering their own nests—why should ‘we’ waste time trying to influence the outcome of their actions?”16 As the journalist Bob Herbert observed in his 2014 chronicle of contemporary America, “Something fundamental in the very character of the United States had shifted. There was a sense of powerlessness and resignation among ordinary people that I hadn’t been used to seeing. The country seemed demoralized.”17 In this context, it is rational that one abandon an interest in politics, or social life broadly construed, and concentrate on looking out for number one. 335

John Dewey: once an organism loses the sense that it can affect its environment, it starts to weaken and die.18 348

The state of present-day capitalism and what appears to be its likely future is one of stagnation—meaning ever-increasing inequality, poverty, austerity, and social insecurity. There is a crisis of unemployment and underemployment. Full employment, meaning, as economist Robert Pollin puts it, “an abundance of decent jobs,” is “fundamental to building a decent society.”19 A healthy economy that generates benefits for the bulk of the population, and not just society’s owning class, depends upon it.20 And this is more than an economic issue. As technology writer Nicholas Carr puts it, people are “happiest when we’re absorbed in a difficult task, a task that has clear goals and that challenges us not only to exercise our talents, but stretch them.” And that is something most often found in work.21 “When joblessness is high in America,” Herbert writes, “the nation’s spirits inevitably are low.”22 Full employment for more than a brief period has never been enthusiastically received by Wall Street, as it raises wages and shifts economic and political power to employees. To some extent the decrepit state of the contemporary labor market reflects the total control over government economic policymaking by the wealthy. The emerging automation wave that Eric Schmidt called attention to at Davos is going to replace millions of jobs and alter the nature of many of those jobs that remain. Some technology experts like Ben Way expect a loss of 70 percent of existing jobs in the next three decades, with little hope that very many new jobs will emerge to replace what is lost.23 University of Pennsylvania sociologist Randall Collins expects an unemployment rate in the neighborhood of 50 percent.24 One need not accept these predictions—they strike us as speculative if not extreme—to see that at the very least what is about to transpire is going to put severe downward pressure on wages and working conditions, which already are deplorable. 368

technology could exert a slow but continual downward pressure on the value and availability of work—that is, on wages and on the share of prime-age workers with full-time jobs.”25 Judt saw this coming in 2010: “Mass unemployment—once regarded as a pathology of badly managed economies—is beginning to look like an endemic characteristic of advanced societies. At best, we can hope for ‘under-employment’—where men and women work part-time; accept jobs far below their skill level; or else undertake skilled work of the sort traditionally assigned to immigrants and the young.”26 387

Artificial intelligence expert Neil Jacobstein notes that “exponential technologies may eventually permit people to not need jobs to have a high standard of living.” He enthuses that “the emphasis will be less on making money and more on making contributions, or at least creating an interesting life.”30 Nor is this very far off in the future. 403

The barrier to this brighter future, of course, is capitalism itself. 408

capitalism is going to be in the crosshairs of history. “Today, the ability of freemarket democracies to deliver widely shared increases in prosperity is in question as never before,” a 2015 report by a commission co-chaired by former Treasury Secretary Lawrence H. Summers announced. “This is an economic problem that threatens to become a problem for the political systems of these nations.”36 The natives are going to get restless. As the Economist notes, “squeezing out” the middle class “could generate a more antagonistic, unstable and potentially dangerous politics.”37 Cato Institute researcher Brink Lindsey writes that “there is the threat that widening disparities between the elite and everybody else will prompt a political backlash against the whole system.”38 The problem of a political system that is defined as a market, where issues can be made “important” or “unimportant” via the influence of campaign donations, lobbying, spin, and media manipulation, is that discussions of those disparities—and of their causes—are taken off the table. 431

“Democracy is when the indigent, and not the men of property, are the rulers,” Aristotle noted at its birth.41 462

One revolutionary change capitalism has brought to modern democratic governance was to split the elected control over the government from direct control over the economy, which is now in the hands of those with capital. 469

As Friedman put it in his classic 1962 work, Capitalism and Freedom, the legitimate role of government is largely “to protect our freedom both from enemies outside our gates and from our fellow citizens: to preserve law and order, to enforce private contracts, to foster competitive markets.” 486

The main job of governance is to make sure the profit system works smoothly, contracts and private property are respected and enforced, the dispossessed are kept in line, and, if there is an economic crisis, the government intervenes as necessary to make it lucrative for businesses and wealthy individuals to invest again. Big government is A-OK when it advances the interests of capital—though this point best not be emphasized to a general audience; for everyone else, “small” government is the order of the day. Governance is best when it is left to those who fully appreciate that the needs of investors come first and foremost. And that is most likely to happen if most everyone else tunes out politics and focuses on other matters. The problem, of course, is that we are entering into a period where change will come so rapidly that, when citizens tune back in, tens of millions of them could be left with nothing. 497

As political scientist Robert A. Dahl puts it, citizens in a democracy must “possess the political resources they would require in order to participate in political life pretty much as equals.”47 The playing field should be leveled so those without means can effectively govern as equals of those with substantial means. To conservatives, such an approach is foolhardy if not downright corrosive of freedom, for effective popular participation in politics, just as much as an “activist” government, is to be discouraged. DEMOCRATIC INFRASTRUCTURE A debate persists over what we term democratic infrastructure. As Dahl writes, “Political equality requires democratic political institutions.”48 The term infrastructure comes from economics. An advanced economy does not exist because entrepreneurs or businesses have the right to invest and can do whatever they please. It exists because elaborate communication, transportation, sanitation, energy, and legal infrastructures provide a foundation that makes commerce possible. Establishing this infrastructure is largely the province of the government, even if the state’s job is to coordinate private interests to get it done effectively. The beauty of infrastructure projects is that they are accessible to everyone and have tremendous “spillovers,” or “positive externalities,” meaning they generate considerable value for others and for society as a whole.49 Without such an infrastructure, an advanced economy cannot exist. So it is with democracy. The right to vote means little without        •  the infrastructure of effective elections, such that one-person, one-vote is the order of the day, and races allow genuine competition        •  the rule of law        •  stringent limits on money in politics        •  limits on the power of the judiciary to act in an arbitrary and unaccountable manner        •  the effective ability to launch effective new parties or associations        •  free trade unions with effective collective bargaining        •  open, transparent governance        •  a credible, independent, and uncensored free press/news media        •  universal free schools with civic education        •  a basic level of economic and social security, which is only limited by the overall productive capacity of the society        •  an environment that can sustain and nurture life. In short, a credible democratic infrastructure requires ground rules and institutions that empower the weakest in society so they can effectively be the political equals of the wealthiest members of society, and that prevent the wealthy few from having excessive influence. It also includes “breakers” to prevent the establishment of such proven enemies of democracy as        •  corruption        •  private monopolistic control over the economy        •  significant economic inequality        •  government secrecy and surveillance        •  government propaganda        •  militarism These six tend to go hand-in-hand.50 The civil liberties that most Americans cherish—the freedoms of speech, press, and religion; the right to assemble; the right to privacy—thrive when there is a strong democratic infrastructure. Without one, these freedoms tend to be on insecure ground, at least to the extent their exercise threatens those in power. We agree with the writer and lawyer Elliot Sperber, who argues that “this infrastructure of democracy” must be as “inalienable” as the political rights we cherish.51 Hungarian scholar Zoltan Tibor Pallinger, who has direct experience in building democracies in formerly communist nations, defines “democratic infrastructure” as the “institutions, instruments and procedures provided by the state that render the use of democratic rights possible.”52 516

Wendell Willkie, corporate president and free enterprise champion turned 1940 Republican presidential candidate, explained the need for unions and collective bargaining by noting that “for labor the essential content of freedom is different in today’s society from what it was in the agricultural society of an earlier age. Men no longer able to own, or aspire to own, small businesses and farms have sought new solutions for a need which all Americans must respect—the need to control for themselves the circumstances which dictate their working lives.”53 According to Willkie, labor unions deserved to be accorded permanence because they were a necessary foundation of modern democracy. He was right: the evidence is clear that unions, in addition to the value they generate for their own members, reduce overall economic inequality and also provide people without property a means for more effectively participating in the political process.54 So strong unions produce a double win in terms of democratic infrastructure. This is well understood and accepted in most advanced democracies, including the United States from the 1930s until recently, 572

When the democratic infrastructure is weak or in decline, the political culture shrivels, self-interest reigns, and demoralization and pessimism ascend. Then the only rational reason to enter public life is to use it as a way station to an eventual job in the private sector where you can cash in your public-sector chips, or just for purposes of flat-out corruption. 587

polling shows that the vast majority of Americans believe big business has too much control over their lives and way too much influence over government.57 “The inability of traditional politics and policies to address fundamental challenges has fueled an extraordinary amount of experimentation in communities across the United States,” a 2015 report by the Next System Project noted. “Unbeknownst to many, literally thousands of on-the-ground efforts have been developing.” 618

When fundamental social change comes, as Klein writes, “it’s generally not in legislative dribs and drabs spread out evenly over decades. Rather it comes in spasms of rapid-fire lawmaking, with one breakthrough after another.” These are periods in which the democratic infrastructure is built up and the weltanschauung has shifted dramatically. Klein captures this well: When major shifts in the economic balance of power take place, they are invariably the result of extraordinary levels of social mobilization. . . . During extraordinary historical moments—both world wars, the aftermath of the Great Depression, or the peak of the civil rights era—the usual categories dividing “activists” and “regular people” became meaningless because the project of changing society was so deeply woven into the project of life. Activists were, quite simply, everyone.59 This is the sort of moment we are entering. We have no idea when exactly or under what terms. But what we can do is prepare and get ready. In short, we agree with Chris Hedges that in historical terms, the United States is entering a period where the status quo cannot remain as it is, and radical, even revolutionary, change is almost certain to come.60 What we do know, and what will be the best indicator of a new moment, is the weltanschauung will shift. Crises that had appeared insurmountable will now appear like opportunities to make a much better world than had ever existed before. 632

The great issue of the coming generation will be expanding democratic values and principles—building out the democratic infrastructure if you will—into economic institutions and practices.61 647

President Franklin D. Roosevelt emphasized this point at every turn. “Democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.”64 “Democracy has disappeared in several great nations,” FDR said on another occasion, “not because the people of those nations disliked democracy, but because they had grown tired of unemployment and insecurity, of seeing their children hungry while they sat helpless in the face of government confusion and government weakness.”65 What mass unemployment means in the coming years, Judt writes, is a “return to dependency upon the state.”66 This is not only because millions are out of work, but because in such a depressed environment capitalism does not generate profits anywhere near satisfactory for investors and businesses. The state needs to intervene much more aggressively not only to create jobs but also to create the conditions, including the markets, for profitable investment. The government needs to make the system work with bold action because obviously the traditional mechanisms to stimulate the economy have failed, or else the economy would not be in a depression. The private economy is dead in the water. As Thompson put it in his sober assessment of automation, for Americans to effectively address the coming waves of unemployment and underemployment, “it is almost certain that the country would have to embrace a radical new role for government.”67 The only issue is what the nature of the radical new role will be. 672

“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself,” Roosevelt said in 1938. “That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.”81 To FDR and Wallace, the domestic fascist threat in the United States was a grave concern and it came primarily from “monopolists” and “cartelists,” who to protect their privileges “would sacrifice democracy itself.” “If we define an American fascist as one who in case of conflict puts money and power ahead of human beings, then there are undoubtedly several million fascists in the United States,” Wallace wrote. He explained that “the American fascist would prefer not to use violence. His method is to poison the channels of public information.”82 In the view of FDR and Wallace, a fascist power grab would not require a violent rupture so much as a quiet takeover orchestrated by elements of the capitalist class. The United States would experience its own home-grown All-American fascism. “They claim to be super-patriots, but they would destroy every liberty guaranteed by the constitution,” Wallace wrote. “Their final objective toward which all their deceit is directed is to capture political power so that, using the power of the state and the power of the market simultaneously, they may keep the common man in eternal subjection.”83 748

developments associated with fascism have become commonplace in the United States since 1945: massive government spending on armaments and militarism; seemingly endless wars barely understood by most Americans; growing inequality; massive monopolistic firms that dominate the economy far more than in FDR’s era; weak and feeble news media that largely propagate elite opinion; a governing system that is mostly if not entirely in the pocket of the wealthy; the disappearing rule of law; and what seems like near ubiquitous and unaccountable surveillance of private citizens.86 That’s a sobering list.87 767

Second, and more daunting, one of the core aspects of fascism everywhere was to destroy democratic infrastructure. 772

Contemporary Republicans should pause and consider the agenda they have embraced in their fight to eliminate labor unions and collective bargaining; undermine public education; scrap progressive taxation; mangle Social Security and Medicare; make voting more difficult for poor people; increase government secrecy; allow unlimited corporate and billionaire spending on politics; privatize government activities so that public monies flow increasingly to private business; disregard all concerns for the environment; and reject Dwight Eisenhower’s wise counsel about the threat posed by a military-industrial complex. 773

America is infected with what Taibbi diagnoses as “a profound hatred of the weak and the poor, and a corresponding groveling terror before the rich and successful.”90 793

We cannot settle for anything less than political and economic democracy because nothing less will create and sustain the America—and the world—that we have a right and a responsibility to demand. 809

Unless there is a large increase in government spending to compensate for the decline—which is a controversial policy option in a capitalist economy—everything else being equal, slower growth rates and higher levels of unemployment result. Indeed, even more striking is the massive and increasing amount of cash that corporations are holding, 846

This “unemployed” capital is a sign of a stagnating economy, with profitable investment opportunities growing so scarce that firms would rather sit on their cash than risk it in real investments. Why exactly US capitalism—and world capitalism, for that matter—has been and is stagnant with no end in sight is a crucial issue that can be traced in part to the way in which monopoly-finance capital produces stagnation. That’s another discussion, however.3 Our concern at this point is with the jobs picture, and Chart 4 demonstrates that unemployment has been increasing in general while capitalism has been tending toward stagnation. We provide here not only the total amount of “official” unemployment, but a broader assessment that includes people who have dropped out of the labor market and are no longer actively seeking employment—that is, people who constitute the “hidden unemployed.” 849

Consider the situation facing young workers. Chart 6 demonstrates that the economy is generating fewer middle-class jobs, and an increasing proportion of the jobs provide incomes at poverty levels. This is what economists call “labor market polarization”—great jobs for those at the top, a mountain of crappy jobs at the bottom, and fewer and fewer jobs in between.4 Studies reveal that this is a phenomenon across all sixteen European Union nations as well.5 This growth in dismal jobs is not because workers are less productive. Chart 7 shows the growing split between the growth in Gross Domestic Product and household income since the 1970s. Put another way, from 1945 to the early 1970s, as workers’ productivity increased, so did their wages by a comparable percentage. Since the 1970s, worker output has grown, in some cases sharply, but wages have stagnated. 876

Economic observers note that the official labor force participation rate has been declining continually, from an annual average of 67.1 percent in 2000 to 62.5 percent in 2015. This translates to the disappearance of close to 7.2 million workers from the official labor force in 2015 (see Chart 11 sources in the Statistical Appendix). However, in this case (as in so many others), the official labor statistics are inadequate. Indeed, if we estimate how many more jobs would be needed to maintain the level of civilian employment that existed in 2000, the picture changes dramatically.11 Chart 11 does just this, revealing that the economy would need to generate nearly 14 million more jobs in 2015 if all those workers who have left the labor market since 2000 had remained in it and had jobs. 910

Back in 1979 over half of American workers—often union workers—had pensions connected to their jobs; today it is around one-third.25 In a nutshell, income that once went to workers is now going to owners and bosses.26 Whereas the CEO of a large company made around twenty times more than the average worker in 1965, by 2013 the ratio had grown to nearly three hundred to one.27 To put it another way, if the United States had the same income distribution in 2015 that it had in 1979, $1 trillion in income going to the top 1 percent would instead go to the bottom 80 percent.28 A study by economists Michael Greenstone and Adam Looney concludes that “most men were earning substantially less in 2009 than men of similar ages and education did in 1969, adjusted for inflation.”29 988

By 2013 an Associated Press study concluded that four out of five American adults “struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.”30 The 997

Although people of color remain disproportionately among the ranks of the poor, they are being joined by a wave of working-class and middle-class whites moving down the economic ladder.31 The flip side of this coin is that upward economic mobility—people’s ability to improve their lot compared to that of their parents—has all but disappeared.32 The United States that was once broadly viewed as “the land of opportunity” today ranks near the bottom of advanced economies for social mobility.33 1002

The vast majority of the jobs lost in the recession were considered “mid-wage,” while the majority of the new jobs created in the recovery were “low-wage.”35 The stock market skyrocketed and fortunes were made on Wall Street, but as New York Times financial reporter Felix Salmon put it, “These days a healthy stock market doesn’t mean a healthy economy, as a glance at the high unemployment rate or low labor-market participation rate will show.”36 In fact, when corporations announce plant closings and layoffs in the United States, media outlets report that the news does “wonders” for stock prices.37 1020

American capitalism seems to have turned a corner: increases in private investment and worker productivity no longer necessarily lead to commensurate increases in employment or real incomes.39 1038

Part of this is pure automation. Another important part is disintermediation—the elimination of intermediaries in banking, online retail, and a host of government services, to name just a few affected areas.41 1047

the one hundred largest US companies (in terms of total annual revenue) are able to generate more US revenues and earn more US profits with fewer American workers, and the process appears to be accelerating.* These one hundred firms accounted for 43 percent of US GDP in 2013, up from 26 percent in 1950, so this trend is hardly on the periphery of the economy.43 There is the palpable sense that technology is destroying more jobs than it is creating, 1054

Even before the Great Recession of 2008, the Bureau of Labor Statistics forecast that two-thirds of the jobs available between 2008 and 2018 would not require any post-secondary education.46 As the journalist Derek Thompson concludes, “The job market appears to be requiring more and more preparation for a lower and lower starting wage.”47 The Economist announces that young people are experiencing an “epidemic of joblessness.”48 Newsweek characterizes young Americans as constituting “Generation Screwed.”49 There are nowhere near enough jobs, and the jobs that do exist, to employ the vernacular, suck. 1068

By 2025 experts anticipate that one of every three global labor “transactions” will be conducted online as part of the “on-demand” or “crowd labor” economy, with a few gigantic digital hiring hall corporations using their networks and apps to get temp labor for employers.53 Informal work, or freelancing, already accounts for around one-third of the US workforce, fully 53 million workers, according to an Edelman Berland report prepared for the Freelancers Union.54 A Christian Science Monitor report stated that up to 50 percent of the new jobs in the recovery were freelance positions.55 Economic Modeling Specialists Intl., a labor market analytics firm, calculated that by 2014 some 18 percent of all US jobs were performed by part-time freelancers or part-time independent contractors. There was a 60 percent increase in the number of these part-time gig jobs from 2001.56 1081

as one New York Times examination concludes, many of these workers are “less microentrepreneurs than microearners. They often work seven-day weeks, trying to assemble a living wage from a series of one-off gigs.”57 According to the Government Accounting Office, these freelance workers are twice as likely as traditional full-time employees to have an annual income under $15,000.58 1091

data reveals that the percentage of male workers who have worked with the same firm for at least ten years has dropped sharply over the past two decades, especially for younger workers.60 “What once was a relationship” between firms and their employees, one reporter explains, “is now a transaction.”61 Businesses “have found that having a large nontraditional workforce makes them more competitive.”62 While the Economist has no illusion that this new freelance-based “on-demand” economy is a good thing for workers, it nonetheless regards the process as unstoppable.63 1101

It is left to the acclaimed pro-market economist Tyler Cowen to capture the logic of where all of this is going: “We will move from a society based on the pretense that everyone is given an okay standard of living to a society in which people are expected to fend for themselves much more than they do now. I imagine a world where, say, 10 to 15 percent of the citizenry is extremely wealthy and has fantastically comfortable and stimulating lives, the equivalent of current-day millionaires, albeit with better health care.”65 The other 85 to 90 percent of us? Not so much. 1108

“The logic of capitalism, when combined with the history of scientific and technological progress, would seem to be a recipe for the eventual removal of labor from the processes of production,” Nicholas Carr writes. “Machines, unlike workers, don’t demand a share of the returns on capitalists’ investments. They don’t get sick or expect paid vacations or demand yearly wages. For the capitalist, labor is a problem that progress solves.”67 1122

Their whole propaganda is to the effect that it must not be considered as the business of the government but must be left open to whatever entrepreneurs wish to invest money in it. We also know that they have very few inhibitions when it comes to taking all the profit out of an industry that is there to be taken, and then letting the public pick up the pieces. “The automatic machine,” he concluded, “is the precise economic equivalent of slave labor. Any labor which competes with slave labor must accept the economic conditions of slave labor. It is perfectly clear that this will produce an unemployment situation, in comparison with which the present recession or even the depression of the thirties will seem a pleasant joke.”75 1166

On March 22, 1964, the “Ad Hoc Committee on the Triple Revolution” submitted a fourteen-page memorandum to President Lyndon Johnson, where the “cybernation revolution” was positioned alongside human rights and militarism as the main challenges to modern societies. The memo, which was signed by current and future Nobel Prize winners Linus Pauling and Gunnar Myrdal as well as the publisher of Scientific American, warned the president that as machines take over production from men, they absorb an increasing proportion of resources while the men who are displaced become dependent on minimal and unrelated government measures—unemployment insurance, social security, welfare payments. These measures are less and less able to disguise a historic paradox: that a growing proportion of the population is subsisting on minimal incomes, often below the poverty line, at a time when sufficient productive potential is available to supply the needs of everyone in the United States.96 The memo called for a guaranteed basic income—not based upon one’s labor—for all Americans to solve the problem. Although this memorandum has largely been forgotten, it had considerable influence at the time. Indeed, in his final sermon, delivered on March 31, 1968, before an audience in the thousands at Washington DC’s National Cathedral, Dr. Martin Luther King Jr. invoked the “triple revolution” and the importance of automation and cybernation at the beginning of his presentation. “Through our scientific and technological genius, we have made of this world a neighborhood and yet we have not had the ethical commitment to make of it a brotherhood,” King observed in words few others could muster. “But somehow, and in some way, we have got to do this. We must all learn to live together as brothers or we will all perish together as fools.”97 1253

they called for socializing the economy so that the surplus generated by automation was controlled by society as a whole, not by the owners of a handful of large corporations.100 Organized labor, having suffered through relatively high levels of unemployment in the late 1950s and early 1960s, no longer saw, nor welcomed, the promise of automation. The Department of Labor estimated that two hundred thousand jobs were being lost to automation each year in the early 1960s; and in industry after industry output was up while employment levels were down.101 1281

In August 1964 President Johnson formally created the National Commission on Technology, Automation, and Economic Progress to examine the issues and file a report, first and foremost “on whether technological change is a major source of unemployment.” The ultimate report, published in 1966, extended its mandate to consider “the fear” that eventually technology “would eliminate all but a few jobs, with the major portion of what we now call work being performed automatically by machine.” It was a prestigious fifteen-member commission, including UAW head Reuther, IBM chair Thomas Watson, five other corporate leaders, and the intellectuals Daniel Bell and Robert Solow. The 1966 report concluded optimistically that government policies could successfully address unemployment arising from automation. It asserted that automation was a progressive development, and that “the vast majority of people quite rightly have accepted technological change as beneficial.”106 1297

What is perhaps most striking for our purposes is what the commission did end up recommending in its report. It said that the technological threat to employment only underscored the crucial need for the government to “fulfill the promise of the Employment Act of 1946: ‘a job for all those able, willing, and seeking to work.’” The report called for the federal government to “be an employer of last resort, providing work for the ‘hard-core unemployed’ in useful community enterprises.” It specifically mentioned the sort of “unmet human and community needs” where this labor, and the new technologies, could be deployed as improving healthcare, transportation, and housing, and battling air pollution and water pollution—in short, a massive expansion of spending on vital infrastructure and cleaning up the environment. Moreover, to ensure that everyone benefited by “the abundance” generated by technological advances, the report called for a guaranteed annual income for all Americans, which would effectively end poverty. The report also specified that it was imperative that traditionally disadvantaged communities receive “compensatory” resources such that their public education gave them the capacity to participate alongside those from more privileged sectors. And it called for a commitment to “improvements in public education” overall, with free schooling for all Americans through grade fourteen.107 1305

These recommendations are breathtaking from the present vantage point because they are so radical, and they were agreed to by some of the leading CEOs in the nation. Indeed, the report even went so far as to urge firms to use automation to “humanize” the workplace and develop the new technologies in such a manner as to make the work experience more rewarding for the worker.108 By the late 1970s or 1980s, with the changing political currents, one can only imagine how a subsequent commission on automation might have considered these issues. Indeed, one can “only imagine,” because no such independent body ever came into existence. This was the one and only time in American history that automation and employment were formally studied and considered by an official government commission. The early to middle 1960s proved to be the high-water mark for popular recognition of automation as an important social and economic issue, and a problem demanding political attention. What is striking is that these writers posed almost the exact same concerns, questions, framing, and even solutions that are being raised today; they were simply fifty years ahead 1316

no longer “news” after the mid-1960s. Chart 18 documents the decline in stories mentioning automation in the New York Times from 1955 through February 2015. But the disappearance of automation as a political issue owes to more than the exaggerated claims of the early 1960s. To a large extent it reflected the fact that organized labor, aside from a handful of progressive unions like the United Electrical Workers (UEW), the International Association of Machinists, and more recently National Nurses United, threw in the towel. This shift in focus was encouraged in the late 1960s by the virtual disappearance of unemployment with the booming economy that accompanied the Vietnam War. It was also encouraged by the persistent management stratagem to label any critic of automation a “Luddite,” as if asking questions about whether all automation was always good was tantamount to saying that society should abandon cooked food, electricity, and indoor plumbing.109 1330

Thanks to computerized programs and robotics, for example, US steel industry production rose from 75 million tons to 120 million tons between 1982 and 2002, while the number of steelworkers fell from 289,000 to 74,000.120 In the 1960s, for another example, a single textile worker operated five machines, each able to run a thread through the loom at one hundred times per minute. By 2014 machines ran at six times that speed and a single operator supervised one hundred looms.121 Office work increasingly became the target of automation and computerization.122 To some extent, this process was so comprehensive and overwhelming—and part of a broader digitalization of all aspects of social life—that it eluded sustained analysis, as water escapes the comprehension of the proverbial fish. It certainly paved the way for what was and is about to come. American jobs were being radically changed by technology, and more than a few were being lost to technology, but until the Great Recession it did not seem to be much of a loss. And even then, as Galbraith put it, “you can’t distinguish a job lost to technology from a job lost to a business slump. The two are, actually, the same thing.”123 1375

Gordon Moore, a computer engineer and a founder of Intel. Moore wrote an article in 1965 in which he projected, in effect, that due to continuous technological improvements, the computing power one could buy for a dollar would double every year for a good ten years. This became Moore’s Law. He later suggested that it would double every two years, and most observers have come to use the notion that it would double every eighteen months. People once anticipated that Moore’s Law would peter out or at least slow down over time, but it has proven resilient and astonishingly accurate. “Over and over again,” Brynjolfsson and McAfee write, “brilliant tinkering has found ways to skirt the limitations imposed by physics.”125 1395

It took scientists a decade of intensive work to sequence the three billion base pairs in the human genome by 2003. By 2013, a single computer facility could sequence that much DNA in a day.127 More recently, the Economist reports, “the new iPhones sold over the weekend of their release in September 2014 contained 25 times more computing power than the whole world had at its disposal in 1995.”128 1403

all the spectacular growth in the “first half” of the chessboard barely registers before 2008. We are now at the part of the curve that is shooting straight up like an oil-well gusher. Even if the rate of growth eventually does slow down, we are deep into uncharted terrain, as though we have traveled through a wormhole to some distant galaxy.130 As Brynjolfsson and McAfee note, “Things get weird in the second half of the chessboard.”131 In their view, the world is at an inflection point, where all sorts of operations that only recently were thought impossible for computers and uniquely the province of humans—driverless cars, anyone? robot “nurses”?—will be easily done by computers, and soon other tasks that presently are considered unthinkable for computers will become standard fare. The most striking feature may well be how very quickly this will take place in historical terms. 1422

To put the moment we are entering in perspective, consider the analysis of Gill A. Pratt. Until 2015 Pratt served as Program Director at the Pentagon’s Defense Advanced Research Projects Agency (DARPA), where he oversaw work on robotics. This is important because DARPA has been at the center of technological innovation throughout the digital era. Pratt argues that humanity may be on the verge of experiencing something comparable in impact to the “Cambrian Explosion,” referring to the relatively brief period 540 million years ago when life underwent an astonishingly rapid diversification, including arguably the evolution of vision. It was crucial for the subsequent development of complex and intelligent life. Pratt outlined a series of related and complementary breakthroughs in robotics and computing that will make it possible for machines “to replicate the performance of many of the perceptual parts of the brain,” including, ironically enough, vision itself. At the very least, Pratt observes, “the effects on economic output and human workers are certain to be profound.” He refuses to predict when exactly this will occur, “as the timing of tipping points is hard to predict,” but it is on its way.132 1429

Computers can now access an unimaginably large body of stored information that is growing by leaps and bounds and process that information almost instantaneously with ever more sophisticated algorithms. This is what is referred to as “big data.”136 Computers, as Nicholas Carr explains, may never be able to replicate “tacit” or “procedural” knowledge, which refers to the stuff we do without thinking about it, like riding a bike or driving a car. Instead, computers are very good at “explicit” or “declarative” knowledge, which is the stuff we do that we can write down instructions for, like how to change a flat tire or solve a quadratic equation. “The superhuman speed with which computers can follow instructions, calculate probabilities, and receive and send data,” Carr notes, “means that they can use explicit knowledge to perform many of the complicated tasks we do with tacit knowledge.” Driverless cars are just the tip of that iceberg. The implications for automation are striking, if not revolutionary. “Even highly trained analysts and other so-called knowledge workers are seeing their work circumscribed by decision-support systems that turn the making of judgments into a data-processing routine.”137 Much of this “big data” is accumulated in the “cloud,” a group of enormous “server farms” controlled by a handful of massive corporations like Google, Apple, Amazon, and Microsoft. The cloud becomes the rational and most cost-effective way for businesses to store and analyze their data. One of the great benefits and therefore consequences of cloud computing, according to Vincent Mosco, the leading scholar on the subject, is that it “essentially deepens and extends opportunities to eliminate jobs and restructure the workforce.” This is, in fact, a primary selling point that cloud computing firms use to drum up business.138 (That seems fitting, as these vast corporate server farms “virtually run themselves,” Carr writes.139) Ford observes that with “the migration of much of the intelligence that animates mobile robots” into the cloud, it makes it possible “to build less expensive robots, since less onboard computational power and memory are required, and allows for instant software upgrade across multiple machines.”140 In the meantime, for the same reason, as the Economist notes, cloud computing is also ideal for harnessing freelance workers to replace higher-paid labor.141 Another possibility opened up by being in the second half of the chessboard is the “Internet of Things,” a term for the billions of human-made devices that are connected to each other on a universal computing infrastructure. Each of these devices has its own Internet address, and will communicate with other devices more than with people. “That’s the whole point of the thing,” technology writer Michael Miller enthuses, “to connect just about everything in the aptly named Internet of Things.” It promises “more automatic, and more intelligent services provided by interconnected smart devices—with a minimal amount of human interaction.”142 “Make no mistake,” author Samuel Greengard writes, “we are entering a brave new world of immersive and embedded technology. . . . It’s entirely clear that a more technology-centric world is in the cards.”143 Depending upon the source, by 2020 or very soon thereafter, it is expected that there will be as many as fifty billion such devices, and only a small fraction of them will be personal computers, tablets, or smartphones controlled by individual humans. “Engineers expect so many of these connected devices,” Philip Howard writes in his book Pax Technica, “that they have reconfigured the addressing system to allow for 2 to the 128th power addresses—enough for each atom on the face of the earth to have 100 addresses.”144 Much of the economy will run through the Internet of Things. As Carr notes, “Manufacturers are spending billions of dollars to outfit factories with network-connected sensors, and technology giants like GE,… 1449

They will be not only in factories, they will be everywhere. 1498

Then, to put an exclamation point on their analysis, they say that 3D printing, robotics, driverless cars, and computers like Watson “are not the crowning achievements of the computer era. They’re the warm-up act.”153 1506

The Economist has been at the forefront of studying and writing about the issue.154 “Until now,” it wrote in 2014, “the jobs most vulnerable to machines were those that involved routine, repetitive tasks. But thanks to the exponential rise in processing power and the ubiquity of digitized information (‘big data’), computers are increasingly able to perform complicated tasks more cheaply and effectively than people.”155 As computer science reporter Federico Pistono puts it, “Millions of algorithms created by computer scientists are frantically running on servers all over the world, with one sole purpose: do whatever humans can do, but better.”156 What does this mean? “The combination of big data and smart machines will take over some occupations wholesale; in others it will allow firms to do more with fewer workers.”157 In earlier stages of automation, Brynjolfsson explains, firms automated the physical work but required humans to be the control system. Now the control system can be automated, and when it is, “then it is less clear what the role for humans is.”158 1511

The Economist notes that new technologies also make it possible for firms to “reshape” those jobs that remain, so that they can “be done by less skilled contract workers.”159 “In case after case,” Carr writes, “we’ve seen as machines become more sophisticated, the work left to people becomes less so.”160 This was anticipated first by Harvard Business School professor James R. Bright in his 1958 book Automation and Management. “It seems that the more automatic the machine, the less the operator has to do,” Bright wrote. “The progressive effect of automation is first to relieve the operator of manual effort and then to relieve him of the need to apply continuous mental effort.”161 1522

In 1966 Bright filed a report for President Johnson’s National Commission on Technology, Automation, and Economic Progress: “The lesson should be increasingly clear; it is not necessarily true that highly complex equipment requires skilled operators. The ‘skill’ can be built into the machine.” With his orientation toward management, Bright was the first dissenting voice regarding the notion that automation required workers to have better education and training: “I suggest that excessive educational and skill specification is a serious mistake and potential hazard to our educational and social system. We will hurt individuals, raise labor costs improperly, create disillusion and resentment, and destroy valid job standards by setting standards that are not truly needed for a given task.”162 He was decades ahead of his time.163 As Tyler Cowen puts it, most of these new jobs that interact with sophisticated machines “won’t be much harder than, in today’s world, operating a tollbooth on the New Jersey Garden State Parkway, a job performed by both man and machines.”164 1529

The magazine offers up Uber as an example of a business that may well be “a forerunner to an eventual system that has no drivers at all.”167 Martin Ford points to a New York–based start-up, Work Fusion, which sells software to firms to automate big projects formerly done by office workers. Where people are still needed, the software recruits freelance workers online to do the temp work, and then the software monitors what the workers do to learn from them so that their jobs, too, can be automated. “As the freelance workers do their jobs they are, in effect, training the system to replace them. That’s a pretty good preview of what the future looks like.”168 “The combination of advanced sensors, voice recognition, artificial intelligence, big data, text-mining, and pattern-recognition algorithms, is generating smart robots capable of quickly learning human actions, and even learning from one another,” writes former US Labor Secretary Robert Reich. “If you think being a ‘professional’ makes your job safe, think again.”169 So exactly which jobs are on the chopping block? 1544

A report in the New York Times adds “counselors, salespeople, chefs, paralegals and researchers” to the list.171 Or consider utility meter readers. In 2001, 56,000 American workers held that job. By 2010 the number was down to 36,000. By 2023 the number is expected to be zero.172 Consider that the four most common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Nearly 10 percent of the labor force, over fifteen million workers—more workers than there are in Texas and Massachusetts combined—are so employed. Thompson notes that these jobs are highly susceptible to automation.173 Ford sees 50 percent of fast-food jobs disappearing, and argues it is likely there will be “explosive growth of the fully automated self-service retail sector—or, in other words, intelligent vending machines and kiosks.”174 Or consider driverless cars. Robotics scientists like MIT’s Daniela Rus make a powerful and convincing case that the impending shift to a driverless world—the technology is in its final stages—will be much more efficient, vastly improve the transportation system, and do wonders for the environment and the quality of life.175 One problem: the most common occupation for American men is driving some sort of vehicle, be it automobile, bus, or truck. What happens to them?176 Then there are the two sectors of the economy harboring the most professionals—health care and education. They “are under increasing pressure to cut costs,” Reich notes. “And expert machines are poised to take over.”177 A 2014 article asked: “Robot Replacing Nurses: Is It Really That Far-Fetched?” The answer: Dr. Rosalind Picard, professor at the Massachusetts Institute of Technology (MIT), recently told the British Broadcasting Corporation (BBC) that robots should be made available to healthcare providers (nurses and physicians) in order to enhance healthcare delivery. However, when pressed by the interviewer to guarantee that robots will not fully replace nurses as a way for hospitals to save money, she answered: “You know, when people are in charge all kinds of things can happen . . . right?”178 For education “entrepreneur” John Katzman, the great question is, “How do we use technology so that we require fewer highly qualified teachers?”179 The better question may be: What jobs aren’t susceptible to elimination or radical de-skilling and downsizing by automation? Computer entrepreneur Peter H. Diamondis and technology reporter Steven Kotler concur. Within a decade, they write, robots “will make up the majority of the blue-collar workforce.” They will be doing everything from “shelf-stocking” inventory at Costco to “burger-slinging” at McDonald’s.180 That’s not all. Ford argues that the last remaining labor-intensive areas in agriculture—primarily picking—are soon to be susceptible to automation.181 1561

“Robots deployed in manufacturing today,” the Wall Street Journal reported in 2015, tend to be large, dangerous to anyone who strays too close to their whirling arms, and limited to one task, like welding, painting or hoisting heavy parts. The latest models entering factories and being developed in labs are a different breed. They can work alongside humans without endangering them and help assemble all sorts of objects, as large as aircraft engines and as small and delicate as smartphones. Soon, some should be easy enough to program and deploy that they no longer will need expert overseers. Robots are getting much lighter, they can be repurposed easily and can do delicate work humans find very difficult and once regarded as impossible for machines. “One company promises its robots eventually will be sewing garments in the U.S., taking over one of the ultimate sweatshop tasks.”183 1592

“China, India, Mexico, and other emerging nations are learning quickly,” Rifkin writes, “that the cheapest workers in the world are not as cheap, efficient, and productive as the information technology, robotics, and artificial intelligence that replaces them.”186 A recent study by University of Chicago economists Loukas Karabarbounis and Brent Nieman found that labor’s share of GDP has been declining in those three nations as well as most of the other nations they examined. Their explanation? Advances in information technology caused the price of plant, machinery, and equipment to drop, so companies have shifted investment away from labor and toward capital. They determine that in the United States almost one-half of the decline in the share of labor in the national income can be attributed to businesses’ replacing workers with computers and software.187 By 2012 the global sales of industrial robots was a $28 billion annual market, and the fastest-growing market is China, where robot installations have been increasing at a 25 percent annual rate since 2005.188 China still has a long way to go, as it has just thirty robots per 10,000 manufacturing employees compared to South Korea (437), Japan (323), Germany (282), and the United States (152), according to the International Federation of Robotics, a trade group. The research firm IHS Technology projects that robot sales in China will increase from 55,000 units in 2014, to 211,000 units in 2019.189 Consider Foxconn, the largest maker of electronic components in the world and the largest exporter in Greater China. Foxconn is single-handedly responsible for manufacturing nearly half of the consumer technology in the world, and much, if not most, of what Americans own in terms of smartphones and tablet computers. It has annual revenues of $135 billion and is the third-largest employer in the world, with 1.2 million workers. Foxconn grabbed its market share by providing a low-paid and heavily exploited workforce for Western firms, working in conditions right out of a Charles Dickens novel. 1609

Foxconn CEO Terry Gou said in 2015 that the firm has been adding thirty thousand industrial robots annually since then, and the process is being accelerated to the point where he expects robots and automation to complete 70 percent of its assembly-line work by 2018. Gou eventually foresees a “robot army”—Foxconn has invested heavily in robotics research—as a way to offset labor costs. “I think in the future young people won’t do this kind of work, and won’t enter the factories,” Gou says.191 Foxconn is not an outlier or some kind of “futurist” firm.192 It is part of a trend. The headline of a 2015 New York Times report from China said it all: “Cheaper Robots, Fewer Workers.” It explained that a few low-tech industries, like garment manufacturing, are moving from China to places that still have very low wages, like Bangladesh. But many industries, particularly electronics, are still moving factories to China. That is because so many of the parts suppliers are now in China that it is often more costly to do assembly elsewhere. So although building robots to replace workers is seldom cheap, a growing number of companies are finding it less costly than either paying ever-higher wages in China or moving to another country.193 We doubt that automation will replace most labor in China, India, or the global south in the near term; there is still more than enough cheap labor.194 We also doubt that firms such as Foxconn anticipate a workerless world in the visible future—although Gou says the firm already has a fully automated plant in Chendu that works 24/7 with the lights off. 1628

One industry analyst says that there will be a few million manufacturing jobs left in 2040. In 2003 there were 163 million manufacturing jobs worldwide.196 All of this is bad news for a capitalist economy, which needs workers with decent incomes so they can become consumers who purchase products. 1646

From Buffalo and Pittsburgh in the east to Cleveland, Akron, Toledo, and Detroit in the middle, and on to Gary, Chicago, and Milwaukee in the west, gigantic factories producing steel, glass, rubber, machine tools, and the like were ever-present, in addition to the iconic auto plants. Millions of people earned good wages and the economies were strong, and at the center of it all was the automobile. That doesn’t even begin to factor in all the construction and real estate development—that is, suburbanization—and other ancillary industries that resulted as well. One can make the case that automobilization was a central factor in the health of US capitalism for much of the twentieth century. It more than offset the losses to employment that the automobile had created by ending the “ecology of horse and plow and the semimodern technology of the railroad and the streetcar.”198 Is anything like this occurring or on the horizon due to computerization and the Internet? To our knowledge, Galbraith has studied that question as much as anyone, and his answer is an emphatic “no.” “With computers and the Internet, this scope for secondary employment is far less.” Indeed, the evidence is that the opposite is the case. “The ratio of jobs killed to jobs created in this process is high,” Galbraith writes. “Moreover, many of those displaced are not only unemployed but also obsolete.” One of the virtues of computerization and the Internet proves to be a great problem for a capitalist economy: it not only saves on labor, but it also saves on capital, as it becomes so much more efficient.199 Ironically, perhaps the only tangible new sector of jobs for humans has been provided by Rifkin, who states that “there is one last surge of work: in the next 35 years we will have to put the infrastructure of the automated economy in place—robots are not going to do that.” Exactly how many jobs that will require is unclear, but Rifkin notes that “this transformation will keep two more generations busy but the downside is of course that the smarter technology gets, the less workers it needs to run it properly.” And, this “surge of work” is paving the way for the end of work by mid-century.200 People who study the list of the most common occupations find it to be largely the province of the types of jobs that predated the computer and are now in its crosshairs. “Nine out of 10 workers today are in occupations that existed 100 years ago,” Thompson writes, “and just 5 percent of the jobs generated between 1993 and 2013 came from ‘high tech’ sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people.”201 1657

Amazon, for another example, already uses some fifteen thousand robots in its warehouses.203 Moreover, those humans who remain 1681

There are not enough “specialized new digital jobs, like people who create apps,” a business reporter writes, “no matter how we’re educating people. Our new industries simply aren’t labor-intensive.”206 When Sidelsky pressed the optimists to describe some of the “many new types of jobs” that will be created, they came up with “lead drivers of multi-car road trains” in the coming era of driverless cars, “big data analysts, or robot mechanics. That does not sound like too many new jobs to me.”207 1688

By the end of 2014, former Treasury Secretary Lawrence Summers stated that he no longer believed that the automation process would create new jobs to replace the ones it was eliminating. “This isn’t some hypothetical future possibility,” he said. “This is something that’s emerging before us right now.”210 Due to automation, “there is no reason to believe there will be jobs for all people at socially acceptable wages,” the commission on the state of the US economy headed by Summers and Balls concluded in 2015. “The rapid pace in computer innovation of routine tasks has rightfully worried policymakers, as this scale of automation has little precedent in industrialized economies.”211 In 2013 two Oxford University scholars published a detailed research paper that concluded that 47 percent of existing US jobs—including many “middle-class” service jobs—were at “high risk” of being eliminated due to automation.212 This has led some respected observers to predict unemployment rates in the coming decades in the 50 percent range. 1702

Amara’s Law, named after systems engineer Roy Amara: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”213 What we are comfortable saying—and what we believe must be said loudly and emphatically—is that the present course is taking all the trends toward increased inequality and poverty already in existence and making them worse. Technological displacement of workers, Summers correctly concludes, “is likely to be a substantial factor pushing toward more inequality in the future.”214 No evidence provided by anyone suggests otherwise. And that alone, not a prospective frightening rate of unemployment decades down the road, should be more than enough to get everyone’s attention. This conclusion comes as no surprise to labor unions and progressive economists. Paul Krugman writes that “we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.”215 But 1713

Brynjolfsson and McAfee stand as arguably the world’s greatest cheerleaders for automation and what they refer to as “the second machine age.” But they acknowledge that “the gains, however large, have been concentrated among a relatively small group of winners, leaving the majority of people worse off than before.”216 The Economist writes that “the prosperity unleashed by the digital revolution has gone overwhelmingly to the owners of capital and the highest-skilled workers.”217 It will continue into the future and “will contribute to pressure to reduce labour rights in all sorts of situations.”218 The Economist also notes there is a “squeezing out” of the middle class, whose emergence in the twentieth century “was a hugely important political and social development across the world.”219 There are crucial existential questions that the new era of artificial intelligence, robotics, and computerization brings to the forefront. “It’s apparent,” Greengard notes, “that society is hitting a tipping point where humans are engineering our own obsolescence.”220 What is the relationship of humans to their machines?221 At what point are they no longer “our” machines? What does human being mean? What makes us happy? Or, the question that technology historian George Dyson posed: “What if the cost of machines that think is people who don’t?”222 Organizations like the Future of Life Institute, funded in part by Tesla founder Elon Musk, the Lifeboat Foundation, and the recently created Center for the Study of Existential Risk at Cambridge University all address the “existential risks” for humanity posed by genetic engineering, nanotechnology, and artificial intelligence, particularly as we approach the so-called singularity, the hypothetical moment when artificial intelligence surpasses the human intellect. As renowned Cambridge astrophysicist Sir Martin Rees puts it, the risk is exponentially greater because of “the ease with which a single person or company can cause catastrophic harm.”223 In July 2015 the Future of Life Institute released a letter signed by some three thousand artificial intelligence researchers and sixteen thousand other noted scholars calling for a global ban on offensive autonomous military weapons. “Artificial Intelligence (AI) technology has reached a point where the deployment of such systems is—practically if not legally—feasible within years, not decades, and the stakes are high: autonomous weapons have been described as the third revolution in warfare, after gunpowder and nuclear arms.”224 1724

Martin Ford is spot-on when he writes that “the problem is not with technology; it is with our economic system, and it lies specifically in that system’s inability to continue thriving in the new reality that is being created.”225 We would only add this: it is not even an economic problem as much as it is a political one, because the only plausible way to solve the great structural problems facing the economy will be through politics. 1748

produces an economy that is marked by low growth and mounting inequality and poverty. In an extreme case, the fruits of automation may then be denied to all. 1773

In 1930, as capitalism entered the worst depression of the twentieth century, and as the world was in the midst of “a bad attack of economic pessimism,” Keynes wrote a short piece to remind people that the problems of the economy were due not to its weakness, but rather to its extraordinary productivity. He noted that US factory output per worker was 40 percent greater in 1925 than in 1919. He projected that within readers’ lifetimes, the number of workers needed to “perform all the operations of agriculture, mining, and manufacture” would be reduced by 75 percent. Keynes hypothesized that in a century’s time, the “economic problem” would be solved, and very little human labor would be required to provide all people with living standards at least eight times greater than those of 1930.230 1820

Thompson writes in the Atlantic. “The sanctity and preeminence of work lie at the heart of the country’s politics, economics, and social interactions. What might happen if work goes away?” Keynes’s pessimism at least for the short term is well founded. “The paradox of work is that many people hate their jobs,” Thompson notes, “but they are considerably more miserable doing nothing.” This leads Thompson to a provocative conclusion: “Most people do need to achieve things through, yes, work to feel a lasting sense of purpose. To envision a future that offers more than minute-to-minute satisfaction, we have to imagine how millions of people might find meaningful work without formal wages.”232 1830

In popular economic theory, such revolutionary increases in productive capacity are supposed to translate into higher living standards, much shorter workweeks, richer public infrastructure, and a greater overall social security. Society should have the resources to tackle vexing environmental problems with the least amount of pain possible. In fact, however, nothing on the horizon suggests that this is in the offing. As automation and computerization take productive capacity to undreamed-of heights, jobs grow more scarce and are de-skilled, many people are poorer, and all the talk is of austerity and seemingly endless cutbacks in social services. There is growing wealth for the few combined with greater insecurity for the many. Washington, we’ve got a problem. The false assumptions, of course, are that the benefits of the technology accrue to more than the owners of the firms deploying the technologies. And also that capitalists have incentive to produce far more than they do to satisfy the needs of people worldwide. In fact, Veblen had it right: capitalists produce as much as they do only as long as it remains profitable to do so. Producing more than that lowers prices and lessens profits. In short, to follow Keynes’s logic to a place he did not go, capitalism would seem to have little or no reason to exist if the “economic problem” is solved, so it is imperative that the economic problem remain. For business and wealthy investors to continue to win, everyone else has to lose. In our view, the evidence points in one direction: the economy needs to be fundamentally reformed, if not replaced. Capitalism as we know it is the wrong economic system for the material world that is emerging. This is a radical conclusion, but it is not made merely by radicals. The number of true believers who think leaving firms and wealthy investors alone to do as they wish will ultimately solve the employment problem and give us a great economy that can be the foundation for a vibrant democracy is shrinking, primarily because it is a faith-based position. There are also some who have a similar faith that technology is innately progressive and all-powerful, so it can and will solve capitalism’s problems for us. They tell us that all we have to do is get out of the way, make some fresh popcorn, and grab a front-row seat as the future unfolds. But researching this book, what has been striking to us is that many, perhaps most, of the people who have studied these matters—from across the political spectrum—recognize that if the system is left alone, it will not right itself. Instead, structural changes are needed, and government will have to play the central role in determining and instituting these changes. Even those who believe that the existing capitalist system provides benefits that make it worth saving realize that significant reforms and government policy interventions are necessary to prevent intolerable outcomes. “It’s time to start discussing what kind of society we should construct around a labor-light economy,” Brynjolfsson and McAfee conclude. “How should the abundance of such an economy be shared? How can the tendency of modern capitalism to produce high levels of inequality be muted while preserving its ability to allocate resources efficiently and reward initiative and effort? What do fulfilling lives look like when they no longer center on industrial-era conceptions of work? How should education, the social safety net, taxation, and other important 1849

The solutions to the employment and economic crises in the United States are political. The great debate is over what types of reforms there should be, and what type of system we should end up with. A core responsibility of the democratic state is to provide the ground rules and basis for an economy that will best serve the democratically determined needs of the people. An unavoidable part of this debate is to take up the issues last taken seriously in the 1960s: How should technology best be deployed to serve human needs? Never has the need for such a democratic debate and policymaking been greater than it is today. 1878

Milton Friedman’s vision of a “free” society with no democratic infrastructure. It is a society where most citizens get nothing of value from the government, and are told they can never get anything of value from the government, so they logically lose their interest in it. As Wolin writes, when politicians proceed “methodically to reduce or eliminate social programs, the result is tantamount to a deliberate strategy of encouraging political apathy among the poor and needy.”170 3551

and then increased, for no coherent reason. Continual warfare is now hard-wired into the political economy, a part of the informal constitution. Second, beginning in the 1980s, for the first time in US history, the federal government began to systematically “privatize” public services and “outsource” to private firms what had traditionally been government activities.175 States and local governments have followed suit, and both parties participate in the process.176 The purported reason for privatization and outsourcing was to bring market efficiency to the public sector; it followed from what Tony Judt described as “the intellectual shift that marked the last third of the 20th century . . . the worship of the private sector and the cult of privatization.”177 Research suggests that politics and greed had the most to do with what the government privatized, and that the efficiency claims were rarely realized and often flat wrong. Instead, this became a cash cow for large corporations and wealthy investors and has fanned the flames of corruption.178 For investors and corporations hard-pressed to locate profitable investments in the sainted “free market,” having a chance to grab a fistful of taxpayers’ dollars and take over military functions, prisons, public schools, and anything else that wasn’t nailed down is a gift from the heavens, especially when the terms are invariably generous, with all-but-guaranteed high rates of return. This also creates powerful lobbies with a decided interest in more militarism, more prisons, and more privatization of schools, so more public money can go into their coffers.179 The US government, under Republicans and Democrats, seems to be dedicated to fattening the bank accounts of crony capitalists above all else. 3589

By removing the government from important functions, it lessens the ability of the citizenry to play a role in the economy and it locks in business domination. Privatization and outsourcing lessens the ability of government to solve social problems and therefore generates cynicism toward it. And, to top it off, evidence suggests privatization has contributed to the rapid escalation of economic inequality.180 Ironically, the administration of the government by the “free market” crowd proves their exact point: government is corrupt, incompetent, and not to be trusted.181 The end result is a great demoralization and depoliticization. The weltanschauung has changed, precisely as intended.182 The cancer of the “excess of democracy” 3605

the present rulers have spent the past forty years trying to convince everyone that becoming part of an aroused and engaged and organized citizenry is unnecessary and a waste of time. Arguably their greatest victory of the past four decades has been converting the longstanding American optimism that democracy can lick any problem before it into a morose pessimism that there is no alternative, and resistance is futile. Of course it is frustrating for citizens to be fighting old fights for rights that should have been secured long ago. But the elites know something that should give us all encouragement: the current rulers cannot win a fair fight so they must rig the game. In times of crisis, like the 1970s, their contempt for democracy comes to the surface. 3627

Unless there are major structural changes, even those liberties and privileges we enjoy today may be in jeopardy. This is a frightening proposition. But the world the current rulers have made is ill-equipped to address the crisis of unemployment and underemployment, and in no position to advance democratic practices and values. It has to go. The humane and effective solution to the economic crisis requires that (1) the political system be rejuvenated into a powerful democratic infrastructure that (2) draws people into public policy debates as effective participants. That is the route to the best possible outcomes. Then a frank and effective debate over how best to restructure the economy to serve human interests can occur. In that process the weltanschauung will change, and the crisis will appear as more of an opportunity than as a threat, and human imaginations will be unchained. We can use the technologies to build an egalitarian, humane, sustainable, and democratic society as has never before been seen. The good news is that nearly all the elements of a democratic infrastructure that we list in Chapter 1 and return to in Chapter 6 have deep roots in American political history. Indeed, what is required to have a credible democracy is well known across the planet. The other good news is that there is no mystery about what creates democracy and democratic infrastructure. They advance primarily with energy from dynamic popular social movements, as we discuss next, in Chapter 5. Social activism changes everything. 3634

In the early days of the American experiment, each state was required to establish its own constitution. Since then, it has been a standard that states have constitutions. As we will explain later in this chapter, they are much more dynamic documents than the US Constitution. Many states have held, and continue to hold, constitutional conventions not just to write the documents but to update them. Others have established relatively easy processes for amending constitutions by petitioning to schedule referendum votes on particular issues. * The capitalism roundly celebrated today as commanded from on high through the vessel of the US Constitution proved to be an acquired taste deep into America’s history. In his 1861 State of the Union Address—in the era when capitalism’s contours were indeed becoming visible—President Abraham Lincoln closed his speech, which had focused on the raging Civil War, by stating, “In my present position I could scarcely be justified were I to omit raising a warning voice against this approach of returning despotism.” The despotism that so concerned Lincoln was “the effort to place capital on an equal footing with, if not above, labor in the structure of government.” Lincoln elaborated on the notion: “Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” This only scratches the surface of Lincoln’s remarkable statement about the relationship of capital and labor to democracy. Abraham Lincoln, State of the Union Address, December 3, 1861, http://www.presidentialrhetoric.com/historicspeeches/lincoln/stateoftheunion1861.html. * There were obviously other motives as well, of a 3650

Here is a sample of the voice of moderation, from King’s 1967 speech announcing his opposition to the war in Vietnam: “The war in Vietnam is but a symptom of a far deeper malady within the American spirit, and if we ignore this sobering reality, we will find ourselves organizing ‘clergy and laymen concerned’ committees for the next generation. They will be concerned about Guatemala and Peru. They will be concerned about Thailand and Cambodia. They will be concerned about Mozambique and South Africa. We will be marching for these and a dozen other names and attending rallies without end unless there is a significant and profound change in American life and policy. . . . This is the role our nation has taken, the role of those who make peaceful revolution impossible by refusing to give up the privileges and the pleasures that come from the immense profits of overseas investments. I am convinced that if we are to get on to the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered. A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies.” Martin Luther King Jr., “Beyond Vietnam,” New York, New York, April 4, 1967, http://mlk-kpp01.stanford.edu/index.php/encyclopedia/documentsentry/doc_beyond_vietnam/. * It was left to the entirely unrepentant Milton 3667

Friedman doctrine: “The Social Responsibility of Business is to Increase its Profits.” Period. See Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times, September 13, 1970, p. 33. 3685

campuses, we occasionally encountered spirited defenses of the status quo. No more. On our recent tours we found deep recognition of the crisis and a palpable desire to address it: to boldly and genuinely democratize the nation. But we also found a profound and numbing pessimism. Americans live in a time when it often seems that nothing of consequence is ever accomplished by the political system for the benefit of the people—or, at the least, that nothing that is accomplished is as good as was promised, or as permanent as expected. When a putative candidate of the people, Barack Obama, is elected with spellbinding rhetoric and overwhelming, unprecedented support from young voters, the actual results are pretty much business as usual on core economic issues, if not across the board. The message we got from every corner of the country, from every campus and church basement and union hall, was that the experience of politics in recent years has poured gasoline on the flames of cynicism. You can fight the power, we were informed. But you cannot win. Resistance, too many Americans of good sense and good will were telling us, is futile. 3706

The resulting depoliticization may well be the greatest victory of the counterrevolution launched in the 1970s by the web of corporate-funded think tanks, policy networks, political action committees, and media that has come to dominate the discourse. It has so disillusioned those who know the current system is not working that many of the Americans who should be our most engaged and active citizens see no hope at all. This represents the greatest challenge Americans face today as a people. Yet, it is not a new challenge. Rulers have always found that having their subjects be quiescent of their own volition is the preferable means of maintaining the status quo. But history also tells us that a time comes when the people can stand it no more—when it is not just optimism but necessity that inspires a reaction against conditions that have grown unbearable—when, as Thomas Jefferson wrote in the Declaration of Independence, “evils” are no longer “sufferable.” This will be the case again, and soon. Indeed, there are signs all around us that the roots of a new activism on behalf of economic democracy are growing underneath the corporate media radar. There was no movement for a fifteen-dollar-an-hour minimum wage when we were touring in 2010, and only the barest hints of one when we were touring in 2013. Now, that movement is everywhere. There are parallel movements for a Retail Workers Bill of Rights, for new unions, for a new economy. These movements are not yet so powerful as they will be, and they are not yet so linked together as they will be. But the remarkable response to the presidential candidacy of Bernie Sanders, which made the linkages in a political context, suggests that the prospect for a transformational moment is real. 3723

AS REAL A REVOLUTION AS THAT OF 1776 We have reviewed the crucial debates concerning democracy at the founding of the nation and in its earliest years. There were also important lessons then about how to make effective social change. “The man who loves his country on its own account, and not merely for its trappings of interest or power, can never be divorced from it, can never refuse to come forward when he finds that she is engaged in dangers which he has the means of warding off,” wrote Thomas Jefferson in a 1797 missive that noted threats to liberty coming not from distant kings or tea companies but from elected congressmen and presidents. 3745

the author of the Declaration of Independence observed that “it behooves our citizens to be on their guard, to be firm in their principles, and full of confidence in themselves. We are able to preserve our self-government if we will but think so.”4 Americans still believe this. But they are not, necessarily, “full of confidence in themselves.” For that confidence to be renewed, a connection must be made. 3751

It was then that workers and farmers would no longer settle for old inequalities dressed up in an emperor’s new clothes of industrial “progress.” They began to identify as Chartists, joining their disparate protests, their disparate energies, their disparate fears, and their disparate hopes to the campaign for a “People’s Charter” that demanded the democratization of politics and governing:        •  All men to have the vote (universal manhood suffrage)        •  Voting should take place by secret ballot        •  Parliamentary elections every year, not once every five years        •  Constituencies should be of equal size        •  Members of Parliament should be paid        •  The property qualification for becoming a Member of Parliament should be abolished16 Today, these changes may appear to be simple and incremental reforms. But at the time they were lodged by the London Working Men’s Association, the demands were portrayed as the height of radicalism—anticipating some principles of equal representation that the United States, the supposed exporter of democratic ideals, would not formally embrace for more than a century. Yet, when the People’s Charter was first circulated in 1838, the radicals gathered 1.25 million signatures supporting their cause, and then several years later they gained 3 million signatures.17 The powerful pushed back, often using violence to thwart peaceful protest and direct-action demonstrations, yet even official historians now accept that “the Chartists’ legacy was strong” and reforms once imagined as radical were with relative speed accepted as “inevitable.”18 From these reforms came a new politics, and from that new politics came transformations of working life and of society that answered the “clumsy” questions first posed by the Luddites about what would happen to the displaced, the unemployed, the unrepresented masses in a new industrial age. 3843

How did this happen? John Bates, an English Chartist who would eventually immigrate to the United States and continue the democratic struggle by organizing miners into a pioneering American union, offered the best explanation. Recalling the transformative moment when many struggles became one, he explained that in Britain “here were [radical] associations all over the county, but there was a great lack of cohesion. One wanted the ballot, another manhood suffrage and so on. The radicals were without unity of aim and method, and there was but little hope of accomplishing anything. When, however, the People’s Charter was drawn up . . . clearly defining the urgent demands of the working class, we felt we had a real bond of union; and so transformed our Radical Association into local Chartist centres.”19 A period of economic and social upheaval spawned a plethora of radical responses that slowly coalesced into a cohesive demand for democracy. This is an arc of history that must be understood in our times. It provides an indication of the vital role to be played by contemporary campaigners on a host of issues, and of the way in which Americans might confront and tame the digital disruptions that have already occurred and those that are sure to come. Thompson invites us, correctly, essentially, to look for a new set of heroes who are not celebrated in the “official” histories of the past or on the business pages of the New York Times or the Wall Street Journal today: I am seeking to rescue the poor stockinger, the Luddite cropper, the “obsolete” hand-loom weaver, the “Utopian artisan,” and even the deluded follower of [religious prophetess] Joanna Southcott, from the enormous condescension of posterity. Their crafts and traditions may have been dying. Their hostility to the new industrialism may have been backward-looking. Their communitarian ideals may have been fantasies. Their insurrectionary conspiracies may have been foolhardy. But they lived through these times of acute social disturbance, and we did not. Their aspirations were valid in terms of their own experience; and, if they were casualties of history, they remain, condemned in their own lives, as casualties. Our only criterion of judgment should not be whether or not a man’s actions are justified in the light of subsequent evolution. After all, we are not at the end of social evolution ourselves. In some of the lost causes of the people of the Industrial Revolution we may discover insights into social evils which we have yet to cure. Moreover, this period now compels attention for two particular reasons. First, it was a time in which the plebeian movement placed an exceptionally high valuation upon egalitarian and democratic values. Although we often boast our democratic way of life, the events of these critical years are far too often forgotten or slurred over. Second, the greater part of the world today is still undergoing problems of industrialization, and of the formation of democratic institutions, analogous in many ways to our own experience during the Industrial Revolution. Causes which were lost in England might, in Asia or Africa, yet be won.20 Thompson penned those words more than half a century ago, 3865

First, we are certain that Thompson’s view of political formation is appropriate not merely to an industrial age but to a digital age. Second, we fear that the timelines Thompson worked on are speeding up, as barriers once thought insurmountable are collapsed in a chaotic age when historian of science James Gleick charts “the acceleration of just about everything.”21 3892

Theodore Roosevelt and his supporters proposed more than a century ago when they spoke of replacing “the tyrannies” of economic and political elites with governance that starts with the premise that “this country belongs to the people who inhabit it. Its resources, its business, its institutions and its laws should be utilized, maintained or altered in whatever manner will best promote the general interest.”22 3898

Roosevelt and his allies argued that “it is time to set the public welfare in the first place.”23 But 3905

America has seen many moments of intensely focused and effective popular engagement in the past, as abolitionists forced the issue of slavery to the center of the nation’s agenda, as “vote yourself a farm” campaigners forced the redistribution of public lands to the poor and new immigrants, as populists and trust busters undid the Gilded Age, as New Dealers saw off the “Toryism” of the Wall Street gamblers and unfeeling corporatists whose covetous greed had crashed the global economy, as civil rights campaigners began to give meaning to a two-centuries-old promise that “all men [and women] are created equal.” None of these movements blossomed from thin air. They bloomed with deep and complex root structures, which had grown together over decades. Disparate movements for what had once seemed to be very different causes came, usually in a moment of crisis, to a realization that they were not so different in their fundamental purposes. 3924

Like the Chartists of another land, responding to an earlier stage of an ongoing industrial revolution, Americans came in the early years of the twentieth century to understand the necessity of uniting in pursuit of democratic reforms that were needed to address the corruption, the inequality, and the economic and political violence of a new age of “robber barons.” It is no coincidence that the economically and socially unstable period from 1910 to 1920 saw the United States amend its constitution to create an elected rather than an appointed US Senate, to establish an income tax and the infrastructure by which corporations would be taxed and regulated, to extend the franchise to women so that 133 years into the American experiment it might finally be possible to speak of majority rule.25 The first wave of the modern democratic infrastructure was being constructed. Nothing was given to the American people in this period. These constitutional amendments were demanded by a great movement for reform that crossed lines of gender and race and class and partisanship and immediate self-interest. The political platforms of the 1912 election—in which the Democratic, Republican, Progressive, and Socialist parties competed with a seriousness and an intensity that has not since been matched—did not peddle pabulum. They outlined bold agendas for altering the character of the economy and the direction of society, and they recognized the need for democratic changes that would make it possible to achieve those alterations. The economic critique drew from economist Thorstein Veblen’s summary dismissal of then-existing capitalism as irrational and unfair. 3933

the practical agenda of the Socialists, with its calls for a minimum wage, unemployment insurance, old-age pensions, conservation of natural resources, and an end to child labor, was echoed in the platforms of the other parties. So, too, were calls for an elected Senate, and for women’s suffrage. And so, too, in only slightly less ardent language, was the understanding of what was awry. The Socialists argued that “the capitalist system has outgrown its historical function, and has become utterly incapable of meeting the problems now confronting society.”26 They denounced “this outgrown system as incompetent and corrupt and the source of unspeakable misery and suffering to the whole working class.” And they explained that in spite of the multiplication of labor-saving machines and improved methods in industry which cheapen the cost of production, the share of the producers grows ever less, and the prices of all the necessities of life steadily increase. The boasted prosperity of this nation is for the owning class alone. To the rest it means only greater hardship and misery. The high cost of living is felt in every home. Millions of wage-workers have seen the purchasing power of their wages decrease until life has become a desperate battle for mere existence. Multitudes of unemployed walk the streets of our cities or trudge from State to State awaiting the will of the masters to move the wheels of industry. The farmers in every state are plundered by the increasing prices exacted for tools and machinery and by extortionate rents, freight rates and storage charges. Capitalist concentration is mercilessly crushing the class of small business men and driving its members into the ranks of property-less wage-workers. The overwhelming majority of the people of America are being forced under a yoke of bondage by this soulless industrial despotism.27 3947

compare the language of the Socialists with the program outlined by former President Theodore Roosevelt and his Progressive Party, which began by announcing that “to destroy this invisible government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”28 The Progressives contended that the “test of true prosperity shall be the benefits conferred thereby on all the citizens, not confined to individuals or classes, and that the test of corporate efficiency shall be the ability better to serve the public; that those who profit by control of business affairs shall justify that profit and that control by sharing with the public the fruits thereof.”29 Roosevelt and his compatriots were not socialists. They were simply speaking the language of the moment; it is a clear example of how the weltanschauung had changed. Indeed, as he prepared his 1912 candidacy, Roosevelt argued that the absence of effective state, and, especially, national, restraint upon unfair money getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows. Again, comrades over there, take the lesson from your own experience. Not only did you not grudge, but you gloried in the promotion of the great generals who gained their promotion by leading the army to victory. So it is with us. We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary.30 Roosevelt was right. Meaningful progress toward the betterment of society could not be achieved without facing the fact that corporations, not citizens, were in charge. The wealthy men who controlled those corporations were absolutely unwilling to act in the public interest, and as such they were employing the great developments of an age of invention and innovation—and the accumulated wealth associated with the mass production of those inventions and the implementation of those innovations—to consolidate their power rather than to improve the condition of the great majority of Americans. Roosevelt recognized that the improvement in the circumstance of that great majority could not be achieved without a democratic revolution. He called it “reform” or “progressivism.” His opponents called it “dangerous” or “anarchism.” But what Roosevelt proposed in the second decade of the twentieth century was precisely what must be proposed today—an outline for democracy in a new age: If our political institutions were perfect, they would absolutely prevent the political domination of money in any part of our affairs. We need to make our political representatives more quickly and sensitively responsive to the people whose servants they are. More direct action by the people in their own affairs under proper safeguards is vitally necessary. The direct primary is a step in this direction, if it is associated with a corrupt practices act effective to prevent the advantage of the man willing recklessly and unscrupulously to spend money over his more honest competitor. It is particularly important that all moneys received or expended for campaign purposes should be publicly accounted for, not only after election, but before election as well. Political action must be made simpler, easier,… 3963

The 1896 Democratic platform was thick with talk of gold and silver “standards,” but devoid of a vision for how to make a politics that would deliver a new economy.41 Bryan accepted the political structures that had been assembled to defeat him, and he was, predictably, defeated. 4058

as a crusading journal) published a nine-part series on the “Treason of the Senate,” which declared that “treason is a strong word, but not too strong to characterize the situation in which the Senate is the eager, resourceful, and indefatigable agent of interests as hostile to the American people as any invading army could be.”44 Instead of waiting for a “kept press” to tell the truth about machinations of “the money power,” progressives such as Robert M. La Follette began to start their own magazines (La Follette’s Weekly, now the Progressive, started in 1909), socialists took local publications such as the Milwaukee Leader and the New York Call national, and anarchists such as Emma Goldman became editors. The labor press flourished. And the exposés and calls to action grew so loud that the “kept press” in many instances grew a little less kept and a little more conscious that something had to change. In the period leading up to the 1912 election, connections were constantly made between economic and social ills and the dysfunction of democratic institutions. The “disconnect” of that time between a demand for change and meaningful reform was revealed and reviled. Citizens could organize, advocate, assemble and petition for the redress of grievances; they could raise cries against injustice and against the practical failures of ruling economic elites; and they could decry the economic misdeeds that created a boom-and-bust pattern that seemed always to boom for the wealthy but that frequented busted everyone else. They could combine direct action that yielded isolated victories (particularly for skilled workers involved in industrial disputes) with electoral action that made temporary gains in cities such as Milwaukee and Cleveland, where brutally corrupt Democratic and Republican machines were upended by the transformative administrations of “Sewer Socialists” and other progressive reformers. But the prospect of a whole and meaningful response to the crisis of the age did not become real until the connection between political reform and economic and social progress became a central theme of national politics. The disconnect could no longer be ignored. It had to be addressed. The political reforms that were demanded and largely achieved in the period from 1910 to 1920—an elected Senate; votes for women; bans on corporate campaign contributions; direct primaries; the option for citizens to petition for initiatives, referendums and recalls; limited protections for labor organizing and collective bargaining; structural shifts that allowed for the development of state banks and municipal utilities; an expanded commitment to public education in general and higher education in particular—did not immediately repair all that ailed America. In some ways, this new democratic infrastructure made things more unstable, more uncertain. But the instability was democratic rather than feudal, and it pointed toward prospects for fundamental change that would be realized as the defeated Democratic vice-presidential nominee of 1920 became the elected Democratic president of 1932. Franklin Delano Roosevelt frequently celebrated the role that democratic reforms had played in clearing the way for policies that would humanize industry and finance, policies that voice “the deathless cry of good men and good women for the opportunity to live and work in freedom, the right to be secure in their homes and in the fruits of their labor, the power to protect themselves against the ruthless and the cunning. It recognizes that man is indeed his brother’s keeper, insists that the laborer is worthy of his hire, demands that justice shall rule the mighty as well as the weak.”45 FDR preached that the essential tool in the pursuit of a humane future was a sense of cohesion around a set of democratic principles and ideals that link all of those who are fighting “against those forces which disregard human cooperation and human rights in seeking that kind of individual profit which is gained at the expense of his… 4082

The political crisis facing Americans has to do with a more traditional definition of disconnect—the sort that occurs when a fully developed and otherwise functional device does not work because it is not connected to a power supply. The power supply we refer to is the great mass of Americans, many of them already active, many more ready to be engaged. They need a democratic infrastructure that can translate their existing and evolving demands for an economy that translates technological advancement into societal progress. 4128

But this is not the case. The economic and social changes ushered in by long periods of deindustrialization, radical workplace change, and stark wage stagnation are creating chaos that benefits 1 percent or so of our population but that leaves the rest of us confused, frightened, and justifiably angered. The keyword of our moment is disruptive.50 4144

abandon the suicidal notion that the corporations have an innate right to do whatever they please, social consequences be damned, as long as they are maximizing profits. This country is seeing the renewal of historic ideals of public and cooperative enterprise. New movements are taking on what Gar Alperovitz, the cofounder of the Democracy Collaborative, refers to as the “huge and agonizing long-term task” of developing and popularizing alternative models for ownership and job creation that involve “nothing less than transforming the underlying institutions that are producing the outcomes we see—in short, one way or another, transforming the system over time, beginning, as always [and as we shall see], in local communities where the pain is greatest.”59 This is big bold stuff, and it has moved way beyond theory. The United States has a vibrant Slow Food movement that has established itself in every state and every major city, along with many small towns. This movement is developing and supporting sustainable models for farming, food production, and eating out—or in. And there is an expanded vision of cooperative enterprise that has begun to renew old ideals of worker ownership and consumer involvement in a country where almost thirty thousand cooperatives have issued almost 350 million memberships.60 4199

This country has a movement to address climate change that recognizes the economic and political challenges outlined by Naomi Klein and Bill McKibben and other visionaries. And it has drawn millions of Americans, especially young Americans, into the streets to demand not merely a transition off fossil fuels but, in the words of Climate Justice Alliance co-director Cindy Wiesner, “an economy good for both people and the planet.”63 An 4224

Reverend William Barber of North Carolina’s Moral Mondays movement that “we need a transformative moral fusion movement that’s indigenously led, state-based, deeply moral, deeply constitutional, anti-racist, anti-poverty, pro-justice, pro-labor movement that brings people together, that doesn’t wait for somebody to rescue you out of Washington DC, but [that] you mobilize from the bottom up.”65 4236

More than six hundred American communities have formally demanded congressional action to begin the process of undoing the Supreme Court’s Buckley v. Valeo, Citizens United, and McCutcheon decisions. They seek nothing less than a constitutional amendment that will renew the fundamental American premises that money is not speech, that corporations are not people, and that citizens and their elected representatives have a right to shape campaign finance laws to ensure that votes matter more than dollars. Sixteen states have formally requested action to amend the constitution. Millions of Americans have voted in referendums, signed petitions, and appeared before legislatures, city councils, and town boards to demand an electoral politics that is defined by ideas rather than the money power of self-interested billionaires and pay-to-play corporations.66 4241

But they have not succeeded in making big-enough change—or even in creating the space where the change might be possible. 4261

there is still a tendency on the part of advocates to imagine that one issue must go first. We hear powerful and poignant arguments for this model of prioritization or that. We have made some of them ourselves. But, if history is any indicator, we know that the defining and uniting issue will be economic. And we know that the crisis of a jobless future will bring millions of Americans who are not currently engaged into a fight that extends from the First Amendment–sanctioned direct action of assembling and petitioning for the redress of grievances through the organizing of new-model labor unions and cooperatives, to the casting of ballots on behalf of candidates who really are better than their opponents. But we also know, as was the case two hundred years ago on the moors of Yorkshire, and one hundred years ago in the sweatshops of New York, that the political process is weighted against this activism—indeed, against all activism. 4264

“political revolution” would be required to democratize politics and economics. To do this, Sanders spoke, constantly, of the need to rejuvenate the democratic infrastructure with constitutional amendments, sweeping reforms and unprecedented levels of popular engagement. 4290

We ought not neglect the concern, the fear, the anger, the passion, the hope, the idealism that have drawn millions of Americans to movements that are so real and so needed—and yet so frustrated. There is a change coming. It is a frightening change. 4301

will be rising inexorably, the damage will be racing out of control, and the range of options for action will be dramatically narrower and dramatically bleaker. Yet, because the threat is so daunting, because the requirements of a response are so great, it all becomes an abstraction. Even when people read the details of what is coming their way in ten or twenty or thirty years, even when those details are outlined by our best scientists, there is a powerful temptation to wait for a clarifying moment before leaping into action. The trouble is, environmentalists fear, that when the clarifying moment comes, it will be too late. We fear that the same could be true when it comes to reports about how the technological revolution under the auspices of contemporary capitalism is going to create new waves of unemployment and underemployment—with more poverty, wage stagnation, and inequality, and with devastating implications for society and democracy. The changes are unfolding now, in our own lives, in our own communities. The apps are being downloaded, the robots are rolling into the hospitals. We’re not talking decades. Two years from the moment you read these words, the planet will add more computer power than it did in all previous history. By the late 2030s there will likely be a thousandfold increase in computer power from where we are today. 4322

If the great mass of Americans are going to have any role whatsoever in the shaping of this future, if there is to be any chance at all that the twenty-first century will belong to the whole of humanity as opposed to the monopolists of a new Gilded Age, then the defining economic issues of the age must become the defining political issues of the age. That 4334

Americans must recognize that our contemporary political discourse stifles rather than encourages the debates about economic and social responses that might benefit the overwhelming majority of us—in large part because our political infrastructure has been organized to take essential issues off the table. Putting issues on the table is the most radical and freeing of all political acts, as it opens to everyone the range of possibility that is always available to the elites. This is the essence of democracy. Americans must build out the democratic infrastructure, not only to repair the damage that has been done to it in recent years, but to take it to places that the boldest visionaries of the past could barely imagine. We argue that the extension of democracy to economic planning is imperative. While we mention all the main elements of such an agenda herein, we reject the notion of rank-ordering them because this is an agenda that must integrate with itself. Our purpose is to illustrate the range of possibility and the free-wheeling—and, yes, disruptive—mindset that must be brought to democratic exploration and innovation. There is a point here that cannot be lost: it is impossible to imagine a decent or desirable society without a strong democratic infrastructure. Only when the democratic infrastructure is in place does it become possible to realize its promise fully. Only then do victories become more permanent, rather than fleeting. Only then do people stop fretting about their powerlessness and start using their power. 4337

the people should have created a superior economic system that worked for the whole of society and its future, not just the needs of the rulers who were locked into their destructive and short-sighted paradigm. Existing US capitalism is similarly a dubious fit for the present technological revolution, and it is a bad fit for democracy. This evidence is drawn from scholars and experts who acknowledge that a tension exists between capitalism as currently practiced and what passes for democracy in America. They understand that this puts considerable strain upon the democratic values and institutions of the country. Yet, for the most part, the notion that capitalism itself must be subject to no-holds-barred political debate is unspeakable, even unthinkable. A similar intellectual paralysis among the wise men of an ancient civilization or Soviet scholars would be derided by these same observers as a sign of the society’s corruption and the bankruptcy of its intellectual class. Yet there is little self-awareness in the United States today among those who ponder the jobs crisis and the incompatibility automation has with our current political economy. Indeed, most writers assume capitalism as it has come to be known is the basis for democracy and freedom, and that whatever happens in the future, the necessity of preserving current capitalism (or some sped-up version of it) all but trumps other concerns. Nothing should be done to alter the power of the digital giants or the unquestioned dominance and legitimacy of the profit motive when it comes to defining the future. Even the truest believers in capitalism, if they are honest with themselves, have to recognize that this is a political gambit, a means for taking the biggest issues off the table. When we cannot have a wide-ranging debate about economics, then concentrated economic power translates into general cultural power. This is the nature of the present weltanschauung. We live in a time when it is illegitimate to say that the emperor is wearing no clothes. This barrier to a no-holds-barred discourse about how best to organize a civil, humane, and deeply democratic future, with liberty and justice for all, warps the debate about the future. It takes not just issues, but ideas, off the table. And it leaves us with too narrow a range of options—even for scholars who have taught us much and care deeply about this country, its peoples, and its future. If changing the economy is off the table, how can the great economic problems outlined in their research, and in all of our books, be addressed? If we may generalize, the one solution that has currency, and that is promoted by scholars who have done so much to identify the concerns outlined in this book (Erik Brynjolfsson, Andrew McAfee, and Martin Ford, among them) is the notion of a basic income or guaranteed annual income for all people in the nation.3 The idea is that everyone gets a sufficient income, usually between ten and twenty thousand dollars annually, so that no one starves to death or goes homeless in an era where jobs become far more scarce. The sales pitch to the affluent sector of the population that will pay higher taxes to bankroll the program is twofold: (1) these tens of millions of unemployed people will certainly spend all of this money on goods and services, so it will end up back in your pockets and make the economy much stronger, and (2) unless the wealthy buy off the majority of the population, there will be extraordinary social turbulence that could make the 1930s look like a day at the beach. It says quite a bit about the constricted range of debate today that Brynjolfsson and McAfee assert that basic-income proposals are radical ideas, at the outer limits of what might be acceptable.4 Ford goes to considerable pains to explain that this project has the free-market seal of approval from Friedrich Hayek and Milton Friedman.5 God forbid anyone think of a reform that would not be embraced by capitalism’s mightiest advocates. The idea of basic income was first posited by those on the left in the… 4364

economist Tyler Cowen makes the astute point that even if this looks like a terrific deal for society’s millionaires, it is almost certain they will resist paying taxes to sustain those they regard as deadbeats and free-loaders.7 Then there develops a massive popular struggle to win and maintain the basic income. If people are going to organize a gigantic battle, they ought to fight for more than this. They ought to fight for a world where their concerns are central, and not struggle to be extras in a world of, by, and for the rich. In our view, a more humane approach would be to go in the opposite direction and simply remove certain functions from the market altogether as the society grows wealthier. Enhance democracy, don’t cash it out. Make broadband Internet access free and ubiquitous. Make healthcare free and ubiquitous. Make extensive public transportation within cities and between them free and ubiquitous. Make all education free and ubiquitous. The list goes on and on. At some point, down the road, inequality is eliminated and humans enter an entirely new phase of their history. The 4402

Education is where the major battle for the future is going on today. A coalition of right-wing, union-hating, high-tech billionaires and hedge-fund managers looking to get rich as schools get privatized is working aggressively to “reform” and effectively end public education in the United States. Most of the arguments are economic: that American kids, who are primarily educated in public schools, are falling behind children worldwide and making the nation less competitive. This is a largely utilitarian view of education that sees it as developing labor skills and high incomes for students. The one reliable measure is testing, and “reformed” school districts have children prepare for and take tests much of their time in schools. Technology is offered as a way to reduce the reliance on human teachers—and in the form of so-called distance learning to eliminate schools themselves. One can only wonder where this leads when there are far fewer jobs and people are increasingly living off basic-income vouchers. There certainly doesn’t seem to be much of a reason for schools to exist, except as holding pens for children until they get old enough to collect their own basic-income vouchers and begin shopping around for health insurance companies that will take them. What is lost in this calculus are the two reasons the United States implemented public education in the first place: (1) to educate young people so they can be engaged and effective citizens and participate fully in the governance of society, and (2) to provide education for all as a great equalizer that gives poor and working-class children a chance to maximize their potential. School reformers often claim they want to create schools to help poor kids become rich adults, but commonly they send their own children to exclusive private schools, with hardly any testing and, ironically, very little technology. Indeed, research shows that a disproportionate percentage of tech billionaires and CEOs went to alternative Montessori schools as children. And in the Silicon Valley many of their children go to alternative Waldorf Schools that emphasize freedom, flexibility, and the arts. In short, these CEOs and their children are educated in an intimate, non-competitive environment with few tests or grades and an emphasis on personal growth, creativity, and critical thinking.8 Here’s our idea: why not make it the national policy that every child in America gets the same caliber of education as the children of the wealthy? That seems to be the civilized and humane target for a post-scarcity society. Why not make this the basic premise of every education debate? 4412

ESTABLISHING THE CONTOURS OF DEMOCRACY American history as it should be taught is that of a centuries-long struggle, often against overwhelming odds, to make real the promise Lincoln enunciated on the blood-soaked fields of Gettysburg, when he spoke of government of, by, and for the people. This history begins with the painful recognition that American “democracy” started as a backroom deal between wealthy, white landholders, many of whom brutally exploited slaves, indentured servants, subsistence farmers, indigenous people, and women. The drama of the story is revealed in the retelling of how dispossessed and oppressed human beings gained for themselves a place at the table of democracy—of how African Americans, Native Americans, Chicanos, women, immigrants, religious dissenters, freethinkers, radical editors, trade unionists, poor people, young people, and gays and lesbians achieved full and meaningful citizenship. This is the greatest American story. These struggles built our democratic infrastructure and an understanding that only through solidarity, through a commitment to one another that bridged difference and indifference, could we all be free and prosperous. This is the story of how the promise of democracy became the reality of democracy. And it is vital to understanding the work of building a democratic infrastructure that is sufficient to the challenges that are coming our way. From the beginning of the American experiment, there has been an understanding of the basic requirements of democracy:        •  elections for positions of public trust by popular vote of constituents        •  the rule of law and the control of corruption        •  constraints on militarism and “continual warfare”        •  the guarantee of an independent, substantial, and uncensored free press        •  a government strong enough to address and eliminate excessive economic inequality Over time, the drafters of state constitutions, as essential frameworks of democracy and governance, have outlined three additional requirements:        •  the right to a free education for all citizens, through grade twelve, which is in all state constitutions        •  the right to form free trade unions and to engage in collective bargaining, as it is identified in some state constitutions        •  the right to a clean and sustainable environment, as it is identified in some state constitutions 4432

The Populist and Progressive Eras recognized that the character of America was changing as a once predominantly rural and agrarian country was becoming increasingly urban and industrial. New democratic practices and arrangements were developed to counter corruption and inequality. The backroom deal was finally ended as a directly elected US Senate was established. Citizens were given the power to write and veto laws via initiatives and referendums and to remove officials via the recall power. Government was given strength and meaning in relation to economic power, via the establishment of the progressive income tax, the authority to tax corporations, and the banning of corporate contributions to campaigns. But even this progress was insufficient, as the Great Depression and the rise of fascism confirmed with scorching force and immediacy. In response, Franklin Roosevelt proposed a Second Bill of Rights, also known as an Economic Bill of Rights. To realize the full promise of democracy, the United States would need to guarantee the rights to        •  meaningful work and a living wage        •  healthcare        •  an education        •  housing        •  adequate food, clothing, and recreation        •  old-age pensions and social security        •  freedom from the abuses of private monopolies in business This remains an extraordinary agenda. Realizing just what is written above would constitute nothing less than a political revolution, and an economic revolution. Our economy would need to be radically transformed—to get off the drug of militarism, to end crony-capitalism policymaking, to get real about planning and social investment—in order to provide all the elements of the economic bill of rights. And the transformation would need to be ongoing. Today’s circumstance requires that a few new protections be added to FDR’s list. For instance, the ancient sanction against corruption must be updated to guard against the privatization and outsourcing of public education and public responsibilities. It is imperative to remove profiteering from the provision of public goods: education, municipal services, public safety, and the defense of the land from foreign threats. If recent decades have taught us anything, it is that Dwight Eisenhower was right to warn against the threat posed by a military-industrial complex. And it is becoming increasingly clear that, as taxpayers and citizens, we cannot afford a prison-industrial complex or an education-industrial complex. Democracy cannot be maintained when profiteers obtain lucrative contracts and then use the money to hire lobbyists and fund campaigns so that they can obtain yet more lucrative contracts.9 4459

Likewise, having an ecology that can sustain human life is not some premium channel a society can select in addition to the democratic basic package. It is not like having satellite radio added to your new car purchase. It is the very foundation for human existence for all societies and must be regarded as such. Environmental movements have come to understand and advance the idea that their success rises and falls with movements for democracy and social justice worldwide. Today’s environmental activists recognize that a new more accountable and community-oriented economy is mandatory for human survival, and that the only way to achieve such an economy is through the dramatic extension of democratic infrastructure. As author and environmental activist Bill McKibben argues, it is imperative to “break the intellectual spell under which we live.” This is what we have termed weltanschauung, and it is joined to the hip of democratic infrastructure. McKibben explains that “the last few decades have been dominated by the premise that privatizing all economic resources will produce endless riches. Which was kind of true, except that the riches went to only a few people. And in the process they melted the Arctic, as well as dramatically increasing inequality around the world.”10 As the rough outlines of the damage done on a host of environmental, economic, and social issues come into stark relief, a sense of urgency is increasing exponentially. Also increasing is the sense that we are all in this together, and we have common interest in a democratic infrastructure. Elite solutions for the environment, just like the economy, will tend to serve elite interests. As the saying goes, if you are not at the table when decisions are being made, you are the dish that is being served. A full democratic infrastructure provides more than the right to vote. Full democratic infrastructure provides economic and social security, a free flow of information, and absolute protection against discrimination and corruption so that every citizen—not just those who are wealthy—has the freedom to engage fully in the politics and governance of the nation. None of this presupposes a particular type of economy, yet all of it presupposes that every American will have the right to participate fully and meaningfully in determining what type of economy best serves her—and best frames the future. When a crisis causes a jolt, as will surely be the case with the technological and social transformations that are now unfolding, citizens must retain the power to put economic options on the table—and to embrace the best of those options. If we want to make it through the changes that are headed our way, and to come out on the other side as a nation that enjoys what the New Economy Coalition describes as a “new economy . . . where capital (wealth and the means of creating it) is a tool of the people, not the other way around,” then there must be a democratic infrastructure that is sufficient to foster economic democracy.11 DEMOCRATIZE THE CONSTITUTION A certain portion of the work in the coming decades must address the nation’s constitutions. Constitutions underpin and frame our democratic infrastructure. Yet, they do not always make it functional. Nothing thwarts political and economic democracy like a constitution so imprecise that it allows right-wing judicial activists to make buying elections easy and voting hard. Instead of democracy, the Constitution of 1787 gave us an unelected Senate and an Electoral College and other structures intended to control rather than empower the unruly masses. Americans who had fought to end the abuses of old elites objected to the prospect of being abused by new ones. They demanded and by 1791 had won the ten amendments known as the Bill of Rights. Seventeen more amendments have come since then. Seven of those amendments overturned Supreme Court rulings, and almost all of them sought to extend democracy, end corruption, and make the federal government more responsive to new times and new challenges.12 These… 4487

Let’s start with the information that people need to be their own governors. To get to democracy, there has to be a democratization of communications that ensures that all Americans are sufficiently informed to fully engage as citizens. 4571

There are no market solutions, no technical fixes, no new economic models. There is only one way out of this mess, and it is to put the people in charge of demanding the solutions that media conglomerates and “click-chasing” reporters will not demand. People—citizens—will need to be in charge of the funding of the next media system.25 Once we remove the shackles of our stilted political discourse, problems that seem impervious to reform become areas for experimentation and great hope. 4574

With roots that go back for decades, the media-reform movement came together in its modern form to thwart Bush-era attempts to effectively eliminate limits on the amount of media that one corporation could own in one community—and, by extension, nationally. More recently, it has blocked efforts to undermine net neutrality, the essential tool for defending free speech and the free flow of communications on the Internet. In an age of rapidly changing media, then, the media-reform movement has already engaged millions of Americans in the fight to prevent some very bad things from happening.26 Now, it must make some good things happen. Media-reform activism must be part of a broad democratic agenda for a digital age.27 The goal—every bit as ambitious as those of the most ardent advocates for economic democracy—should be information democracy. Citizens who possess little or no wealth must have the same information that citizens with great wealth now enjoy. Hedge-fund managers and CEOs do not seek information as entertainment. They are not spectators. They get the best information that can be found and they act on it. Citizens who would be their own governors must adopt the same sensibility. For obvious reasons, journalism that democratizes access to information will not be funded by the elites. Bernie Sanders is precisely right when he says that “it’s not in the interest of the corporations who own the networks to actually be educating the American people so that we’re debating the real issues.”28 But it is in the interest of the people to support journalism that sustains democracy. So the United States should give the people the tools to subsidize independent, not-for-profit journalism.29 How? Begin with supercharged funding of public broadcasting and robust support for community media—along the lines already outlined by the most energetic campaigners on behalf of maximized funding for what should be “an American BBC.”30 4582

A democratic agenda must demand substantial public investments in journalism as a “public good.” This is nothing new for America. The United States developed a press system that was the envy of the world in the early nineteenth century through massive postal and printing subsidies for newspapers.31 These subsidies made the cost of production so low that the United States eventually had more newspapers per capita than any other country in the world. The founders of the American experiment were not familiar with the term public good, but they treated the press as just that. And they did so in the only way that made democratic sense, by providing generous postal and printing subsidies to all publications—even those that dissented, even those that, like the abolitionist press, proposed radical change—so that none were puppets of the government.32 What’s the modern model for establishing a nonprofit, noncommercial, competitive, uncensored, and independent press system that embraces digital technology, that recognizes the potential of new-media platforms, and that, above all, provides a journalism that is sufficient to sustain genuine democracy? How about this: every American adult gets a two-hundred-dollar voucher she can use to donate government money to any nonprofit news media of her choice. She can split her two hundred dollars among different qualifying nonprofit media, indicating her choice on her tax return or a simple form. This program would be purely voluntary, like the tax-form check-offs for funding elections or protecting wildlife. Simple universal standards can be developed for media that qualifies for voucher funding, erring always on the side of expanding rather than constraining the number of qualifying newsrooms. A small existing agency, such as the Postal Regulatory Commission (which has some history in this area), could provide necessary oversight and administration. Based on a proposal from economist Dean Baker, the Citizen News Voucher program we outline here represents a literal and practical response to the transformation of media in the digital age. Baker says it is “designed to maximize the extent of individual choice while taking full advantage of new technologies.”33 The idea borrows from the libertarian movement, in its recognition that vouchers can be used to give greater control over the expenditure of public tax dollars. It combines a healthy hostility to government control over news content with a faith in the power of individuals to make their own choices, and it recognizes the public-good nature of journalism. A news voucher program would allow public-media organizations to dramatically increase their funding. Imagine if a public television station in a metropolitan area of one million people that was ill-served by existing media—which is to say any and every metropolitan area—managed to get fifty thousand viewers to donate half of their Citizen News Voucher to help with the development of a newsroom to cover state and local elections and government. With a $5 million budget, that station would have the resources to hire top journalists and to provide a quality alternative to dwindling commercial coverage that is invariably surrounded by a slurry of negative campaign commercials. Now, imagine if most of those fifty thousand viewers donated the other half of their Citizen News Vouchers, in combination with similar numbers of viewers from twenty more metropolitan areas, to develop an evening radio and cable news program along the lines of Amy Goodman’s “Democracy Now.” That program would have close to $100 million to hire journalists to cover national and international issues. But let’s also imagine that two thousand residents and allies of an impoverished and neglected neighborhood in the core city of that metropolitan area were to direct half of the vouchers to fund a community radio station newsroom covering policing issues. Let’s put it all online, with podcasts and apps and alerts so that every one of these initiatives is available to everyone—as news… 4599

Millions of people came to the defense of the open Internet to tell Washington, in no uncertain terms, that the Internet belongs to all of us and not just a few greedy phone and cable companies.”34 Absolute protections for a free and open Internet were impossible to get. Then we got them. The information we need to utilize and maintain a democratic infrastructure will be ours if we make the struggle for that information part of an agenda that recognizes the necessity of political and economic democracy. And if we hoop ourselves together to advance that agenda, we can get it. Indeed, if we hoop ourselves together at a moment when people will be demanding transformative change, we can get a whole lot more. 4640

DEMOCRACY, NOT MONOPOLY What is striking today is that there is an emerging genre of superb books outlining the stunning increase in economic inequality in the United States over the past four decades and the disastrous implications for our economy, our democracy, and the social structure. It seems like everyone gets it. When the Occupy movement exploded onto the scene in 2011, even Republicans talked about inequality as a problem, albeit for a split-second.35 For those old enough to remember the 1960s or early 1970s, today’s America feels increasingly like a feudal or Third World country, the kind few thought possible fifty years ago. Dramatically lessening economic inequality is required to have a functional democracy; there is no two ways about it. That is one theme that has been central in every period of democratic surge in the nation’s history, and it must be so today, because indications are that unless we the people act rapidly and boldly, the current circumstance is only going to get worse, possibly much worse. One of the essential explanations for mounting economic inequality in the United States is the increasing monopoly power over the economy. This was well understood in the Progressive Era, the New Deal, and even in the 1960s. Monopolies themselves were recognized as singularly anti-democratic constructs that needed to be weakened. Economic concentration is far more prevalent today than in any of those earlier times. The digital economy is nothing if not a hothouse for monopoly. Yet the issue gets barely any serious discussion; massive monopolistic corporations are treated as if they are part of the unchangeable scenery, like the Rocky Mountain range. It shows just how powerful these firms are that they can buy their way out of critical analysis. 4646

Jefferson and Lincoln): concentrated economic power is not only a threat to smaller businesses, workers, and community enterprise, it is a direct threat to democratic governance. It must be addressed squarely or any hard-earned popular reforms will be fleeting. Fortunately, the current crisis is sparking a renaissance in thinking with regard to corporate power and monopoly.36 What’s even more encouraging now is that the talk is turning from identification of the crisis toward consideration of what to do about 4660

Teachout took it as such. “Stopping a merger like this is real political power,” she explained in the spring of 2015.38 “The Comcast defeat reminds us that we haven’t always accepted big banks, big chicken, big beef, big Monsanto, big patents, big oil, a market defined by bigness instead of competition.” To Teachout’s view, “the crash of 2008 was the first sign for many people that this concentration of power was bad for people’s lives. Although calls to break up the banks failed, the mainstream demand lives on. Banks are bigger and more concentrated than ever, but the consensus ideology was burst. However, the anti-monopoly sentiment stayed largely caged in its own arena, an idea reserved for banks, not for a way of seeing the economy more broadly.” Teachout explained that a new populist fighting force representing the broad grassroots demand that we break up big companies. When the Sherman Antitrust Act was passed, Senator Sherman spoke about it in democratic terms, ‘A Charter of Liberty,’ he said—and until the 1980s we understood that. Comcast, even without the merger, threatens our liberties. One-hundred-and-ten years ago, a group calling itself the Antitrust League held events around the country, demanding the government break up big companies. A few years later, Teddy Roosevelt used the Sherman Act to break up Standard Oil. And while it took until FDR to put in place a persistent, rational antitrust policy, Roosevelt’s choice to battle Standard Oil was a critical turning point in American history—it showed we did not have to bow before big monopolists. The modern antitrust leagues are just now forming. Teachout’s not the only one proposing to break up digital giants like Amazon and even Google.39 Nor is she alone in speaking of the need for new movements and “a new charter of liberty.”40 That’s the ticket. But why stop there? 4675

Breaking up monopolies makes sense in some cases, but in others, indeed in the most oppressive of monopoly circumstances, it is virtually impossible to break up a giant company into five or ten competitive parts. These are the “natural monopolies,” the kind that dominate the digital economy with its “network effects.” What to do? There is an old argument that could be made new again. Worried in the 1930s about the way in which “the corporation is simply running away with our economic (and political) system,” University of Chicago economics professor Henry Calvert Simons suggested that “the state should face the necessity of actually taking over, owning, and managing directly . . . industries in which it is impossible to maintain effectively competitive conditions.”41 Simons was no radical. Economist Milton Friedman referred to Simons as “my teacher and my friend—and, above all, a shaper of my ideas.”42 So why did Simons favor nationalization? His reason was both economic and political. “Few of our gigantic corporations can be defended on the grounds that their present size is necessary to reasonably full exploitation of production economies,” he argued. Yet, Simons explained, the most powerful corporations could easily thwart attempts at regulation, even blocking moves to apply antitrust laws. The practical solution was “direct government ownership and operation in the case of all industries where competition cannot be made to function effectively as an agency of control.”43 4692

Invoking Simons’s work, Alperovitz wrote in 2012 that the logic of his argument remains. “With high-paid lobbyists contesting every proposed regulation, it is increasingly clear that big banks can never be effectively controlled as private businesses. If an enterprise (or five of them) is so large and so concentrated that competition and regulation are impossible, the most market-friendly step is to nationalize its functions.”44 That opens up a host of questions that need to be solved. Most important: How can there be accountable and effective management of public enterprises? The track record in the United States and worldwide reminds us that FDR was right: the more democratic a society is, the broader its democratic infrastructure, the more likely public institutions will be honest, effective, and hugely popular. 4706

link the elements of the democratic infrastructure that have already been described to the development of what the United States has never really had: a national industrial policy that        •  focuses on creating and retaining meaningful and well-compensated work in all sectors of the economy        •  guards against the development of monopolies that reduce competition and innovation, and that threaten small business        •  supports research and development—especially in areas where investment is necessary but not necessarily profitable in the short term        •  works with private and public employers and communities to establish a proper balance between work and leisure, providing a regulatory framework that defines full-time work and guarantees that compensation is adequate so that employees can support their families without being expected to work excessive hours        •  maintains the planning, funding, and support networks needed to guarantee healthcare, disability, and retirement security for all, as well as the education, training, and transportation services that are required by twenty-first-century workers        •  encourages economic development in industrial sectors and geographical areas that may not be immediately profitable, but have great social value; by doing so it can make areas eventually cost efficient        •  ensures that workers have a voice in their workplaces and, through their unions, in broader economic planning by corporations and governments        •  recognizes the value of public utilities and public services to the whole of the economy and to the whole of society, and encourages public ownership and cooperative development        •  guarantees that the benefits of technological advances are shared by all, and that changes in the workplace are made to ease economic and social burdens rather than merely to boost profits        •  requires that trade policies benefit workers and the environment in the United States and the countries with which it trades        •  maintains a steady commitment to environmental protection and climate justice with an eye toward ensuring that economic decisions are made to promote sustainability rather than exploit the planet        •  addresses the unique challenges faced by rural and urban Americans, and by people of color and immigrants who have suffered from historical discrimination and contemporary inequity        •  establishes a national land-use policy that supports sustainable agriculture and the development of livable communities rather than sprawl and factory farming        •  is constantly evolved in a transparent and inclusive manner, with democratic oversight and governance. Of course, to mention economic planning in the United States in the past few decades is seen as utterly absurd and extremely dangerous. We are told by people who plan all the time to improve their own lives that planning by society will lead to some totalitarian hack—usually a brain-dead bureaucrat who fantasizes about Khrushchev’s Soviet Union—interfering with the untouchable market. Everyone who listens to a politician or a corporate spokesperson knows the words by heart. But the truth is we do have serious economic planning in the United States and it has been effective. Trade deals, intellectual property protections, tax policies, farm subsidies, all sorts of monopoly licenses for broadcasting, cable TV, and cellphone spectrum are forms of economic planning. So are choices made with regard to privatization and outsourcing. And let’s not forget bailouts of Wall Street and multinational corporations. The market produces its own inefficiencies, its own failures, and—in an age of crony capitalism—its own pathologies that cost taxpayers and the US economy trillions of dollars.45 Yet, when the market crashes, there are plans to protect those who did the crashing. That’s a form of planning, although… 4716

Those purportedly brain-dead bureaucrats of yesteryear are today more likely to be cynical hustlers looking to pass through “the revolving door” between government and the corporate sector. If they do it just “right,” as many former congressmen and regulators have, they can make millions in big-ticket private-sector jobs in the industries they oversaw during their period of “public service.” The minimal baseline level of credible planning that once gave the United States the most advanced physical infrastructure in the world has become so corrupt that decisions about how and when to repair that very infrastructure are made not with an eye toward keeping everyone safe and mobile but with an eye toward perfecting the curb cuts around corporate campuses and developing paying-customer lanes on soon-to-be-privatized highways. Oh, yes, there is a lot of planning on behalf of the very wealthy and the very powerful. What’s needed is planning for the rest of us. Economic planning needs to be democratized and popularized and made accountable. And this democratic planning must be done locally, regionally, and nationally. It could be that such planning will keep things just as they are, and regard its function as assisting the largest corporations to get even larger. But if that is the case, it should be the result of the informed consent of the people. There is no indication, however, that corporate America believes it can win a fair fight on those terms. So is economic planning un-American or necessarily radical? Hardly. Most of what is discussed here builds on the industrial policies and approaches to economic planning long embraced by the governors of the strongest economic powerhouses of Europe, especially Germany. We do not hold up the Germans or the Danes or the Norwegians or the Swedes as perfect planners. And we do not suggest that the United States must borrow precise policies—although they are instructive, and we particularly appreciate the groundbreaking work of Britain’s Trades Union Congress to show how easily the German model might be adapted to other countries.46 What we do suggest is that Jeremy Wiesen, a professor of entrepreneurship (emeritus) at New York University’s Stern School of Business, was absolutely right to argue several years ago in the Wall Street Journal: “We shouldn’t need to implore the government to have at least as many officials focused on new business creation as are measuring GNP and GDP. The term ‘industrial policy’ should not be seen as a pejorative. It certainly isn’t in China. Nor should it be anathema for the U.S. government to provide capital and other incentives to keep scientific and entrepreneurial talent at home, give aggressive trade assistance, and incubate new businesses—all of which is done in China.”47 We believe with economists and Robert Pollin and Dean Baker that “an effective combination of public investments and industrial policies” is necessary “to meet the fundamental challenges at hand.”48 And we emphatically agree with Pollin and Baker that “a public investment/industrial policy agenda is quite viable in principle and has demonstrated its effectiveness in widely varying circumstances, in the U.S. and elsewhere.”49 Nothing about public investment and industrial policy—nor any of the broader changes that are necessary to democratize economic decision making—will halt, or even slow, the arrival of the future. Rather, these changes will shape the future along humane and equitable lines, rather than along some billionaire’s bottom line. There is moral and practical value in establishing an economy that responds to human values and human needs, and that recognizes, as have Green Parties around the world, that conventional economic policy uses economic growth, inflation, balance of payments and unemployment as “economic indicators,” the normal criteria against which progress is measured. Although it is the most usually quoted indicator, gross national product (GNP) is a poor indicator of true progress and does not… 4763

One of the top excuses for Americans who do not vote is that they simply do not have the time to gather information, get to the polls, and cast a ballot. “When pollsters have attempted to ask non-voters why they haven’t voted, two of the common answers have been ‘too busy’ or ‘schedule conflicts’,” notes long-time political writer Eric Black. “A lame excuse by some, perhaps, but not for all.”51 The day-to-day burdens placed on low-wage workers who put in long hours, often at some distance from their homes and the neighborhoods where they would vote, make it hard to meet even the most basic requirements of democratic engagement, argues Congressman Steve Israel, who explains that millions of Americans simply cannot “find time to vote.”52 It is true that making voting easier, as Israel and others propose, could increase turnout. But it is even more true, to our view, that giving people more job security, steady hours, more workplace flexibility and, above all, more time away from work, will dramatically increase their freedom to participate in democracy. That fuller participation ensures that elections produce governments and policies that are more reflective of the popular will and more responsive to popular needs. Economic security begets greater economic security, as it allows working Americans to shape responses to questions about public investment, planning, and trade that are in the public interest—as opposed to the often misguided and invariably self-serving whims of CEOs who can hire lobbyists and fund politicians to do their bidding. 4802

if the experience of the past four decades, and especially of the most recent period of booms and busts, bubbles and bursts, meltdowns and bailouts, wage stagnation and widening inequality teaches us anything it is that there is no market-driven route to justice and sustainability. No billionaire will deliver prosperity and equity. The only way up is democracy. The people have to shape this change. When the jarring reality of a jobless economy finally and fully hits, as it will, there is going to be an immediate demand for bold and meaningful economic change to ease immediate pain and long-term uncertainty. At this point, every economic and political charlatan in the land, every spin doctor and every paid-off pundit, will have a proposal. So, too, will many honorable yet misguided politicians who want to help but who have no clues. There will be horrible and dangerous plans. There will be those, as there always are, who promise that all will be well if we cede a little more authority to the elites who have been so in charge for so very long. There will be threats to democracy and these will be particularly horrifying—because moments of great turbulence will demand more democracy, not less. And the best way to prepare is to lock in as much democracy as we can. Alperovitz, a professor at the University of Maryland, has worked for a number of years to get Americans to “contemplate how to rebuild a more equitable economy.” Proposals for public banking and real regulation of corporations that are “simply running away with our economic (and political) system” are simply pieces of a greater program he proposes as part of a “new economy” movement that recognizes that “deepening economic and social pain are producing the kinds of conditions from which various new forms of democratization—of ownership, wealth and institutions—are beginning to emerge. The challenge is to develop a broad strategy that not only ends the downward spiral but also gives rise to something different: steadily changing who actually owns the system, beginning at the bottom and working up.”54 In recent years, Alperovitz has been a happy warrior on behalf of burgeoning movements for worker ownership nationwide. But, as he explains, “The current goal is not simply worker ownership, but worker ownership linked to a community-building strategy.” Alperovitz argues that the strategy must take up the challenge of rebuilding the basic institutional substructure of the local economy in ways that are efficient, effective, stable, redistributive and ongoing. This will include:                 •  Expanded use of city, school, hospital, university and other purchasing power to help stabilize jobs in a manner that democratizes ownership and benefits for both low-income communities and small- and midsize businesses;                 •  Expanded use of public and quasi-public land trusts (both for housing and commercial use) to capture development profits for the community and to prevent gentrification;                 •  An all-out attack on the absurdly wasteful giveaways corporations extract from local governments;                 •  Coordination with labor unions and community activists to build and sustain momentum. 4820

The United States Federation of Worker Cooperatives, a decade-old national grassroots coalition, now includes more than one hundred member workplaces across the country as part of “a thriving cooperative movement” that provides consulting and technical assistance to cooperatives. Its slogan is “Farther-Faster-Together” and its express mission is to link worker cooperatives to one another and to broader social justice movements. The movement is growing. And they are focusing on communities that have been hit hard by deindustrialization and dislocation. The potential for these models is real, as is the interest in them. “When people start thinking about how they would organize their own workplaces if they had the opportunity and the tools to do it, they get so excited,” says Rebecca Kemble, the president of the federation’s board. “It frees them up from so much that beats people down, that depresses them. Suddenly, there are possibilities.”55 There are a lot of possibilities: in new movements by teachers and parents who seek to end the overemphasis on high-stakes testing and rote learning in favor of programs for educating children to think and to act as citizens, in movements to rethink backward models of training and retraining displaced workers for jobs that will soon disappear, in smart thinking about sharing jobs and dialing back the length of the work week, in fresh proposals for full employment and serious infrastructure investment (which recognizes that the infrastructure of the future will require both concrete and fiber optics), and in a renewed understanding of the power and value of public ownership and utilities that meet human needs. That’s a very good start—precisely 4851

At the local level, where Kemble says it is still possible to make change, activists are on the move.56 She was elected in April 2015 to the Madison, Wisconsin, city council and is already working with Mayor Paul Soglin to invest $5 million over five years in “planning, research, grants, loans, and even forgivable loans” to get worker-owned cooperatives up and running. Based on a similar project in New York City, but significantly larger in scale and ambition, the Madison project will focus on both economic and racial justice. “Building a great local economy is not reserved for white males,” says Soglin. “We’re hoping this will be part of our economic development strategy in areas where there’s food insecurity, where there isn’t a concentration of jobs, and where significant numbers of households are below the poverty line.” Kemble and the mayor hope to shape a new understanding of twenty-first-century economics. “One of the benefits of a program like this is it gives us another opportunity to show that the economics of aggrandizing wealth in the top one percent is stupid,” says Soglin.57 To bring projects like the one in Madison to scale, to take them national so to speak, remains the challenge. And it is a challenge where the threat of a jobless economy comes into direct conflict with the politics of citizenless democracy. This is where, no matter how beautiful it may be, the dream gets deferred. “[What] we call traditional politics no longer has much capacity to alter most of the negative trends,” explains Alperovitz. “To be clear: I think projects, organizing, demonstrations and related efforts are important. But deep down, most people sense—rightly, in my view—that unless we develop a more powerful long-term strategy, those efforts aren’t going to make much of a dent.”58 4865

IMAGINE DEMOCRACY Imagine if that changed. Imagine if a justifiably frightened and angered American people were to look up from their gadgets and their unemployment forms. Imagine if they realized that the present is unsatisfactory and that the future looks terrifying. Imagine if these Americans recognized that what is terrifying is not the technology, nor even the fact that everything is going to change. What is terrifying is that they have no say about the scope and character and direction of that change. What is terrifying is that they cannot put proposals for a new economy on the table and make them the law of the land and the frameworks for our future. What is terrifying is that the essential economic issues of the time are not the essential political issues of the time. Imagine if the people recognized that they must have a say or they will have nothing at all. And imagine if they were hooped together, finally and fully, across what were once considered lines of division. Imagine if the people were ready to demand a new Constitution, a new politics, a new economy. Imagine if the people were ready, finally, to demand democracy—and all of the freedom, fairness, and human potential that extends from the moment when the profiteers and the pretenders are pushed aside and we, the people, forge our future. 4880

Pride and Prejudice by Jane Austen

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I meant to be uncommonly clever in taking so decided a dislike to him, without any reason. It is such a spur to one’s genius, such an opening for wit, to have a dislike of that kind. One may be continually abusive without saying anything just; but one cannot always be laughing at a man without now and then stumbling on something witty.” 2858

Altruism: The Power of Compassion to Change Yourself and the World by Matthieu Ricard

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Last annotated on May 20, 2016

In the reality of every day, despite the share of violence that afflicts the world, our existence is usually woven from deeds of cooperation, friendship, affection, and care. 70

in-depth studies, gathered together by Harvard professor Steven Pinker in The Better Angels of our Nature, show that violence, in all its forms, has continued to diminish over the course of the last few centuries. 73

Satisfaction with life is measured in terms of a life plan, a career, a family, and a generation. It is also measured according to the quality of each passing instant, the joys and sufferings that color our existence, and our relationships to others; it is given or denied by the nature of external conditions and by the way in which our mind translates these conditions into happiness or misery. 105

About the rising level of the oceans, the American magnate Stephen Forbes declared on Fox News: “To change what we do because something is going to happen in one hundred years is, I would say, profoundly weird.” Isn’t it actually a declaration like that that is absurd? The head of the largest meat company in the United States is even more openly cynical: “What matters,” he says, “is we sell our meat. What will happen in fifty years is none of our business.” But it all concerns us, as well as our children, those close to us, and our descendants, along with all beings, human and animal, now and in the future. Concentrating our efforts solely on ourselves and our relatives, in the short term, is one of the regrettable manifestations of egocentrism. 118

The American psychologist Tim Kasser and his colleagues at the University of Rochester have highlighted the high cost of materialist values.8 Thanks to studies spread over twenty years, they have demonstrated that within a representative sample of the population, individuals who concentrated their existence on wealth, image, social status, and other materialistic, extrinsic values promoted by consumer society are less satisfied with their existence. Focused on themselves, they prefer competition to cooperation, contribute less to the general interest and are unconcerned with ecological matters. Their social ties are weakened and they have fewer real friends. They show less empathy and compassion for those who suffer and have a tendency to use others for their own ends. They are in less good health than the rest of the population. Excessive consumerism is closely linked to extreme self-centeredness and lack of empathy.9 131

Selfishness is at the heart of most of the problems we face today: the growing gap between rich and poor, the attitude of “everybody for himself,” which is only increasing, and indifference about the generations to come. 140

We would on the contrary try to promote a caring economy that would enhance reciprocal trust, and would respect the interests of others. 162

research in the neurosciences that has shown that any form of training—learning how to read or learning a musical instrument, for example—induces a restructuring in the brain at both the functional and structural levels. This is also what happens when one trains in developing altruistic love and compassion. 178

To recapitulate, altruism seems to be a determining factor of the quality of our existence, now and to come, and should not be relegated to the realm of noble utopian thinking maintained 186

psychologist Daniel Batson, who has devoted his career to the study of altruism, points out that “altruism is a motivational state with the ultimate goal of increasing another’s welfare.”5 He clearly distinguishes altruism as ultimate goal (my explicit aim is to accomplish others’ welfare) from altruism as means (I accomplish others’ welfare with a view to fulfilling my own well-being). In his eyes, for a motivation to be altruistic, the well-being of others must constitute a goal in itself.6 213

good intentions are indispensable for altruism, but they are not enough. One must act, and action must have a precise goal, that of contributing to the well-being of another.7 Monroe does acknowledge, however, that motivations for an action count more than their results.8 232

Altruism does not require a personal sacrifice: it can even lead to personal benefits, provided that those benefits do not constitute the ultimate goal of our behavior, but are only secondary consequences of it. In essence, altruism does indeed reside in the motivation that animates one’s behavior. Altruism can be regarded as authentic so long as the desire for the other’s welfare constitutes our ultimate goal, even if our motivation has not yet been transformed into actions. By contrast, a selfish person considers others as instruments in the service of his own interests. He does not hesitate to neglect, or even to sacrifice, the good of the other when that turns out to be useful to reach his ends. 267

After Capitalism (New Critical Theory) by David Schweickart

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Last annotated on May 12, 2016

The form of association, however, which, if mankind continues to improve, must be expected in the end to predominate, is not that which can exist between a capitalist as chief, and work-people without a voice in the management, but the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations, and working under managers elected and removable by themselves. —John Stuart Mill, Principles of Political Economy (1848) But there was in store a still greater victory of the political economy of labor over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold hands. The value of these great social experiments cannot be over-rated. They have shown that production on a large scale, in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands. —Karl Marx, “Inaugural Address of the Working Men’s International Association” (1864) Our ideal as cooperativists must be the achievement of authentic human solidarity, as wanted by God, and through which people progress in every aspect. . . . Our cooperatives must primarily serve those who see them as bastions of social justice and not those who see cooperatives as refuges or safe places for their conservative spirit. —Don José María Arizmendiarrieta, Pensamientos (1978) 394

The General Assembly, recognizing that cooperatives, in their various forms, promote the fullest possible participation in the economic and social development of all people, including women, youth, older persons, persons with disabilities and indigenous peoples, are becoming a major factor of economic and social development and contribute to the elimination of poverty, . . . proclaims the year 2012 the International Year of Cooperatives. —United Nations General Assembly, December 18, 2009 409

as historical materialism would predict, with existing “relations of production” inadequate to new “forces of production,” (that is to say, when existing economic structures cannot take advantage of new technologies) there occurred a decisive shift in class power, which led to, to use Marx’s words, “the transformation of the whole, immense superstructure.”19 (The West did not sit by idly during this historical upheaval, but intervened with considerable success to ensure that the class it favored—the one committed to restoring capitalism—came out on top.20) 683

It is a tenet of historical materialism that the institutions of new societies often develop within the interstices of the old. Successor-system theory should help us locate the seeds and sprouts of what could become a new economic order, so that they might be protected and nourished. 706

concerned with what is both possible and necessary now—the immediate next stage beyond capitalism, a stage that will be marked by its origins within capitalism. 723

by “revolution” I mean a process by which the power of a dominant economic class is broken and new socioeconomic institutions put in place that significantly enhance the prospects and power of the subordinated classes at the expense of the dominant class. 731

am not sure that the time is ripe for such a theory. At any rate, I don’t have one. Nonetheless, I do think it is possible to sketch some plausible transition scenarios. This will be done in chapter 6. 732

A new theory of revolution will recognize that the old models of social revolution, drawing their inspiration from the French, Russian, Chinese, and Cuban revolutions, are largely inappropriate to the world today, certainly to advanced capitalist societies, perhaps even to poor countries. The question of armed insurrection will have to be reexamined. The masses are never going to storm the White House, nor is a people’s army ever going to swoop down from the Appalachian Mountains and march up Pennsylvania Avenue. A revolutionary transition to socialism will almost certainly be a democratic transition. The new theory will recognize the need for a more concrete vision of structural alternatives than has been customary in the past. 735

radical structural transformation will involve a substantial deepening of democracy. 746

Although there will be commonalities of vision, there will be differences as well—of tactics, transitional strategies, and ultimate goals. Unlike the program of neo-liberal capitalism, one size does not fit all. The counterproject does not envisage all nations aiming for the same patterns of development, or adopting the same technologies, values, and consumption habits. The counterproject calls for a halt to the McDonaldization of the world. 754

The counterproject is nothing less than the project of our species. 760

ethics is about more than principles and values, as various philosophers, particularly feminist philosophers, have pointed out. Ethics is also about cultivated moral capacities, styles of moral reasoning, and concepts of self-identity. Building on the pioneering work of Carol Gilligan, various feminist philosophers have articulated a sophisticated “ethic of care” (contrasted with an “ethic of rights), centered less on principles and abstract values, more on cultivating empathy and attentiveness to the concrete, to difference, to interconnectedness. This ethic may be particularly appropriate to the counterproject. It is not so much needed to ground the argument for Economic Democracy, although it can serve that purpose—as can most other contemporary ethical theories. 781

transition, about actually getting beyond capitalism to a better world. An ethic of care, with its emphasis on our responsibilities to others and on our deep interconnectedness, not only to those closest to us, but to that ever-enlarging circle of human beings with whom our fate is ever more concretely tied and to nature itself, has a motivational appeal that more abstract theories often lack. 23 787

I will propose a full-employment policy as the basic solution to poverty in both rich and poor countries—a policy (as we shall see) that cannot be enacted under capitalism. I couple this with “fair trade,” so that poor countries do not have to devote a disproportionate amount of their resources to catering to rich-country consumers. I recommend that poor countries engage in broad-based, labor-intensive public programs of health and education. 791

that under capitalism, there is a structural tendency toward overwork. 800

that ecological sustainability requires we opt increasingly for leisure over consumption. 803

Community . It is possible under Economic Democracy to redesign local communities to make them more “user-friendly.” Each year funds will be available for public capital expenditures so that new public amenities may be instituted. 807

Democracy . The successor system to be proposed entails a large advance in democracy. Citizens will have far more opportunity than they do now to discuss, debate, and decide issues of common concern. Feminist theory has been much involved with the question of preconditions for real democratic dialogue. What is the role of argument in democratic decision-making? How do we do justice to the “difference” of those with whom we engage when we talk across the borders of race, gender, class, and sexual orientation? How do we develop the ability to listen to the other? These and related questions are of profound importance to a movement that raises high the banner of democracy. 812

capitalism. The feminist revolution has been, above all, a nonviolent revolution. Moreover, it has not been marked by decisive, watershed events that clearly mark a “before” and “after” the revolution. A new theory of revolution must pay careful attention to what has been learned from the millions (quite literally) of small and large battles fought, lost, and won as women have moved to redefine the world and their place in it. o The worst excesses of political revolutions have often been marked by masculinity. Angry young men have contributed courageously to revolutionary struggle, but they have also been involved in nonproductive and sometimes gratuitous violence. 821

o Women have played a huge role in virtually all the progressive struggles of the past several decades. Women have often constituted the majority of the participants, not only in struggles related to gender but those concerning human rights, nuclear disarmament, ecology, solidarity with the people of El Salvador or Nicaragua, sweatshops, and so forth. If the counterproject comes to have revolutionary potential, it will almost certainly count as many women as men among its activists, quite likely more, and thus will have a different character and ethos from classical revolutionary movements. How different? What are the implications for organizational theory and practice? 830

How can it be right that under capitalism some people have so much while others have so little? In particular, what do capitalists do to merit their stupendous wealth? That is to say, what is it that they do that entitles them, morally, to so large a slice of the economic pie? 881

The capitalist provides the capital necessary for economic development. The capitalist exhibits entrepreneurial creativity. The capitalist risks his capital. The capitalist defers personal consumption for the benefit of society. 885

They appeal implicitly to a commonly accepted ethical standard: it is right that people be rewarded for actions that contribute to the common good. They implicitly assert that the rewards accruing to capitalists are more or less proportional to their contributions. 888

A capitalist society is characterized by three basic features: The bulk of the means of production are privately owned, either directly or by corporations that are themselves owned by private individuals. Marx and the socialists of his day called this feature “private property.” This may have been an unfortunate choice of terminology, since calling for the abolition of private property, which Marx does, conjures up images of communal food, clothing, shelter, and (who knows what those radicals will do?) maybe even communal toothbrushes. In fact, these things are not at issue. Items purchased for one’s own use are, for Marx, “personal property,” not private property. Your toothbrush, your clothes, your car, and your home remain yours under socialism. 896

The term “free market” is often used as a defining characteristic of capitalism, but this is misleading, since some degree of price regulation—via differential product taxes, subsidies, tariffs, or outright price controls—is present in most capitalist societies. A capitalist economy must be a market economy, but the market need not be wholly free of governmental regulation or, for that matter, wholly free of private-sector price fixing either. Most of the people who work for pay in this society work for other people who own the means of production. Most working people are “wage laborers.” 905

It is a crucial characteristic of the institution of wage labor that the goods or services produced do not belong to the workers who produce them but to those who supply the workers with the means of production. There are several things to note about this definition. First of all, it defines capitalism as an economic system, not a political system. Whether or not a society has a free press or allows its citizens to vote in competitive elections is irrelevant as to whether it is a capitalist society. Fascist Italy, Nazi Germany, white supremacist South Africa, and most of the almost-too-many-to-count military dictatorships of this century were capitalist societies. 912

So long as most productive assets are privately owned, most economic exchanges take place through the market, and most people work for wages or a salary, a society is capitalist. 920

(Sweden, for example, is very much a capitalist country. Privately owned firms account for 90 percent of its industrial output.) All three of these defining structures must be present for a society to be capitalist. A society of small farmers and artisans, for example, is not a capitalist society, since wage labor is largely absent. A society in which most means of production are owned by the central government or by local communities is not a capitalist society. Contemporary China, for example, is not capitalist since private ownership of the means of production—if we include land as a means of production—is not (yet?) dominant. (More on China in chapter 6.) It must be emphasized that using the market to allocate goods and services does not make a society capitalist. Almost everywhere today the term “market economy” is employed as a synonym for (and usually instead of) “capitalism.” This is a serious conceptual mistake. As we shall see, it is perfectly possible—and indeed desirable—to have a market economy that is socialist. Competition is not the antithesis of socialism. “Market socialism” is not an oxymoron. A viable successor system will not be as ruthlessly competitive as contemporary capitalism, but it will by no means abandon market competition altogether. 921

To use “market economy” as a synonym (indeed, euphemism) for “capitalism” is not merely an analytical mistake; it is an ideological distortion. The term “market economy” highlights the least objectionable defining feature of capitalism while directing attention away from the really problematical institutions, namely, private ownership of means of production and wage labor. For example, the “privatization” reforms so insistently prescribed for Russia and the countries of Eastern Europe following their turn away from communism were not “market reforms.” Market reforms, fully compatible with socialism, were well under way in most of these countries. The Western-advocated reforms were attempts (largely successful) to establish private ownership of the means of production . If capitalism as an economic system is defined by the three institutions listed above, what is a “capitalist”? It is a curious fact that in our capitalist society there is no commonly agreed-upon definition of this key term. In fact, the term is rarely used in the mass media or even in scholarly circles. We hear of industrialists, businessmen, entrepreneurs, and shareholders—but almost never of “capitalists”—perhaps because the word still has unsavory connotations (robber barons calling on the Pinkertons to break strikes and beat up protesting workers). Capitalists don’t like to be called capitalists, at least not in public; they prefer to remain invisible, or at least be called by some other name. If we are to understand capitalism, we need some sort of definition that picks out the class of people who constitute the system’s driving force. For our purposes, a reasonable definition of “capitalist” is someone who owns enough productive assets that he can, if he so chooses, live comfortably on the income generated by these assets. A capitalist is not someone who merely believes in capitalism, nor are you a capitalist just because you happen to own a few stocks or bonds. To be a capitalist you must own enough income-generating assets that you can live comfortably without working. You may work—you probably do—but you don’t have to. (The capitalist class in the United States, by this definition, comprises roughly 1 percent of the population, owners of productive assets of $2 million or more. A 5 percent return on these assets would generate an income of $100,000 per year.) The capitalist class derives its wealth from its ownership of productive wealth, that is, from “capital.” A capitalist receives income because he “contributes” his capital to production. 931

If the factors of production are only labor and nature, where does “the capitalist” enter the picture? It is clear that labor should be rewarded for its contribution to production. It is equally clear that nonhuman nature need not be. (It must be replenished or conserved, but that’s a separate matter.) The capitalist also demands a reward, a “fair return on his investment”—but on what basis? The standard answer, taught in every introductory economics course, is that goods are the product of three factors of production—land, labor, and capital—and that the owners of these factors are rewarded on the basis of their contributions. Well, land is clear enough—that’s shorthand for natural resources (i.e., nature)—and labor is labor. But what is “capital”? Tools? Technology? Money? Congealed time? Embodied labor? What? Marx 959

A new economics, a “neoclassical” economics, thus came into being, which zeroed in on this labor theory of value, criticized it, and offered an alternative theory, a “marginalist” theory of value. This new theory quickly replaced the treasonous old theory in all respectable quarters, and has remained to this day the dominant paradigm in the economics profession. 972

The real heart of the “neoclassical revolution” is its theory of distribution. The fundamental problem confronting post-Marxian economic theory is the problem of explaining (and justifying) the profits of the capitalist. 978

a free market will set a rental rate, wage rate, and interest rate, and so bring about a distribution—but what grounds do we have for saying that this is a just distribution? 982

civil and political rights are hollow if individuals do not have the ability to exercise them. Specifically, if the government controls all the media and all the employment in society—as it did in Soviet-style societies—then formal freedoms remain empty, since dissident views cannot be promulgated. This argument has no force against Economic Democracy, since the government of such a society does not control all the media or all the employment. Economic Democracy is a market economy. There are many employment opportunities in the market sector, and there are many forms of profit-oriented media. Therefore, if there is a significant market for your ideas, there will be publishing houses willing to publish them. If you have difficulty finding a publisher, you and your friends can start your own publishing company, with your own funds or with the help of an investment grant from one of the community banks, all of which are on the lookout for possibilities to fund new, employment-generating businesses. Another objection to the alleged compatibility of Economic Democracy with liberty concerns the size of government. It will be asserted that since Economic Democracy extends the scope of governmental activities, it will give rise to a massive bureaucracy that will inevitably erode our meaningful freedoms. This assertion rests on two false assumptions. First, it assumes that Economic Democracy greatly increases the power of government. On the contrary, Economic Democracy does not so much increase the power of government as redistribute the power citizens have over government—by greatly curbing the political clout of money. Secondly, the assertion assumes that the bureaucracy under Economic Democracy will be significantly larger than under capitalism. This need not be the case. Certain government functions will be cut back under Economic Democracy. Since it will no longer be necessary to make the world safe for capitalist investment, the truly grotesque military budgets of the world can be scaled back drastically. So too can those bureaucracies now in place to control that portion of the population constituting capitalism’s “reserve army of the unemployed” and those people rendered more or less permanently redundant by the system. Governments will remain large, since there is much for government to do, but there is no reason to think that a large government, suitably held in check by a system of constitutional guarantees and accountable to the electorate, will pose a genuine threat to political freedom. 3943

should surprise no one that incumbents try to rig the rules to ensure their own reelection and try to make deals while in office that can be parlayed into lucrative private-sector employment should they lose an election. Political parties lessen the insecurity, since, if all else fails, the party will find a place for you in its ongoing organization. Clearly, the party system dovetails nicely with interests of capital. It is good to have individual candidates for office always in need of campaign funds and ever on the lookout for a comfortable private-sector place to land if an election turns sour. Moreover, the political parties themselves—employers of last resort for defeated candidates—are also beholden to wealthy contributors, so all the bases are pretty much covered. Economic Democracy will have to face the career-risk problem creatively if it is to draw good people into politics. One possible solution is a reemployment guarantee: If you decide to run for public office but lose, you may, if you so choose, return to your former place of employment at your old salary. If you win the election, the option always remains of returning to your former place of employment whenever you please, and at an income and position comparable to what you would likely have had, had you remained with the enterprise. Your former place of employment may have to make some adjustments to find a suitable spot for you, but such difficulties would seem a small price to pay toward ensuring good government. (Even under capitalism, governments during wartime usually make such arrangements for employees called to active duty.) Needless to say, all elections in Economic Democracy will be publicly financed. Another small price to pay for an effective, genuine democracy. 3976

at present, China should be regarded as a form of market socialism. There is at this time much theorizing and much practical experimentation going on in China. There are factions pushing for capitalist restoration while others remain committed to a “socialist market economy with Chinese characteristics”—as the economic structure is officially described. There is considerable concern about rising unemployment, a problem that capitalism cannot resolve, and considerable concern about increasing regional inequalities, a problem that market-determined investment flows will only exacerbate. There is considerable experimentation with various forms of workplace organization, including those that give ownership rights to workers. It is possible that the next move forward will be toward something like Economic Democracy. 4103

Special emphasis is being given to food production, land being leased to those who will farm it productively and sell their products in farmers’ markets. (Cuba, it is worth noting, currently ranks 17th of 171 countries on a composite United Nations Development Programme index of health and education, ahead not only of all other low-income countries, but also ahead of Greece, Italy, and the United Kingdom.5) 4154

There’s plenty wrong with China: the income gap is large and widening; there are lots of sweatshops providing the Wal-Marts of the world with cheap manufactured goods; corruption, particularly at the lower levels of government, is rampant; dissent is often suppressed; environmental degradation is severe. Consider the comments of Pan Yue, China’s deputy environmental minister: Our raw materials are scarce, we don’t have enough land and our population is constantly growing. . . . Cities are growing, but desert areas are expanding. . . . Five of the most polluted cities in the world are in China; acid rain is falling on one third of our territory; half of the water in China’s seven largest rivers is completely useless, a quarter of our citizens lack access to clean drinking water.11 These facts present a grim picture. And yet—there are these “optimism” reports: A Pew Research Center survey in 2005 found China to be “the world leader in hope for the future”—the most optimistic of the seventeen nations surveyed. Not only was personal optimism high, but China led the list regarding “satisfaction with national conditions.” Fully 72 percent indicated satisfaction, as opposed to 19 percent dissatisfied. This compares with only 39 percent in the United States indicating satisfaction, 57 percent dissatisfied. (And that was before the financial meltdown.) It is noteworthy, too, that the young Chinese, ages eighteen to twenty-nine, are the most optimistic of all, 78 percent anticipating a “very positive future.”12 More recent surveys by Gallup indicate continued optimism in China (78 percent), much more than in the United States (52 percent), UK (43 percent) or Japan (23 percent). (The UK figure is on the high side for Europe, France registering 33 percent, Germany 30 percent, Italy 23 percent, Greece 10 percent). 4191

The fact that China has given a large scope to the market in its economy does not mean that China is not a socialist society. As successor-system theory makes clear, a viable, desirable socialism requires a suitably regulated market mechanism to allocate most goods and services. The fact that there is considerable inequality in China does not mean that China is not a socialist society. If there are markets, there will be inequalities that have nothing to do with individual effort. Some enterprises will be luckier than others. Some will be better run. Within enterprises inequalities will persist, since financial incentives will be employed to attract and retain skilled technical and managerial personnel. The fact that there are some very rich capitalists in China does not mean that China is not a socialist society. As we have seen, a viable, desirable socialism might want to include a capitalist sector—certainly a sector of small businesses, but perhaps even a sector of large, entrepreneurial capitalists. Entrepreneurial capitalists could play a useful role in fostering innovation and providing much needed employment, particularly in a developing country. It should not be presumed that such a sector will inevitably become the dominant sector, certainly not if wages and working conditions are regulated, these firms are unionized, and a large alternative sector of public firms exists. 4213

What about workplace democracy in China? We observe that formal institutions are in place in many enterprises, backed by official rhetoric. The language of “democratic management” is widely used in China. The Chinese Constitution proclaims that “state-owned enterprises practice democratic management through congresses of workers,” which are empowered to “decide matters concerning the well-being and benefits of the workers,” and even to “elect the factory director or manager according to the arrangement of the competent governmental department.”16 Even nonpublic enterprises are supposed to be “conducive to developing democracy, giving voice fully to the workers’ ideas and demands, and allowing the workers to take part in their enterprises’ democratic management”—at least according to Politburo member Wei Jianxing.17 Even if they are not yet effective—which they are not—the fact that formal institutions are in place and supported by the prevailing ideology is not insignificant. A revitalized labor movement could well make use of them. There is class struggle going on in China right now. How it will be resolved remains undetermined. What about social control of investment in China? Again, formally, the situation is promising. Financial institutions in China are overwhelmingly public institutions. The Chinese government has control over its investment funds in ways that governments in capitalist countries do not. Banks, which are virtually all public, control 75 percent of the capital of the country, as compared with less than 20 percent in “developed” countries. Stock and bond markets in China are among the smallest in the world—and these are used almost exclusively by state-owned enterprises. Strict capital controls prevent citizens from investing in foreign financial markets or securities.18 Another consideration concerning social control of investment: the invisible hand of the market does not dictate the future. China still plans. It sets out goals and it commits resources to realize them. Among the current goals: to create a moderately well-off “harmonious socialist society,” a sustainable, “green” economy, and “new socialist countryside.” 4223

We have defined “capitalism” as a market economy in which the bulk of the means of production are in private hands and the bulk of the work-force are wage laborers. But in China nearly half of the Chinese labor force is engaged in agriculture, and the land has not been privatized. Moreover, although the share of the output of state-owned enterprises in the economy has declined dramatically over the past several decades, it still makes up a substantial part of the national economy—controlling roughly 30 percent of the total secondary and tertiary assets, and over 50 percent of total industrial assets.19 Given this definition, it would seem that China is not (yet) a capitalist country. It also seems clear that the capitalist class, although influential, is far from dominant. Let me offer three reasons for thinking that they will remain subordinate, that is, three reasons for thinking that China will not “go capitalist”: Capitalism cannot solve China’s fundamental problems—and its ruling class knows this. China’s political class is not stupid. Singapore’s long-time ambassador to the U.N., Kishore Mahbubani, has remarked that “after more than a hundred years of anarchy and misrule, China has amassed the best governing class it has seen in generations.”20 None of the problems noted above—widening income inequality, environmental destruction, etc.—is news to the Chinese. These are discussed incessantly in the press and debated at the highest levels of government. The Chinese ruling class is well aware that unbridled capitalism will exacerbate inequalities, create more unemployment, and wreak ecological havoc. This was clear to most even before the Great Global Recession. It is even more obvious now. There is considerable pressure from below opposing the capitalist trajectory, pressure from workers and peasants, who have ideology on their side. Protestors often appeal to socialist values, and are supported by significant party officials and intellectuals. Chinese workers and peasants are far from passive. A new law was passed in 2008, the Labor Dispute Conciliation and Arbitration Law, in response to skyrocketing numbers—some 317,000 disputes in 2006, of which 14,000 involved demonstrations or strikes, sometimes even violence.21 Although workers and peasants appear to hold the central government in high regard, there is deep discontent with local officials, who are often (correctly) perceived as corrupt and bent on appropriating for themselves and their allies public lands and state assets. This pressure generates deep concern about instability on the part of the political class, who, given recent history, are particularly sensitive to this issue. China has experienced massive upheavals during the century just past: anticolonial struggles, civil war, Japanese occupation, a Communist revolution, the Great Leap Forward, the Cultural Revolution, Tiananmen Square. The leadership knows that things can spin out of control. (The Chinese ruling class is haunted by the specter of instability in ways that Western ruling classes are not. Our ruling classes do not have to pay attention to the poor. They’ve been wholly marginalized. Chinese workers and peasants are by no means marginal—and they have ideology on their side.) 4248

Members of the political class want to preserve their own place in society. Such is the concern of every political class. But there is a second factor that is far from irrelevant. They want to preserve the collective accomplishments of China—and their own place in history . Astonishing successes have been recorded, accomplished by the Chinese themselves without significant external aid or advice. China’s rulers do not want to see these successes unravel, as could happen if popular grievances and environmental issues are not addressed. 4273

World-systems theorist Giovanni Arrighi sums up his detailed, careful study of China: If China’s reorientation [away from the energy-consuming Western path, toward a more balanced and ecologically-sustainable development] succeeds in reviving and consolidating China’s traditions of self-centered market-based development, accumulation without dispossession, mobilization of human rather than non-human resources, and government through mass participation . . . China will be in a position to contribute decisively to the emergence of a commonwealth of civilizations truly respectful of cultural differences. But, if the reorientation fails, China may well turn into a new epicenter of social and political chaos that will facilitate Northern attempts to re-establish crumbling global dominance, or . . . help humanity burn up in the horrors of the escalating violence that has accompanied the liquidation of the Cold War world order.22 4283

Marx liked to speak of the institutions of the new society developing within the womb of the old. These institutions, many of them already in existence in some form, point to a reform agenda for an advanced capitalist society. These reforms, if implemented, would fall short of full Economic Democracy, but they can be seen as steps along the way—much 4297

than a man who consumes less. Rather, “the aim should be to attain the maximum of well-being with the minimum of consumption.” If we break our addiction to relentless growth and live in relatively self-sufficient regions that are ecologically sustainable, there will be enough to go around. He quotes Gandhi: “The Earth provides enough for every man’s need but not for every man’s greed.”58 4793

An impossible dream? Schumacher responds to this charge: Now it might be said that this is a romantic, a utopian, vision. True enough. What we have today, in modern industrial society, is not romantic and certainly not utopian. But it is in very deep trouble, and holds no promise of survival. We jolly well have to have the courage to dream if we want to survive and give our children a chance of survival.60 John Maynard Keynes had a dream. (Interestingly enough, Keynes intervened to have Schumacher released from a detention center in Britain, where he had been interred as a German alien at the outbreak of World War II. Keynes had been much impressed by a technical paper sent to him by the then young Schumacher.) Keynes noted in the final chapter of The General Theory that “the outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income.” But he didn’t think this unhealthy state would persist, for he thought capital would soon become so plentiful that interest rates would soon approach zero, which “would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative, oppressive power of the capitalists to exploit the scarcity value of capital .”61 (Keynes’s words, not Marx’s. One can see why neoliberal economists have fought so hard to discredit Keynes.) Above all, Keynes looked forward to the gradual replacement of increasing consumption by increasing leisure , and to the beneficent effects such a transformation would bring. In a remarkable essay, written just after the outbreak of what would become the Great Depression, he looked to the future: We shall use the new-found bounty of nature quite differently than the way the rich use it today, and will map out for ourselves a plan of life quite otherwise than theirs. . . . What work there still remains to be done will be as widely shared as possible—three hour shifts, or a fifteen-hour week. . . . There will also be great changes in our morals. . . . I see us free to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the extraction of usury is a misdemeanor, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. . . . We shall honor those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things.62 4801

What Should I Do? The possibility of action is crucial, not only as a feature of the world we want, but to achieving that world. In the last lines of his book, Schumacher writes: Everywhere people ask, “What can I actually do ? The answer is as simple as it is disconcerting: we can, each of us, work to put our own inner house in order. The guidance we need for this cannot be found in science or technology, the value of which utterly depends on the ends which they serve; but it can still be found in the traditional wisdom of mankind. 4838

Marx harbors no such illusions, but, like Keynes, he thinks that history is on our side, the side of the vast majority, and that sooner or later “the expropriators will be expropriated.” 4845

It is hard to dispute Barry’s grim assessment: It is quite possible that by the year 2100 human life will have become extinct, or will be confined to a few residual areas that have escaped the devastating effects of nuclear holocaust or global warming on a scale that has in the past wiped out almost all existing life forms.65 4848

First, as Schumacher says, “get your own house in order.” I take this to mean that one must change one’s life, at least in some respects, so as to live a life that in some way prefigures the world we want. This means living more frugally, striving to reduce one’s carbon footprint, shifting one’s diet from more meat to less, or perhaps none at all (which happens to be a much healthier, as well as more ecologically sustainable, way to live). This means thinking about, and cultivating, the human and natural relationships that “the traditional wisdom of mankind” recommends. Will a change of lifestyle change the world? No, of course not. As our earlier analysis makes clear, if everyone were to start consuming less, we’d plunge into economic crisis—unless structural changes are also made. But one is not everyone . Your reduced consumption will not, at this point in time, damage the economy, whereas it will likely make you a better person and will simultaneously validate—indeed help create—the attitudes and values necessary for a new world. Your example makes it easier for others to change.66 Step Two: Spend some time working with others to alleviate some concrete social problem. This means joining an organization or starting one. The possibilities are endless, for the problems are endless: local and global poverty, racism, sexism, homophobia, the many facets of ecological destruction, war, domestic violence, prisons, capital punishment, unemployment, our irrational food supply, hopelessness, and so on. None of these organizations, by themselves, will bring about the needed revolution. But we don’t know that history is on our side. The needed revolution may never happen. However, we can be pretty sure—I say this from long experience—that getting involved in a good project will bring you into contact with good people, people often better (smarter, braver, more skillful at X or Y) than yourself, and this will in turn make you a better, indeed happier, person. As Frances Moore Lappé points out, We form ourselves in large part by the choice of whom we bring into our lives. So we can choose to associate with those more courageous than we. By observing them, we experience courageousness, and perhaps become more gutsy than ourselves. Pretty amazing.67 Step Three: As pointed out in the last section, we also need a large, coherent political movement. The capitalist class will not melt away, as Keynes hoped. If the deep structural changes that are needed are to come about peacefully, we need a political party—or perhaps a coalition of political parties—that is committed to deep structural change. How might we imagine such a party? Let me offer one example from which there might be much to learn. 4854

Messenger (Giver Quartet, Book 3) by Lois Lowry

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Today, the road all runners come, Shoulder-high we bring you home, And set you at your threshold 1564

down, Townsman of a stiller town. 1566

The End of Karma: Hope and Fury Among India’s Young by Somini Sengupta

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Nearly two-thirds of Indians sustained themselves on less than $2 a day.19 314

By 2012, more than 300 million Indians lived below the national poverty line, which Biraj Patnaik, an activist, rightly called the starvation line. 316

million young men and women turn eighteen every month. They go out in search of work and dignity. They push their leaders to deliver. 327

Aspiration is like water. It needs a place to go, or else it drowns everything in its path. 334

Out of My Mind by Sharon M. Draper

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Words. 43

Words have always swirled around me like snowflakes—each one delicate and different, each one melting untouched in my hands. Deep within me, words pile up in huge drifts. Mountains of phrases and sentences and 45

Note: Figurative language Edit

were like sweet, liquid gifts, and I drank them like lemonade. I could almost taste them. They made my jumbled thoughts and feelings have substance. My parents have always blanketed me with conversation. They chattered and babbled. They verbalized and vocalized. My father sang to me. My mother whispered her strength into my ear. Every 48

Note: Figurative language imagery Edit

When people look at me, I guess they see a girl with short, dark, curly hair strapped into a pink wheelchair. By the way, there is nothing cute about a pink wheelchair. Pink doesn’t change a thing. They’d see a girl with dark brown eyes that are full of curiosity. But one of them is slightly out of whack. Her head wobbles a little. Sometimes she drools. She’s really tiny for a girl who is age ten and three quarters. Her legs are very thin, probably because they’ve never been used. Her body tends to move on its own agenda, with feet sometimes kicking out unexpectedly and arms occasionally flailing, connecting with whatever is close by—a stack of CDs, a bowl of soup, a vase of roses. Not a whole lot of control there. After folks got finished making a list of my problems, they might take time to notice that I have a fairly nice smile and deep 58

dimples—I think my dimples are cool. I wear tiny gold earrings. Sometimes people never even ask my name, like it’s not important or something. It is. My name is Melody. 65

Mom bringing me home from the hospital—her face showing smiles, but her eyes squinted with worry. Melody tucked into a tiny baby bathtub. My arms and legs looked so skinny. I didn’t splash or kick. Melody propped with blankets on the living room sofa—a look of contentment on my face. I never cried much when I was a baby; Mom swears it’s true. Mom massaging me with lotion after a bath—I can still smell the lavender—then wrapping me in a fluffy towel with a little hood built into one corner. Dad took videos of me getting fed, getting changed, and even me sleeping. As I got older, I guess he was waiting for me to turn over, and sit up, and walk. I never did. But I did absorb everything. I began to recognize noises and smells and tastes. The whump and whoosh of the furnace coming alive each morning. The tangy odor of heated dust as the house warmed up. The feel of a sneeze in the back of my throat. 68

Note: Imagery and important passage Edit

And music. Songs floated through me and stayed. Lullabies, mixed with the soft smells of bedtime, slept with me. Harmonies made me smile. It’s like I’ve always had a painted musical sound track playing background to my life. I can almost hear colors and smell images when music is played. 75

Note: Important passage meaningfull Edit

Mom loves classical. Big, booming Beethoven symphonies blast from her CD player all day long. Those pieces always seem to be bright blue as I listen, and they smell like fresh paint. 78

Dad is partial to jazz, and every chance he gets, he winks at me, takes out Mom’s Mozart disc, then pops in a CD of Miles Davis or Woody Herman. Jazz to me sounds brown and tan, and it smells like wet dirt. Jazz music drives Mom crazy, which is probably why Dad puts it on. 79

Note: Imagery Edit

For some reason, I’ve always loved country music— loud, guitar-strumming, broken-heart music. Country is lemons—not sour, but sugar sweet and tangy. Lemon cake icing, cool, fresh lemonade! Lemon, lemon, lemon! Love it. 83

Note: Imagery and figurative language Edit

screech 86

joy. 86

If I had a paintbrush . . . wow! What a painting that would be! But Mom just shook her head and kept on spooning 94

yakking 99

Mostly, though, I remember words. Very early I figured out there were millions of words in the world. Everyone around me was able to bring them out with no effort. The salespeople on television: Buy one and get two free! For a limited time only. The mailman who came to the door: Mornin’, Mrs. Brooks. How’s the baby? The choir at church: Hallelujah, hallelujah, amen. The checkout clerk at the grocery store: Thanks for shopping with us today. Everybody uses words to express themselves. Except me. And I bet most people don’t realize the real power of words. But I do. Thoughts need words. Words need a voice. I love the smell of my mother’s hair after she washes it. I love the feel of the scratchy stubble on my father’s face before he shaves. But I’ve never been able to tell them. 99

Note: Imagery imporyant passage Edit

I guess I figured out I was different a little at a time. Since I never had trouble thinking or remembering, it actually sort of surprised me that I couldn’t do stuff. And it made me angry. 108

Note: Angry Edit

cooed 113

loved 115

cry. 116

sadness decorating 117

before I was born. I had lots of chances to figure out how the threads of a rug are woven as I lay there waiting for someone to pick me up. I couldn’t roll over, so it was just an irritated me, the shag rug, and the smell of spilled sour soy milk in my face until I got rescued. 120

funny, 125

didn’t understand at the time, but my father did. He would sigh and pull me up onto his lap. He’d hug me close and hold up the little cat, or whatever toy I seemed to be interested in, so I could touch it. 127

“Your life is not going to be easy, little Melody,” he’d say quietly. “If I could switch places with you, I’d do it in a heartbeat. You know that, don’t you?” 130

I just blinked, but I got what he meant. Sometimes his face would be wet with tears. He’d take me outside at night and whisper in my ear about the stars and the moon and the night wind. “The stars up there are putting on a show just for you, kid,” 132

he’d say. “Look at that amazing display of sparkle! And feel that wind? It’s trying to tickle your toes.” 134

He had placed a bird feeder on our porch, and we would sit there together as the birds darted in, picking up seeds one at a time. “That red one is a cardinal,” he’d tell me, and “that one over there is a blue jay. They don’t like each other much.” And he’d chuckle. 136

He has a clear voice that seems made for songs like “Yesterday” and “I Want to Hold Your Hand.” Dad loves the Beatles. No, there’s no figuring out parents and why they like stuff. 138

I’ve always had very good hearing. I remember listening to the sound of my father’s car as he drove up our street, pulled into the driveway, and rustled in his pocket to find his house keys. He’d toss them on the bottom step, then I’d hear the sound of the refrigerator door open—twice. The first time he’d get something cold to drink. The second time he’d search for a huge hunk of Muenster cheese. 140

I’d be laughing by the time he got to my room, and he’d lean over my bed and kiss me. His breath always smelled like peppermints. When 146

Here’s the thing: I’m ridiculously smart, and I’m pretty sure I have a photographic memory. It’s like I have a camera in my head, and if I see or hear something, I click it, and it stays. 151

geniuses. 153

complicated 153

recall 153

remember 154

adjust 160

limits. 164

So every once in a while I really lose control. I mean really. My arms and legs get all tight and lash out like tree limbs in a storm. Even my face draws up. I sometimes can’t breathe real well when this happens, but I have to because I need to screech and scream and jerk. They’re not seizures. Those are medical and make you go to sleep. 165

Then, in the toy section, I saw them. Brightly colored packages of plastic blocks. Just that morning I had seen a warning on television about that toy—they were being recalled because the blocks had been painted with lead paint. Several children had already been hospitalized with lead poisoning, the report had said. But there they were—still on the shelf. I pointed to them. Mom said, “No, sweetie. You don’t need those. You have enough toys.” I pointed again and screeched. I kicked my feet. 172

“No!” Mom said more forcefully. “You are not going to have a tantrum on me!” I didn’t want the blocks. I wanted to tell her they were dangerous. I wanted her to tell somebody to get rid of them before a child got sick. But all I could do was scream and point and kick. So I did. I got louder. Mom rushed out of the toy section, pushing the cart real fast. “Stop it!” she cried out at me. I couldn’t. It made me so angry that I couldn’t tell her. The tornado took over. My arms became fighting sticks, my legs became weapons. I kicked at her with my feet. I screamed. I kept pointing in the direction of those blocks. People stared. Some pointed. Others looked away. Mom got to the door of the store, yanked me out of the cart, and left it with all her selections sitting there. She was almost in tears when she got to the car. As she buckled me in my seat, she almost screamed at me, “What is wrong with you?” Well, she knew the answer to that one, but she knew that was not my usual behavior. I gulped, sniffed, and finally calmed down. I hoped the people at the store watched the news. When we got home, she called the doctor and told him about my crazy behavior. He sent a prescription for a sedative, but Mom didn’t give it to me. The crisis was over by then. I don’t think Mom ever figured out what I was trying to say that day. 176

really 189

I’ve seen dozens of doctors in my life, who all try to analyze me and figure me out. None of them can fix me, so I usually ignore them and act like the retarded person they think I am. I paste on a blank look, focus on one wall, and pretend their questions are too hard for me to understand. It’s sort of what they expect anyway. 190

enrolling 193

like a piece of wet spaghetti. 195

knew 199

“Marvelous! Tremendous! Stupendous!” 206

I knew the words and melodies of hundreds of songs—a symphony exploding inside my head with no one to hear it but me. But he never asked me about music. I knew all the colors and shapes and animals that children my age were supposed to know, plus lots more. In my head I could count to one thousand—forward and backward. I could identify hundreds of words on sight. But all that was stuck inside. 223

is my opinion that Melody is severely brain-damaged and profoundly retarded.” Whoa! Even though I was only five, I had watched enough Easter Seals telethons to know this was bad. Really bad. I felt a thud in my gut. My mom gasped, then said nothing for a full minute. Finally, she took a deep breath and protested quietly, “But I know she’s bright. I can see it in her eyes.” “You love her. It’s only normal to have wishful thinking,” Dr. Hugely told her gently. “No, she has a spark. More than that—a flame of real intelligence. I just know it,” my mother insisted, sounding a little stronger. “It takes time to accept the limitations of a beloved child. She has cerebral palsy, Mrs. Brooks.” “I know the name of her condition, Doctor,” my mother said with ice in her voice. “But a person is so much more than the name of a diagnosis on a chart!” Good try, Mom, I was thinking. But already her voice was losing its edge, melting into the mushiness of helplessness. “She laughs at jokes,” my mother told him, the ice in her voice replaced by desperation, “right at the punch line.” Mom’s voice faded. What she was saying sounded ridiculous, even to me, but I could see she just couldn’t find the words to explain her gut feeling that I had some smarts stuck in here. Dr. Hugely looked from her to me. He shook his head, then said, “You’re lucky she has the ability to smile and laugh. But Melody will never be able to walk on her own or speak a single sentence. She will never be able to feed herself, take care of her own personal needs, or understand anything more than simple instructions. Once you accept that reality, you can deal with the future.” That was just plain mean. My mom hardly ever cries. But she did that day. She cried and cried and cried. Dr. Hugely had to give her a whole box of tissues. Both of them ignored me while she sobbed and he tried to find nice words to say to make her feel better. He didn’t do a very good job. Finally, he gave her options. “You and your husband have several decisions to make,” he told Mom. “You can choose to keep her at home, or you can send her to a special school for the developmentally disabled. There aren’t many choices here locally.” Where do they get those almost-pleasant-sounding phrases to describe kids like me? Mom made a sound that could have been the mewing of a kitten. She was losing it. Dr. Hugely continued. “You can also decide to put Melody in a residential facility where she can be cared for and kept comfortable.” He pulled out a colorful brochure with a smiling child in a wheelchair on the cover and handed it to Mom. I trembled as she took it. “Let’s see,” the doctor said, “Melody is, ah, five now. That’s a perfect age for her to learn to adjust to a new environment. You and your husband can get on with your lives without her as a burden. In time, her memories of you will fade.” 232

Note: Important for charachter development Edit

burden? 256

hurled 261

insensitive. 261

“And what’s more,” she continued, “I think you’re wrong—I know you are! Melody has more brains hidden in her head than you’ll ever have, despite those fancy degrees from fancy schools you’ve got posted all over your walls!” 262

blink. 265

wise 266

enough to lower his head. Mom was on a roll. “You’re not so intelligent, sir— you’re just lucky! All of us who have all our faculties intact are just plain blessed. Melody is able to figure out things, communicate, and manage in a world where nothing works right for her. She’s the one with the true intelligence!” 267

Note: Intelligence Edit

determination 272

headed 272

treated 288

invisible. 288

“disabilities. 292

worst 295

perfect 299

She’s our fashion model. She is just plain beautiful— movie-star eyes; long, curly hair; and a tiny pixie nose. She looks like a doll that you see in a box on a shelf, except she’s prettier. Her mother dresses her in a perfectly matching outfit every day. If she has on a pink shirt, she wears pink slacks, pink socks, and two tiny pink bows in her hair. Even her little fingernails have been done to match. 302

decorate 306

like 313

wished 315

creative!” 319

Please? 330

attaching 332

trouble 333

complicated 333

If Maria is our hugger, Gloria is our rocker. She rocks for hours in the corner under one of the dumb smiling flowers. The teachers are always trying to coax her out, but she wraps her arms around herself like she’s cold and keeps on rocking. She’s autistic, I think. She can walk perfectly well, and she talks when she has something to say. It’s always worth listening to. “Snowman makes me shiver,” she blurted out one day when the classroom was surprisingly quiet. Then she curled up in her corner and said nothing else until it was time to go home. She’s never added one decoration to our snowman, but she does uncurl and seem to relax when a teacher puts on a CD of holiday music. 335

yodels, 341

direction 347

smile 348

guessing 350

“Who was the first baseball player to hit sixty home runs in one season?” Mr. Gross asked. “Babe Ruth!” Then a screech. “Who broke Babe Ruth’s record of seven hundred fourteen home runs?” “Hank Aaron!” Whooping noises. “And who is the all-time hit king?” Mr. Gross seemed to be astonished at Willy’s knowledge. “Pete Rose! Four-two-five-six. Eeek!” “And who holds the lifetime touchdown record?” Silence. Not even a squeak. Willy doesn’t bother with football. Or snowmen. 351

zooms 366

tossing 366

common 372

Retarded. 379

Mrs. Violet Valencia lives next door to us. Violets are purple, and Valencia oranges are, well, orange! Purple oranges are just plain unusual, and so is she. She’s a big woman—about six feet tall, with the biggest hands I’ve ever seen. They’re huge! I bet she could put a full-size basketball in each of her palms and still have room left over. If Mrs. V is, well, like a tree, then my mom is a twig next to her. 383

Mrs. V wears huge, flowing dresses—must be miles of material in those things—all in crazy color combinations. Bubble-gum pink, with fire-engine red, with peachy sherbet, with bright cinnamon. And all shades of orange and purple, of course. She told me she makes the dresses herself. I guess she’d have to. I have never seen anything like them in any store in the mall. Or in a hospital, either. 389

her. She wore the same bright outfits in the preemie ward, the kids’ cancer ward, the children’s burn unit. “Color brings life and hope to these children!” she’d announce boldly, daring anybody to disagree. I guess nobody did. 393

Ollie spent all day long swimming around that small bowl, ducking through the fake log, and then swimming around again. He always swam in the same direction. The only time he’d change his course was when Mom dropped a few grains of fish food into his bowl each morning and evening. I’d watch him gobble the food, then poop it out, then swim around and around once again. I felt sorry for him. At least I got to go outside and to the store and to school. Ollie just swam in a circle all day. I wondered if fish ever slept. But any time I woke up in the middle of the night, Ollie was still swimming, his little mouth opening and closing like was he trying to say something. 585

Peacekeeping: A Novel by Mischa Berlinski

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Last annotated on April 24, 2016

like LBJ, I had seen carpenters cutting, sawing, sanding, and planing lumber into a child’s coffin. But then I had let the matter slide. Deep, deep inside me there was a voice that said, Let them walk for their water. There is no other way to put it: had the voice said anything else, and had it been loud enough, I would have acted. My ability to remain happy while intimately aware of the sufferings of others was a discovery about myself. 1054

How Did We Get Into This Mess?: Politics, Equality, Nature by George Monbiot

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Last annotated on April 22, 2016

This apparatus of justification, or infrastructure of persuasion, and the justifying narratives it generates allow the rich to seize much of our common wealth, to trample the rights of workers and to treat the planet as their dustbin. Ideas, not armies or even banks, run the world. Ideas determine whether human creativity works for society or against it. 89

For every independent voice with a national platform, there are one hundred working on behalf of plutocratic power. 97

In reality, the free market is a political construction, that often has to be imposed through violence, such as Suharto’s massacres in Indonesia, Pinochet’s coup in Chile and the suppression of protests against structural adjustment and austerity all over the world.3 Far from being a neutral forum, the market is dominated by powerful agents – corporations and oligarchs – who use their position to demand special treatment: contracts, handouts, tax breaks, treaties, the crushing of resistance and other political favours. They extend their power beyond their trading relationships through their ownership of the media and their funding and control of political parties. Freedom of the kind championed by neoliberals means freedom from competing interests. It means freedom from the demands of social justice, from environmental constraints, from collective bargaining and from the taxation that funds public services. It means, in sum, freedom from democracy. The negative freedom enjoyed by corporations and billionaires (freedom to be or to act without interference from others; as defined by Isaiah Berlin in his essay Two Concepts of Liberty4) intrudes upon the negative freedom the rest of us enjoy. As a result, the great flowering of freedom that has enhanced so many lives since the end of the Second World War is now at risk. The freedom of the elite from democratic restraint limits other people’s freedom from hunger, poverty and brutal conditions of employment. It limits free access to health and education; freedom from industrial injuries; freedom from pollution, addiction, loan sharks and confidence tricksters. Freedom for the financial sector means speculative chaos, economic crises and bailouts for which the rest of us must pay. The crushing of protest and the promotion of corporate power (by instruments such as the proposed Transatlantic Trade and Investment Partnership) are just two forms of the extreme government intervention required to create a system which claims to be free from government intervention. Another example is the vast infrastructure of law and coercion needed to commodify land, labour and money, none of which fall organically into a market economy.5 Another is the invention of limited liability, which permits companies to shed and socialise their losses. Neoliberalism, far from revealing biological laws, describes a system that creates its own reality. All this remains largely invisible to citizens: unnamed, unexamined and shrouded by the mysteries of faith. The anonymity of neoliberalism is not only an expression of power; it is a source of power. 116

Progressive change requires mass mobilisation. But, by identifying and challenging power, by discovering its failings and proposing alternatives, by showing the world as it is rather than as the apparatus of justification would wish people to see it, we can, I believe, play a helpful part in this mobilisation, alongside politicians, protesters, social entrepreneurs, pressure groups and a host of other agents of change. This, at least, is the conviction that enables 151

The age we are entering, in which we exist apart, is unlike any that has gone before. In the past few years, we have seen loneliness become an epidemic among young adults.1 Now we learn that it is just as great an affliction for older people. A study by Independent Age shows that severe loneliness in England blights the lives of 700,000 men and 1.1 million women over fifty,2 and is rising with astonishing speed. Ebola is unlikely ever to kill as many people as the disease of loneliness. Social isolation is as potent a cause of early death as smoking fifteen cigarettes a day, while loneliness, research suggests, is twice as deadly as obesity.3 Dementia, high blood pressure, alcoholism and accidents – all these, like depression, paranoia, anxiety and suicide, become more prevalent when connections are cut.4 We cannot cope alone. 166

Yes, factories have closed, people travel by car instead of by bus, use YouTube rather than go to the cinema. But these shifts alone fail to explain the speed of our social collapse. These structural changes have been accompanied by a life-denying ideology, which enforces and celebrates our social isolation. The war of every man against every man – competition and individualism, in other words – is the religion of our time, justified by a mythology of lone rangers, sole traders, self-starters, self-made men and women, going it alone. For the most social of creatures, who cannot prosper without love, there is now no such thing as society, only heroic individualism. What counts is to win. The rest is collateral damage. 174

More than a fifth now say they ‘just want to be rich’ – wealth and fame being the sole ambitions of 40 per cent of those surveyed.5 A government study in June 2014 revealed that Britain is the loneliness capital of Europe.6 We are less likely than other Europeans to have close friends or to know our neighbours. 180

Research by economists at the University of Milan suggests that television helps to drive competitive aspiration.9 It strongly reinforces the income–happiness paradox: the fact that, as national incomes rise, happiness does not rise with them. Aspiration, which increases with income, ensures that the point of arrival, of sustained satisfaction, retreats before us. The researchers found that those who watch a lot of television derive less satisfaction from a given level of income than those who watch only a little. Television speeds up the hedonic treadmill, forcing us to strive even harder to sustain the same level of satisfaction. 191

the myriad forms of career-making competition the medium celebrates, the generalised obsession with fame and wealth, the pervasive sense, in watching it, that life is somewhere other than where you are, to see why this might be. 197

wealthier. New figures show that while the income of company directors has risen by more than a fifth, wages for the workforce as a whole have fallen in real terms over the past year.10 The bosses now earn – sorry, I mean take – 120 times more than the average full-time worker. (In 2000, it was forty-seven times.) And even if competition did make us richer, it would make us no happier, as the satisfaction derived from a rise in income would be undermined by the aspirational impacts of competition. The top 1 per cent now own 48 per cent of global wealth,11 but even they aren’t happy. A survey by Boston College of people with an average net worth of $78 million found that they too are assailed by anxiety, dissatisfaction and loneliness.12 Many of them reported feeling financially insecure: to reach safe ground, they believed, they would need, on average, about 25 per cent more money. (And if they got it? They’d doubtless need another 25 per cent.) One respondent said he wouldn’t get there until he had $1 billion in the bank. For this we have ripped the natural world apart, degraded our conditions of life, surrendered our freedoms and prospects of contentment to a compulsive, atomising, joyless hedonism, in which, having consumed all else, we start to prey upon ourselves. For this we have destroyed the essence of humanity: our connectedness. 200

Today the dominant narrative is that of market fundamentalism, widely known in Europe as neoliberalism. The story it tells is that the market can resolve almost all social, economic and political problems. The less the state regulates and taxes us, the better off we will be. Public services should be privatised, public spending should be cut and business should be freed from social control. 226

Even when outcomes are based on talent and hard work, they don’t stay that way for long. Once the first generation of liberated entrepreneurs has made its money, the initial meritocracy is replaced by a new elite, who insulate their children from competition by inheritance and the best education money can buy. Where market fundamentalism has been most fiercely applied – in countries like the US and UK – social mobility has greatly declined.2 If neoliberalism were anything other than a self-serving con, whose gurus and think tanks were financed from the beginning by some of the richest people on earth (the American tycoons Coors, Olin, Scaife, Pew and others), its apostles would have demanded, as a precondition for a society based on merit, that no one should start life with the unfair advantage of inherited wealth or economically determined education. 238

But they never believed in their own doctrine. Enterprise, as a result, quickly gave way to rent. All this is ignored, and success or failure in the market economy is ascribed solely to individual effort. The rich are the new righteous, the poor are the new deviants, who have failed both economically and morally, and are now classified as social parasites. The market was meant to emancipate us, offering autonomy and freedom. Instead it has delivered atomisation and loneliness. The workplace has been overwhelmed by a mad, Kafkaesque infrastructure of assessments, monitoring, measuring, surveillance and audits, centrally directed and rigidly planned, whose purpose is to reward the winners and punish the losers. It destroys autonomy, enterprise, innovation and loyalty, and breeds frustration, envy and fear. Through a magnificent paradox, it has led to the revival of a grand old Soviet tradition, known in Russian as tufta. It means the falsification of statistics to meet the diktats of unaccountable power. The same forces afflict those who can’t find work. They must now contend, alongside the other humiliations of unemployment, with a whole new level of snooping and monitoring. All this, Verhaeghe points out, is fundamental to the neoliberal model, which everywhere insists on comparison, evaluation and quantification. We find ourselves technically free but powerless. Whether in work or out of work, we must live by the same rules or perish. All the major political parties promote them, so we have no political power either. In the name of autonomy and freedom we have ended up controlled by a grinding, faceless bureaucracy. These shifts have been accompanied, Verhaeghe writes, by a spectacular rise in certain psychiatric conditions: self-harm, eating disorders, depression and personality disorders. Performance anxiety and social phobia are rising fast; both of them reflect a fear of other people, who are perceived as both evaluators and competitors, the only roles for society that market fundamentalism admits. Depression and loneliness plague us. The infantilising diktats of the workplace destroy our self-respect. Those who end up at the bottom of the pile are assailed by guilt and shame. The self-attribution fallacy cuts both ways: just as we congratulate ourselves for our successes, we blame ourselves for our failures, even if we had little to do with them. So if you don’t fit in; if you feel at odds with the world; if your identity is troubled and frayed; if you feel lost and ashamed, it could be because you have retained the human values you were supposed to have discarded. 245

Lord Macdonald, formerly the director of public prosecutions, points out, ‘It is difficult to imagine a broader concept than causing “nuisance” or “annoyance”. The phrase is apt to catch a vast range of everyday behaviours to an extent that may have serious implications for the rule of law.’10 Protesters, buskers, preachers: all, he argues, could end up with IPNAs. The Home Office minister, Norman Baker, once a defender of civil liberties, now the architect of the most oppressive bill pushed through any recent parliament, claimed that the amendments he offered in December 2012 would ‘reassure people that basic liberties will not be affected’.11 But Liberty describes them as ‘a little bit of window-dressing: nothing substantial has changed’.12 The new injunctions and the new dispersal orders create a system in which the authorities can prevent anyone from doing more or less anything. But they won’t be deployed against just anyone. Advertisers, who cause plenty of nuisance and annoyance, have nothing to fear; nor do opera lovers hogging the pavements of Covent Garden. Annoyance and nuisance are what young people cause; they are inflicted by oddballs, the underclass, those who dispute the claims of power. These laws will be used to stamp out plurality and difference, to douse the exuberance of youth, to pursue children for the crime of being young and together in a public place, to help turn this nation into a money-making monoculture, controlled, homogenised, lifeless, strifeless and bland. For a government which represents the old and the rich, that must sound like paradise. 6 January 2014 412

‘One of the penalties of an ecological education is that one lives alone in a world of wounds’, the pioneering conservationist Aldo Leopold wrote. ‘An ecologist must either harden his shell and make believe that the consequences of science are none of his business, or he must be the doctor who sees the marks of death in a community that believes itself well and does not want to be told otherwise.’1 I remembered that when I read the news that the world has lost 52 per cent of its vertebrate wildlife over the past forty years.2 1052

The hominins from whom we evolved inhabited a fascinating, terrifying world, in which survival depended on constant observation and interpretation. They contended not only with lions and leopards, but with sabretooths and false sabretooths, giant hyaenas and bear dogs (monstrous creatures with a huge bite radius). 1062

We still possess these capacities. We carry with us a ghost psyche, adapted to a world we no longer inhabit, which contains – though it remains locked down for much of the time – a boundless capacity for fear and wonder, curiosity and enchantment. We are pre-tuned to the natural world, wired to respond to nature. 1071

By damaging the living planet we have diminished our existence. We have been able to do this partly as a result of our ability to compartmentalise. This is another remarkable capacity we have developed, which perhaps reflects the demands of survival in the ever more complex human world we have created. By carving up the world in our minds we have learnt to shut ourselves out of it. 1093

Now almost every aspect of our lives is lived within grids, either concrete or abstract. Linearity, control and management dominate our lives. We fetishise progress: a continuous movement in the same direction. We impose our lines on the messy, contradictory and meandering realities of the human world, because otherwise we would be completely lost in it. We make compartments simple enough, amid the labyrinths we have created, to navigate and understand. Thus we box ourselves out of the natural world. We become resistant to the experiences that nature has to offer; its spontaneity and serendipity, its unscripted delights, its capacity to shake us out of the frustrations and humiliations which are an inevitable product of the controlled and ordered world we have sought to create. We bully the living world into the grids we impose on ourselves. Even the areas we claim to have set aside for nature are often subjected to rigid management plans, in which the type and the height of the vegetation is precisely ordained and, through grazing or cutting or burning, nature is kept in a state of arrested development to favour an arbitrary assemblage of life over other possible outcomes. Nothing is allowed to change, to enter or leave. We preserve these places as if they were pickles in a jar. The language we use to describe them is also rigid and compartmentalised. In the UK we protect ‘sites of special scientific interest’, as if the wildlife they contain is of interest only to scientists. The few parts of the seabed which are not ripped up by industrial trawling are described as ‘reference areas’, as if their only value is as a baseline with which to compare destruction elsewhere. And is there a more alienating term than ‘reserve’? When we talk about reserve in people, we mean that they seem cold and remote. It reminds me of the old Native American joke: ‘We used to like the white man, but now we have our reservations.’ Even ‘the environment’ is an austere and technical term, which creates no pictures in the mind. 1106

We have our bread; now we are wandering, in spellbound reverie, among the circuses. The world’s most inventive minds are deployed not to improve the lot of humankind but to devise ever more effective means of stimulation, to counteract the diminishing satisfactions of consumption. The mutual dependencies of consumer capitalism ensure that we all unwittingly conspire in the trashing of what may be the only living planet. The failure at Rio de Janeiro belongs to us all. It marks, more or less, the end of the multilateral effort to protect the biosphere. The only successful global instrument – the Montreal Protocol on substances that deplete the ozone layer – was agreed and implemented years before the first Earth Summit, in 1992.2 It was one of the last fruits of a different political era, in which intervention in the market for the sake of the greater good was not considered anathema, even by the Thatcher and Reagan governments. Everything of value discussed since then has led to weak, unenforceable agreements, or to no agreements at all. 1198

Total impact should be measured as I = CAT: consumers times affluence times technology. Many of the world’s people use so little that they wouldn’t figure in this equation. They are the ones who have most children. While there’s a weak correlation between global warming and population growth, there’s a strong correlation between global warming and wealth. 1258

And most of the farmed animals in this country are fed on either soya or maize, whose impacts on the living world are terrible.2 A new paper in the journal Science of the Total Environment reports that, ‘Livestock production is the single largest driver of habitat loss.’3 Perhaps you can dismiss these problems from your mind. But the overuse of antibiotics by livestock farms that can lead to resistant strains of pathogens, and the competition for scarce arable land between the production of animal feed and grain for human consumption, must surely trouble 1376

Like the growing of potatoes, maize cultivation with conventional methods in this country is a perfect formula for ripping the soil off the land, as the ground is ploughed deeply, then left almost bare for several months. A study in south-west England suggests that the soil structure has broken down in 75 per cent of the maize fields there.1 Maize cultivation has expanded from 1,400 hectares to 160,000 since 1970.2 It is not grown to feed people, but to feed livestock and to supply anaerobic digestion plants producing biogas. If the National Farmers’ Union gets its way, maize growing will expand by another 100,000 hectares in the next six years, solely to make biogas.3 Subsidies which were meant to encourage farmers to turn their slurry and crop wastes into biogas – a sensible and commendable idea – are instead being used to grow virgin feedstocks on the best arable land. Across the European Union, thanks to this perverse incentive, virgin crops (mostly maize) now account for 55 per cent of all the feedstock being poured into biogas plants. Our soils are being torn apart for no good reason. Soil erosion and an associated problem, soil compaction — mostly caused by using heavy machinery in the wrong conditions – is a major contributor to floods. Rain percolates into soils whose structure is intact, but flashes off fields where the structure has broken down, taking the soil – and the pesticides and fertiliser – with it. 1464

Researching her film The Story of Stuff, Annie Leonard discovered that of the materials flowing through the consumer economy, only 1 per cent remain in use six months after sale.1 Even the goods we might have expected to hold onto are soon condemned to destruction through either planned obsolescence (breaking quickly) or perceived obsolescence (becoming unfashionable). But many of the products we buy, especially for Christmas, cannot become obsolescent. The term implies a loss of utility, but they had no utility in the first 2440

The movement started with Rick Santelli’s call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama’s plan to ‘subsidise the losers’.6 In other words, it was a demand for a financiers’ mobilisation against the bail-out of their victims: people losing their homes. This is the opposite of the Observer’s story. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events.7 The movement, whose programme is still lavishly 2501

knew this once, but now we’ve forgotten. What hope do we have of resisting a force we won’t even see? 2528

is subtler than No Turning Back. There are fewer of the direct demands and terrifying plans: these movements have learnt something in the past thirty years. It is hard to think how their manifesto could have been better tailored to corporate interests. As if to reinforce the point, the front cover carries a quote from Sir Terry Leahy, until recently the chief executive of Tesco: ‘The path is clear. We have to be brave enough to take it.’ Once more the press has taken up the call. In the approach to publication, the Daily Telegraph commissioned a series of articles called Britain Unleashed, promoting the same dreary agenda of less tax for the rich, less help for the poor and less regulation for business.17 Another article in the same paper, published in September 2012 by its head of personal finance Ian Cowie, proposes that there be no representation without taxation. People who don’t pay enough income tax shouldn’t be allowed to vote.18 I see these people as rightwing vanguardists, mobilising first to break and then to capture a political system that is meant to belong to all of us. Like Marxist insurrectionaries, they often talk about smashing things, about ‘creative destruction’, about the breaking of chains and the slipping of leashes.19 But in this case they appear to be trying to free the rich from the constraints of democracy. And at the moment they are winning. 1 October 2012 2577

Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm. All other functions are better discharged by private enterprise, which will be prompted by the profit motive to supply essential services. By this means, enterprise is liberated, rational decisions are made and citizens are freed from the dehumanising hand of the state. This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top one per cent, but to the top tenth of the top one per cent.4 In the United States, for example, the upper 0.1 per cent has already regained the position it held at the beginning of the 1920s.5 The conditions that neoliberalism demands in order to free human beings from the slavery of the state – minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions – just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim. 2604

So the question is this. Given that the crises I have listed are predictable effects of the dismantling of public services and the deregulation of business and financial markets, given that it damages the interests of nearly everyone, how has neoliberalism come to dominate public life? Richard Nixon was once forced to concede that ‘we are all Keynesians now’: even the Republicans supported the interventionist doctrines of John Maynard Keynes. But we are all neoliberals now. Mrs Thatcher kept telling us that ‘there is no alternative’, and by implementing her programmes, Clinton, Blair, Brown and the other leaders of what were once progressive parties appear to prove her right. The first great advantage the neoliberals possessed was an unceasing fountain of money. 2614

The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, as well as the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme – the restoration of the power of the elite – and package it as a proposal for the betterment of humankind. 2622

force. In the US, the Democrats were neutered by new laws on campaign finance. To compete successfully with the Republicans, they would have to give big business what it wanted. The first neoliberal programme of all was implemented in Chile following Pinochet’s coup, with the backing of the US government and economists taught by Milton Friedman, one of the founding members of the Mont Pelerin Society. 2634

sense. The corporations’ tame thinkers sell the project by reframing our political language.7 Nowadays I hear even my progressive friends using terms like wealth creators, tax relief, big government, consumer democracy, red tape, compensation culture, job seekers and benefit cheats. These terms, all deliberately invented or promoted by neoliberals, have become so commonplace that they now seem almost neutral. Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by the means it forbids: greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused develop, the public will need ever less persuading that it has been misled. 2641

Little distinguishes the British imperial project from any other. In all cases the purpose of empire was loot, land and labour. When people resisted (as some of the Kikuyu did during the Mau Mau rebellion), the response everywhere was the same: extreme and indiscriminate brutality, hidden from public view by distance and official lies. Successive governments have sought to deny the Kikuyu justice: destroying most of the paperwork, lying about the existence of the rest, seeking to have the case dismissed on technicalities.9 Their handling of this issue, and the widespread British disavowal of what happened in Kenya, reflect the way in which this country has been brutalised by its colonial history. Empire did almost as much harm to the imperial nations as it did to their subject peoples. 2766

In his book ‘Exterminate All the Brutes’, Sven Lindqvist shows how the ideology that led to Hitler’s war and the Holocaust was developed by the colonial powers.10 Imperialism required an exculpatory myth. It was supplied, primarily, by British theorists. In 1799, Charles White began the process of identifying Europeans as inherently superior to other peoples.11 By 1850, the disgraced anatomist Robert Knox had developed the theme into fully fledged racism.12 His book The Races of Man asserted that dark-skinned people were destined first to be enslaved and then annihilated by the ‘lighter races’. Dark meant almost everyone: ‘what a field of extermination lies before the Saxon, Celtic, and Sarmatian races!’13 Remarkable as it may sound, this view soon came to dominate British thought. In common with most of the political class, W. Winwood Reade, Alfred Russel Wallace, Herbert Spencer, Frederick Farrar, Francis Galton, Benjamin Kidd, even Charles Darwin saw the extermination of dark-skinned people as an inevitable law of nature.14 Some of them argued that Europeans had a duty to speed it up: both to save the integrity of the species and to put the inferior ‘races’ out of their misery. These themes were picked up by German theorists. In 1893, Alexander Tille, drawing on British writers, claimed that ‘it is the right of the stronger race to annihilate the lower’.15 In 1901, Friedrich Ratzel argued in Der Lebensraum that Germany had a right and duty to displace ‘primitive peoples’, as the Europeans had done in the Americas. In Mein Kampf, Hitler explained that the eastward expansion of the German empire would mirror the western and southern extension of British interests.16 He systematised and industrialised what the imperial nations had been doing for the past five centuries. The scale was greater, the location different, the ideology broadly the same. I believe that the brutalisation of empire also made the pointless slaughter of the First World War possible. A ruling class which had shut down its feelings to the extent that it could engineer a famine in India in the 1870s in which between 12 and 29 million people died was capable of almost anything.17 Empire had tested not only the long-range weaponry that would later be deployed in northern France, but also the ideas. Nor have we wholly abandoned them. Commenting on the Kikuyu case in the Daily Mail, Max Hastings charged that the plaintiffs had come to London ‘to exploit our feebleminded justice system’.18 Hearing them ‘represents an exercise in state masochism’. I suspect that if members of Hastings’s club had been treated like the Kikuyu, he would be shouting from the rooftops for redress. But Kenyans remain, as colonial logic demanded, the ‘other’, bereft of the features and feelings that establish our common humanity. So, in the eyes of much of the elite, do welfare recipients, ‘problem families’, Muslims and asylum seekers. The process of dehumanisation, so necessary to the colonial project, turns inwards. Until this nation is prepared to recognise what happened and how it was justified, Britain, like the countries it occupied, will remain blighted by imperialism. 8 October 2012 2772

Remittances from the diaspora amount to between $1.2 and 1.6 billion a year,2 which is roughly 50 per cent of Somalia’s gross national income.3 Forty per cent of the population relies on these remittances for survival.4 Over the past ten years, the money known to have been transferred to suspected terrorists in Somalia amounts to a few thousand dollars.5 Cutting off remittances is likely to kill more people than terrorists will ever manage. 2812

There are no good solutions that military intervention by the UK or the US can engineer. There are political solutions in which our governments could play a minor role: supporting the development of effective states that don’t rely on murder and militias, building civic institutions that don’t depend on terror, helping to create safe passage and aid for people at risk. Oh, and ceasing to protect and sponsor and arm selected networks of death. Whenever our armed forces have bombed or invaded Muslim nations, they have made life worse for those who live there. The regions in which our governments have intervened most are those which suffer most from terrorism and war. That is neither coincidental nor surprising. Yet our politicians affect to learn nothing. Insisting that more killing will magically resolve deep-rooted conflicts, they scatter bombs like fairy dust. 2916

the remarkable ability it would grant big business to sue the living daylights out of governments which try to defend their citizens. It would allow a secretive panel of corporate lawyers to overrule the will of Parliament and destroy our legal protections. Yet the defenders of our sovereignty say nothing. The mechanism is called investor–state dispute settlement. It’s already being used in many parts of the world to kill regulations protecting people and the living planet. 2938

There is no right of appeal on the merits of the case. Yet they can overthrow the sovereignty of parliaments and the rulings of supreme courts. You don’t believe it? Here’s what one of the judges on these tribunals says about his work: When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all … Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.8 There are no corresponding rights for citizens. We can’t use these tribunals to demand better protections from corporate greed. As the Democracy Centre says, this is ‘a privatised justice system for global corporations’.9 Even if these suits don’t succeed, they can exert a powerful and chilling effect on legislation. One Canadian government official, speaking about the rules introduced by the North American Free Trade Agreement, remarked: I’ve seen the letters from the New York and DC law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years. They involved dry-cleaning chemicals, pharmaceuticals, pesticides, patent law. Virtually all of the new initiatives were targeted and most of them never saw the light of day.10 Democracy, as a meaningful proposition, is impossible under these circumstances. This is the system to which we will be subject if the transatlantic treaty goes ahead. The US and the European Commission, both of which have been captured by the corporations they are supposed to regulate, are pressing for investor–state dispute resolution to be included in the agreement. 2959

It is precisely because our courts are generally not biased or lacking independence that the corporations want to bypass them. The European Commission seeks to replace open, accountable, sovereign courts with a closed, corrupt system riddled with conflicts of interest and arbitrary powers. Investor–state rules could be used to smash any attempt to save the NHS from corporate control, to re-regulate the banks, to curb the greed of the energy companies, to renationalise the railways, to leave fossil fuels in the ground. These rules shut down democratic alternatives. They outlaw leftwing politics. This is why there has been no attempt by our government to inform us about this monstrous assault on democracy, let alone consult us. This is why the Conservatives who huff and puff about sovereignty are silent. Wake up people, we’re being shafted. 2979

The Act, Parliament was told, was meant to protect women from stalkers. But as soon as it came onto the statute books, it was used to stop peaceful protest. To obtain an injunction, a company needs to show only that someone feels ‘alarmed or distressed’ by the protesters, a requirement so vague that it can mean almost anything. Was this an accident of sloppy drafting? No. Timothy Lawson-Cruttenden, the solicitor who specialises in using this law against protesters, boasts that his company ‘assisted in the drafting of the … Protection from Harassment Act 1997’.3 In 2005, Parliament was duped again, when a new clause, undebated in either chamber, was slipped into the Serious Organised Crime and Police Act.4 It peps up the 1997 Act, which can now be used to ban protest of any kind. Mr Lawson-Cruttenden, who represented RWE npower, brags that the purpose of obtaining injunctions under the act is ‘the criminalisation of civil disobedience’.5 One of the advantages of this approach is that very low standards of proof are required: ‘hearsay evidence … is admissible in civil courts’. The injunctions he obtains criminalise all further activity, even though, as he admits, ‘any allegations made remain untested and unproven’.6 Last week, stung by bad publicity, npower backed down. The villagers had just started to celebrate when they made a shocking discovery: they now feature on an official list of domestic extremists. The National Extremism Tactical Co-ordination Unit (NETCU) is the police team coordinating the fight against extremists. To illustrate the threats it confronts, the NETCU site carries images of people marching with banners, of peace campaigners standing outside a military base and of the Rebel Clown Army (whose members dress up as clowns to show that they have peaceful intentions). It publishes press releases about Greenpeace and the climate camp at Kingsnorth.7 All this, the site suggests, is domestic extremism. NETCU publishes a manual for officers policing protests. To help them identify dangerous elements, it directs them to a list of ‘High Court Injunctions that relate to domestic extremism campaigns’, published on NETCU’s website.8 On the first page is the injunction obtained by npower against the Radley villagers, which names Peter Harbour and others. Dr Harbour wrote to the head of NETCU, Steve Pearl, to ask for his name to be removed from the site. Mr Pearl refused. So Dr Harbour remains a domestic extremist. 3046

To vote no is to choose to live under a political system that sustains one of the rich world’s highest levels of inequality and deprivation. This is a system in which all major parties are complicit, which offers no obvious exit from a model that privileges neoliberal economics over other aspirations.13 It treats the natural world, civic life, equality, public health and effective public services as dispensable luxuries, and the freedom of the rich to exploit the poor as non-negotiable. 3199

Independence, as more Scots are beginning to see, offers people an opportunity to rewrite the political rules. To create a written constitution, the very process of which is engaging and transformative. To build an economy of benefit to everyone. To promote cohesion, social justice, the defence of the living planet and an end to wars of choice.15 To deny this to yourself; to remain subject to the whims of a distant and uncaring elite; to succumb to the bleak, deferential negativity of the no campaign; to accept other people’s myths in place of your own story: that would be an astonishing act of self-repudiation and self-harm. Consider yourselves independent and work backwards from there, then ask why you would sacrifice that freedom. 2 September 2014 3208

In 1909 a dangerous subversive explained the issue thus: Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived … the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.12 Who was this firebrand? Winston Churchill. As Churchill, Adam Smith and many others have pointed out,13 those who own the land skim wealth from everyone else, without exertion or enterprise. They ‘levy a toll upon all other forms of wealth and every form of industry’.14 Land value tax recoups this toll. It has a number of other benefits.15 It stops the speculative land hoarding that prevents homes from being built. It ensures that the most valuable real estate – in city centres – is developed first, discouraging urban sprawl. It prevents speculative property bubbles, of the kind that have recently trashed the economies of Ireland, Spain and other nations and which make rents and first homes so hard to afford. Because it does not affect the supply of land (they stopped making it some time ago), it cannot cause the rents that people must pay to the landlords to be raised. It is easy to calculate and hard to avoid: you can’t hide your land in London in a secret account in the Cayman Islands. And it could probably discharge the entire deficit. 3313

This is where the debate about workers and shirkers, strivers and skivers should have led. The skivers and shirkers sucking the money out of your pockets are not the recipients of social security demonised by the Daily Mail and the Conservative Party, the overwhelming majority of whom are honest claimants. We are being parasitised from above, not below, and the tax system should reflect this. 21 January 2013 3334

The Values of Everything So here we are, forming an orderly queue at the slaughterhouse gate. The punishment of the poor for the errors of the rich, the abandonment of universalism, the dismantling of the shelter the state provides: apart from a few small protests, none of this has yet brought us out fighting. The acceptance of policies which counteract our interests is the pervasive mystery of the twenty-first century. In the United States, blue-collar workers angrily demand that they be left without health care, and insist that millionaires should pay less tax. In the UK we appear ready to abandon the social progress for which our ancestors risked their lives with barely a mutter of protest. What has happened to us? The answer, I think, is provided by the most interesting report I have read this year. ‘Common Cause’, written by Tom Crompton of the environmental conservation group the World Wildlife Fund for Nature (WWF), examines a series of fascinating recent advances in the field of psychology.1 It offers, I believe, a remedy to the blight which now afflicts every good cause from welfare to climate change. Progressives, he shows, have been suckers for a myth of human cognition he labels the Enlightenment model. This holds that people make rational decisions by assessing facts. All that has to be done to persuade people is to lay out the data: they will then use it to decide which options best support their interests and desires. A host of psychological experiments demonstrates that it doesn’t work like this. Instead of performing a rational cost–benefit analysis, we accept information which confirms our identity and values, and we reject information that conflicts with them. We mould our thinking around our social identity, protecting it from serious challenge. Confronting people with inconvenient facts is likely only to harden their resistance to change. Our social identity is shaped by values which psychologists classify as either extrinsic or intrinsic. Extrinsic values concern status and self-advancement. People with a strong set of extrinsic values fixate on how others see them. They cherish financial success, image and fame. Intrinsic values concern relationships with friends, family and community, and self-acceptance. Those who have a strong set of intrinsic values are not dependent on praise or rewards from other people. They have beliefs which transcend their self-interest. Few people are all-extrinsic or all-intrinsic. Our social identity is formed by a mixture of values. But psychological tests in nearly seventy countries show that values cluster together in remarkably consistent patterns. Those who strongly value financial success, for example, have less empathy, stronger manipulative tendencies, a stronger attraction to hierarchy and inequality, stronger prejudices towards strangers and less concern about human rights and the environment. Those who have a strong sense of self-acceptance have more empathy and a greater concern about human rights, social justice and the environment. These values suppress each other: the stronger someone’s extrinsic aspirations, the weaker his or her intrinsic goals. We are not born with our values. They are shaped by the social environment around us. By changing our perception of what is normal and acceptable, politics alters our minds as much as our circumstances. Free, universal health provision, for example, tends to reinforce intrinsic values. Shutting the poor out of health care normalises inequality, reinforcing extrinsic values. The sharp rightward shift which began with Margaret Thatcher and persisted under Blair and Brown, all of whose governments emphasised the virtues of competition, the market and financial success, has changed our values. The British Social Attitudes survey, for example, shows a sharp fall over this period in public support for policies which redistribute wealth and opportunity.2 This shift has been reinforced by advertising and the media. The media’s fascination with power politics; its rich lists; its catalogues of the hundred… 3339

Gathering Blue (Giver Quartet, Book 2) by Lois Lowry

You have 58 highlighted passages

You have 16 notes

Last annotated on April 21, 2016

“Mother?” There was no reply. She hadn’t expected one. Her mother had been dead now for four days, and Kira could tell that the last of the spirit was drifting away. “Mother.” She said it again, quietly, to whatever 27

Her mother’s brother had been near her in the Field for two days, not guarding Katrina, his sister, but sitting silently beside the body of his own woman, the short-tempered Solora, and that of their new infant who had been too young to have a name. They had nodded to each other, Kira and her mother’s brother, in acknowledgment. But he had departed, his time in the Field of Leaving finished. He had tykes to tend; he and Solora had two others in addition to the one that had brought about her death. 51

mother. Often Katrina had told Kira the story of her birth—the birth of a fatherless girl with a twisted leg—and how her mother had fought to keep her alive. “They came to take you,” Katrina said, whispering the story to her in the evening, in their cott, with the fire fed and glowing. “You were one day old, not yet named your one-syllable infant name—” “Kir.” 58

“I know.” Kira sighed again. In the past there had been sicknesses that spread from one cott to the next, with many deaths. When that happened, a huge burning would take place, followed by a rebuilding that became almost festive with the noise of workers smearing wet mud over the fitted wooden sides of new structures, methodically slapping it into smoothness. The charred smell of the burning would remain in the air even as the new cotts rose. 112

filled her container with water. Everywhere she heard arguing. The cadence of bickering was a constant sound in the village: the harsh remarks of men vying for power; the shrill bragging and taunting of women envious of one another and irritable with the tykes who whined and whimpered at their feet and were frequently kicked out of the way. 117

Note: Important for 8 elements of culture Edit

Kira did not know what the Council of Guardians would decide. She knew only that whether she was to stay or go, to rebuild on her mother’s piece of land or to enter the Field and face the creatures who were waiting in the forest, 205

She reached for a nearby piece of wood and turned it over in her hands, measuring its strength and its straightness. For a cott, should she be permitted to stay, she would need some sturdy lengths of solid wood. She would go to the woodcutter named Martin. He had been her mother’s friend. She could barter with him, maybe offering to decorate a fabric for his wife, in exchange for the beams she would need. 207

The Council Edifice was surprisingly splendid. It remained from before the Ruin, a time so far past that none of the people now living, none of their parents or grandparents, had been born. The people knew of the Ruin only from the Song that was presented at the yearly Gathering. 221

distorted 231

“Take pride in your pain,” 236

Jamison. 312

gradually 419

this,” Katrina had said one year to the guardian. “Look what she has done!” she said and showed him the scrap that Kira had just completed, the one that had composed itself so magically in her fingers. “She has a skill far greater than mine.” 423

at her mother’s side, never touching the fragile ancient cloth, marveling each time at the rich hues that told the history of the world. Golds and reds and browns. And here and there, faded pale, almost reduced to white, there had once been blue. Her mother showed her the faded places that remained of it. 427

Kira, clutching the cloth talisman in her pocket, became aware suddenly that its warmth and comfort had returned. During her infrequent leisure times, Kira often experimented with colored bits of threadings, feeling the excitement in her fingers as her surprising skill grew. She used bits of discarded woven cloth from the weaving shed. It was not a violation. She had asked permission to take the scraps to her cott. Sometimes, pleased with what she had done, she showed her work to her mother and received a proud, quick smile of approval. But more often her efforts were disappointments, the uneven products of a girl still learning; usually she threw her experiments away. This one, the one she held now in the nervous fingers of her right hand, she had done as her mother lay ill. Seated helplessly by the side of the dying woman, Kira leaned forward again and again to hold a container of water to her mother’s lips. She smoothed her mother’s hair, rubbed her cold feet, and held the trembling hands, knowing there was nothing more she could do. While her mother slept restlessly, Kira sorted the dyed threads in her basket and began to weave them into the cloth scrap with a bone needle. It soothed her to do so, and passed the time. 440

The threads began to sing to her. Not a song of words or 449

tones, but a pulsing, a quivering in her hands as if they had life. For the first time, her fingers did not direct the threads, but followed where they led. She was able to close her eyes and simply feel the needle move through the fabric, pulled by the urgent, vibrating threads. 450

that a large box had been placed on the floor behind the seats of the Council of Guardians. 459

Near the Edifice steps, a crowd had gathered to watch a pig-slaughter behind the butcher’s. After the choice parts were sold, scraps would be thrown. People and dogs together would shove and grab. The smell from the thick mounds of excrement beneath the terrified pigs and the high-pitched squeals of terror as they awaited death made Kira feel dizzy and nauseated. She hurried 504

remembered how he had acquired his pet, his little companion dog. It had been a useless stray, underfoot, scavenging everywhere for food. On a rainy afternoon it had been caught and tossed by the wheel of a passing donkey cart.