Economy

Following a double digit loss in the Ohio primary and a high single digit loss in Pennsylvania, Barack Obama’s campaign is undergoing what First Read has termed a “re-launch,” and focused on the economic woes of everyday people. Articles appeared today in the New York Times, Washington Post, and Wall Street Journal about this style and policy shift designed to pursue the blue-collar votes that have recently proven elusive for him.

From the Washington Post:

Sen. Barack Obama came this past weekend to this factory town, where the loss of hundreds of jobs at the Delphi auto parts plant was only the latest blow, and told 2,000 voters that the way to fix things was not just to vote for him -- but to join a bottom-up mass movement to change the way government works.

He didn't put it that way exactly. But in a noteworthy shift, the Illinois senator is trying to reach working-class and middle-class voters by arguing more explicitly that the reform ideas driving his campaign can address the economic troubles that threaten their way of life. Supplanting lobbyist influence with citizen activism, uniting the country beyond petty partisan gamesmanship and bringing more candor to government, he argues, are not just abstract goals, but concrete steps that can level the playing field and lead to a more equitable distribution of the nation's wealth.

"When we push back the special interests, when we unify the country, when we speak honestly with the American people about our challenges, there's nothing we can't accomplish, nothing we can't do," he said here. "When we unify the country, we will change our economy."

Much also has been made about the cosmetic changes the campaign is undergoing. Obama recently showed off his basketball skills in Indiana (where the sport is sacrosant), and has reverted to a common practice from earlier in the campaign: going without coat and tie and rolling up his sleeves.

From the Wall Street Journal:

During his weekend tour of Indiana, Sen. Obama shed his suit jacket and rolled up his shirt sleeves. Rather than pace up and down the stage like a law professor addressing a lecture hall, the Illinois senator has taken to speaking more often from behind a podium.

"If you had watched the last few weeks of this campaign, you would think that all that politics is about is taking hits and bickering," he said. "There's no serious discussion about how we're actually going to bring back jobs to Anderson."

The candidates are turning their attention to the economy at an important time. Global food shortages are starting to have effects at home, and the San Francisco Chronicle today documented the ongoing economic shift that will force many Americans to accept a new standard of living due to the weak dollar.

At NDN, we agree that far more attention needs to be paid to the economic woes of everyday people. NDN President Simon Rosenberg recently blogged on the need to keep political attention on laying out an agenda that restores broad-based prosperity, which the Globalization Initiative has been advocating for the last three years.

With the economy on the wrong track, the candidates need to pick up their rhetoric and provide a cogent narrative on America’s place in the new globalized economy. While it may be easy to pander on these issues for short term political advantage, greater benefit, to both candidate and nation, will come from providing a convincing argument that deals with the realities of globalization. Hopefully, a renewed focus on everyday people will do just that.

American awareness of famines is generally limited to pictures on television or the internet of people starving in faraway places. Surely global food shortages and rising prices cannot affect Americans at home – or so went the thinking. No more.

Costco and Wal-Mart’s Sam’s Club have placed limits on the amount of rice customers can buy. These limits are too high to affect the average consumer, but some businesses may be affected. The reasons for this limit, though, are worth noting. From the Washington Times:

Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy. Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry.

While it is difficult to nail down the specific causes in terms of what bears the greatest amount of responsibility for these high prices, it is worth noting that many experts point to the global hoarding and speculative buying of these goods as well as policies promoting the use of corn for ethanol production. It is also worth noting that this issue is starting to create domestic fears.

NDN Globalization Initiative Policy Director Maggie Barker recently blogged on the causes of these high prices, and I wrote about the political turmoil they are creating globally.

With Democrats voting today in Pennsylvania, we are coming to the close of a six week period in which Senators Obama and Clinton have been talking non-stop about the loss of manufacturing jobs. During that time, they have, to one degree or another, been touting one of the most highly anticipated benefits of dealing with climate change – aside from saving the planet, of course – the entire sector of new “green collar” jobs that will come with it.

Skilled labor will be required to create the solar panels, wind turbines, hybrid engines, energy efficient buildings, and other, as of yet undreamt of clean technologies. Presumably, the argument goes, Pennsylvania’s un- or under- employed workers will benefit from these new jobs. The buy-in to this concept from organized labor has been strong. (The Blue Green Alliance, a partnership of the United Steelworkers and the Sierra Club, has been pushing this side of the argument. They hosted the “Good Jobs, Green Jobs National Conference” in Pittsburgh last month.)

The consensus on green collar jobs – at least on the Democratic side – is broad. New ads from the Alliance for Climate Protection showcase the bipartisan support for creating a solution to climate change. Politicians, of course, love green collar jobs. What better way to go into an economically depressed community than with the promise of a new generation of good-paying jobs?

The green collar jobs argument illustrates just how far the environmental movement has come since its first round of huge legislative successes and awareness campaigns of over a generation ago. The new attentiveness to climate has allowed the environmental community to partner with government, labor, multinational corporations, and religious and community groups to launch a powerful arsenal of multi-disciplinary arguments that environmentalists have been formulating for decades about why and how to stop climate change. These arguments go far beyond what many, until recently, saw as the traditional purview of environmentalism.

This new, broadened approach to environment is working in the fight to advance a solution to climate change – in part because the challenge is so large that it will have far reaching affects on everything from the economy to national security, and in part because the environmental movement now has the ability to make arguments that reach into the polling places of Pennsylvania. This Earth Day, it seems that the climate debate, which has been called “Environment 2.0,” goes hand in hand with environmentalism 2.0, a movement so powerful it can produce a blockbuster documentary, win a Nobel Peace Prize, and – hopefully – create a broad political consensus to save the planet while creating good, new jobs.

In this short video, NDN Globalization Initiative Chair Dr. Robert J. Shapiro expands on his quote from John Heilemann's recent piece in New York Magazine on Barack Obama's economic argument, entitled "Econobamanomic Theory."

From the article:

Robert Shapiro, another veteran of the 1992 Clinton economic team and author of a new book on globalization, agrees. "The narrative is: The U.S. is way ahead in the global economy, but we need to make basic changes so that everyone can prosper," Shapiro says. "We need to get control of health-care and energy costs, because without it, American workers will never see rising wages-since the burden on businesses is otherwise too great." As for training, Shapiro has proposed giving grants to all the community colleges in the country to keep their computer labs open on nights and weekends so that anyone can show up and learn (for free) the skills they need to compete in a tech-centric economy. "We can do it for $125 million a year, and even if it costs twice that much, it would be worth it."

In the video, Dr. Shapiro discusses the necessity for Presidential candidates to explain the vast global changes that are affecting the economy and to provide real plans to make globalization work for all Americans. He argues that John McCain has created an unrealistic economic narrative focused on tax cuts for corportations, but that Senators Clinton and Obama must create a truly compelling one.

Take a look:

NDN's Green Project was in New York on Wednesday, with a very successful panel on investing in clean technology. Green Project Director Michael Moynihan told listeners that, "With oil at $115 a barrel and climate change unsolved, clean technology may be most important components of the 21st Century economy." Peter C. Fusaro, Chairman and Founder of Global Change Associates, best selling author of What Went Wrong at Enron, and perhaps the world’s leading expert on clean technology funds, offered that "the government has to create a stable policy environment for industry." Finally, well known analyst, David Kurzman, Senior Vice President of the Clean Technology Research Group at Panel Intelligence, LLC, said that the key to successfully investing in clean technology is to "follow the smart money."

Take a look at the excellent and informative video (complete with PowerPoints) from the event:

Why didn’t President Bush wait until next Tuesday, Earth Day to give yesterday’s speech on global warming? The stated reason is that the speech was timed to precede the Major Economies Meeting that begins in Paris today in preparation for the upcoming G-8 meeting in July. The real reason, however, may be that the President’s advisers did not want to get a huge round of negative publicity on Earth Day itself. For that is precisely the reaction the speech received. Typical are the comments in Paris of South Africa’s environmental minister, Marthinus van Schalkwyk who described the speech as a step backward, not forward, from the US position at Bali. While the President—under pressure from large US companies as well as the other G-8 leaders—deserves credit for addressing the issue, his proposals fall far short of those of Senators McCain, Obama and Clinton, many states, cities and universities and much of the business community itself.

Instead of calling for large reductions in emissions by 2020—what all three Presidential Candidates have embraced and many cities and organizations are doing--he called for an end to increases by 2025. And instead of proclaiming the need for America to lead on the issue, he once more retreated behind the fig leaf that America cannot take action unless China and India accept caps as well.

His speech coincides with new research from a University of California team that China has recently surpassed the United States in emissions as its economy continues its torrid pace of double digit growth China’s rising level of emissions underscores the need for US leadership to bring China and India into a post-Kyoto system. However, the refusal of the US to accept any discipline itself, in effect, gives China and India--whose per capita emissions are only a fraction of those in the US--a free ride.

Indeed, in line with its embrace of all things technological, China is blitzing ahead with the deployment of clean technologies across its economy. China has already invested $1 billion in wind turbines and expects to multiply its wind power ten fold by 2020. It is deploying end of pipe technologies to combat its famous pollution. And, embarrassingly, China’s cars already enjoy higher gas mileage, at 37 miles per gallon on average, than America’s fleet.

There is still a chance for the President to show leadership at the upcoming G-8 meeting in Japan in July where leaders from 16 countries including the G8, China, India and Brazil, have pledged to make climate change a priority in a special session at the sidelines. If yesterday was any indication, however, President Bush will not be the one leading the discussion.

An article from today's New York Times by Andrew Martin discusses the impact of ethanol and other biofuels on drastically rising food prices:

The idea of turning farms into fuel plants seemed, for a time, like one of the answers to high global oil prices and supply worries. That strategy seemed to reach a high point last year when Congress mandated a fivefold increase in the use of biofuels.

But now a reaction is building against policies in the United States and Europe to promote ethanol and similar fuels, with political leaders from poor countries contending that these fuels are driving up food prices and starving poor people. Biofuels are fast becoming a new flash point in global diplomacy, putting pressure on Western politicians to reconsider their policies, even as they argue that biofuels are only one factor in the seemingly inexorable rise in food prices.

In some countries, the higher prices are leading to riots, political instability and growing worries about feeding the poorest people. Food riots contributed to the dismissal of Haiti's prime minister last week, and leaders in some other countries are nervously trying to calm anxious consumers.

At a weekend conference in Washington, finance ministers and central bankers of seven leading industrial nations called for urgent action to deal with the price spikes, and several of them demanded a reconsideration of biofuel policies adopted recently in the West.

Many specialists in food policy consider government mandates for biofuels to be ill advised, agreeing that the diversion of crops like corn into fuel production has contributed to the higher prices. But other factors have played big roles, including droughts that have limited output and rapid global economic growth that has created higher demand for food.

That growth, much faster over the last four years than the historical norm, is lifting millions of people out of destitution and giving them access to better diets. But farmers are having trouble keeping up with the surge in demand.
...

C. Ford Runge, an economist at the University of Minnesota, said it is “extremely difficult to disentangle” the effect of biofuels on food costs. Nevertheless, he said there was little that could be done to mitigate the effect of droughts and the growing appetite for protein in developing countries.

“Ethanol is the one thing we can do something about,” he said. “It’s about the only lever we have to pull, but none of the politicians have the courage to pull the lever.”

But August Schumacher, a former under secretary of agriculture who is a consultant for the Kellogg Foundation, said the criticism of biofuels might be misdirected. Development agencies like the World Bank and many governments did little to support agricultural development in the last two decades, he said.

He noted that many of the upheavals over food prices abroad have concerned rice and wheat, neither of which is used as a biofuel. For both those crops, global demand has soared at the same time that droughts suppressed the output from farms.

The full article is worth reading, as it also covers the domestic American politics and the tough choices that policy makers will have to make on this issue. Green Project Director Michael Moynihan recently blogged on some technologies that have the potential to be game changers and touched on biofuels, writing:

In the area of portable fuels, biofuels made from switchgrass and other inedible plants grown on scrubland, holds promise. At a time when food prices are soaring and many countries are hoarding rice, wheat and corn, it makes no sense to devote America's heartland loam-some of the richest land in the world-to the production of corn-based ethanol. However, technologies to convert hard-to-break-down grasses grown on scrubland to fuel do make sense.

This is an issue that NDN's Globalization Initiative and Green Project have been watching and will continue to follow closely as the debate over American energy and climate policies unfolds in the coming months.

NDN has been talking about the great transformation underway in the United States and across the globe. One new challenge that poses great risks but also great opportunity is climate change. How the United States and the world adapt to this challenge may well define the Century. Indeed, with oil trading at over $110 per barrel, the clean technologies and policies implemented to create the post carbon economy may well represent the greatest business opportunity of the coming Century.

In Europe, a cap and trade system for carbon emissions has already created a multi billion dollar market in carbon credits. That market may soon expand to include the United States. On the technology front, the next generation of electric cars and other technologies such as carbon capture, solar power, wind power and bio fuels may prove transformative. Venture Capitalist John Doerr has called green technology the biggest investment opportunity of his lifetime, bigger even than the Internet. Al Gore says it’s vital to saving the planet. But is all the hype justified? Or is clean technology potentially another bubble?

Learn the answer to these important questions on Wednesday, April 16 in New York City, when NDN Green Project Director Michael Moynihan, hosts a panel with leading clean technology experts entitled “Understanding the Cleantech Investment Opportunity.” It will feature Peter C. Fusaro, Chairman and Founder of Global Change Associates, best selling author of What Went Wrong at Enron and perhaps the world’s leading expert on clean technology funds and well known analyst, David Kurzman, Senior Vice President of the Clean Technology Research Group at Panel Intelligence, LLC. The panel will get to the heart of the green technology issue from an investment perspective and discuss what policy approaches to climate change including cap and trade, a carbon tax, the solar tax credit, and other investment incentives.

NDN’s Green Project is working to answer these and other questions and develop a legislative, regulatory and advocacy framework to address climate change, move toward energy independence, and accelerate the development of new technologies to promote economic growth.

For background reading, check out Michael's original NDN paper on public investment in infrastructure and his recent blogging on green issues.

Event Details:
Wednesday, April 16th
12:00pm
Regency Hotel, Regency Room
540 Park Avenue
New York, NY
Click here to RSVP

In this short video, Dr. Rob Shapiro, Chair of NDN's Globalization Initiative, says that in order to understand what is going on with the American economy, we must first understand the role of globalization, particularly the globalization of the capital pool.

Take a look:

For more of Rob's far-reaching work on the economy and globalization, check out:

• His critically acclamined new book, Futurecast: How Superpowers, Populations, and Globalization Will Change the Way You Live and Work.
• The New Landscape of Globalization - an analysis of the fundamental dynamics of globalization and how they affect U.S. growth, wages, and job creation.
• The Idea-Based Economy and Globalization - an examination of how and why US companies and workers lead the world in developing new intellectual property and why these leads in innovation constitute a critical U.S. advantage in globalization.
• A recent interview of Rob on the current state of the economy by NDN President Simon Rosenberg. Rob's narrative covers the economic slowdown, the financial and housing crisis, and the failure of policy makers to make globalization work for all Americans.