Marcy

Observing the Great Blackout of 2003

We have become a nation of Tweets. Our national infrastructure is crumbling before our eyes, while we name call on Tweets. The Just Vote No Blog suggests that on August 14 we observe the 16th anniversary of the great Northeastern Blackout of 2003 by urging our legislators to stop squabbling and mind our increasingly over-burdened power grid.

Photo: The Atlantic, August 13, 2018

August 14, 2019 marks the 16th anniversary of the Northeastern Blackout of 2003. On that day, over 50 million people in the Northeastern United States and in parts of the Midwest and Canada found themselves without any electric power. Fears of another 9/11 immediately surfaced, especially in New York City. However, the culprits were over-loaded power lines that brushed against some overgrown trees on northern Ohio.

Alarm software failed to prompt human controllers into action, power was not re-routed among affected regions, resulting in a massive blackout that for some residents lasted three days.

Although sadly there were some deaths and injuries attributed to the blackout, thankfully residents met the challenge with civility and good will, thus avoiding greater harm to people and property.

Why Should We Remember the Great Blackout of 2003

Disasters like the Northeastern Blackout, as well as tragic events such as the 2018 Camp and Paradise wildfires in California, should be reminders of the need for private citizens and legislators to pay attention to the nation’s infrastructure.

Overloaded power lines, overgrown trees adjacent to power lines, neglected equipment, and outdated or poorly deployed software are major causes of blackouts, as well as wildfires. Blaming climate change and pouring tax money into green deals won’t help. Blaming power utilities or clamoring for government-owned suppliers won’t help. Using tragedies to advance agendas won’t help.

Even when there is specific legislation purporting to address power grid challenges, such legislation is often questionable, wasteful or both. The recent return to the U.S. Senate of Senator Angus King’s (I-Maine) proposal to replace digital power nodes with analog ones could serve as example. The Senator’s argument for proposing (in 2017, 2018 and now in 2019) a return to analog power systems is that the U.S. needs to protect its power grid from a cyber attack such as the one Ukraine suffered in 2015. True, no way to digitally attack what is not digital. However, with analog systems, there is no way to deal with massive and immediate movement of power when that is necessary to prevent or curtail regional overloads.

We Need To Focus on Infrastructure Not On Tweets

We have become a nation of Tweets. Why are we Tweeting about some legislator’s racial profile instead of his responsibility to keep his state free of crime and rats? Why are we Tweeting about Pacific Gas & Electric’s profit “greed” instead demanding that inspection crews follow up on aging or neglected equipment? Our infrastructure is crumbling before our eyes, including some of our power systems, but we focus on agenda-driven and/or distracting tactics instead.

Take Action of August 14, 2019

The Just Vote No Blog suggests observance on August 14 of the great Northeastern Blackout of 2003. This would be a good day for everybody to contact their legislators and suggest they stop squabbling and start working on the increasing demands on our power grids.

The Coming of Nemesis: Kopp vs. Wiener

Nemesis is punishment showered upon those who regularly engage in hubris. Quentin Kopp just announced he will run against Scott Wiener.

Hubris is interesting, because you get people who are often very clever, very powerful, have achieved great things, and then something goes wrong – they just don’t know when to stop. Margaret MacMillan

On July 31, Quentin Kopp, a fearless fixture in California politics, announced that he intends to challenge incumbent Scott Wiener for the state Senate seat in District 11 representing San Francisco, Daly City, Colma, Broadmoor, and parts of South San Francisco. The 90-year old Kopp seems mad as heck and is not going to take it any more.

The last straw for Kopp of Wiener’s schemes was Senate Bill 281, hearing of which scheduled for May 6 was canceled at Wiener’s request. SB 281 was the most recent in a long line of attempts to transfer management and/or ownership of the iconic Cow Palace from the current board to a local county joint-powers authority.

The 78-year old exhibit hall sits on 68 acres of coveted land owned by the California Department of Food and Agriculture’s Division of Fairs and Expositions. Although its days of glory are over, when the Cow Palace hosted headliners like the Beatles, Rolling Stones, and Elvis Presley, the hall still has audiences that enjoy shows and fairs like the San Francisco Sport & Boat Show, Golden Gate Kennel Club Dog Show, Dickens Christmas Fair, and the Horse Show & Rodeo. The Crossroads of the West Gun Show will end after 2019 by decision of the Cow Palace Board.

Thanks to revenue from these exhibits, the Cow Palace receives very little funding from the California state budget.

In an interview with San Francisco Chronicle’s Phil Matier, Quentin Kopp indicated that he felt SB 281 was a land grab to build more highrises in residential neighborhoods. Apparently, he is correct according the the text of SB 281:

This bill would authorize the authority to, among other things, enter into contracts or agreements for the development of the property for affordable and market-rate mixed-use housing and establish minimum local zoning standards, including, but not limited to, standards for height, density, parking, and floor area ratio, that apply to a project on the property that are different from those adopted by any other affected local jurisdiction.

Quentin Kopp is no lightweight in California politics. His resume is impressive:
San Francisco Supervisor 1971-1986, representing the West Portal neighborhood. State Senator 1987-1994, representing the southern part of San Francisco and the northern part of San Mateo County. San Mateo Superior Court Judge 1994 -2004. He retired after leaving his Court post.

After retirement from the Court, Kopp was appointed in 2006 to the California High Speed Rail Authority, a post he held until 2010. As Chair he was instrumental in the passage of Proposition 1A, which authorized a $9.95 billion bond to develop a high-speed rail system that would zip passengers from San Francisco to Los Angeles in less than three hours. The project received $2.5 billion from the Federal Railroad Administration. So far, construction can only be seen in California’s Central Valley, for an estimated cost to completion of $20 billion. Today Quentin Kopp rants against how the Rail Authority mishandled the bond money every chance he gets. The Federal Railroad Administration is angry too, and wants its money back.

In September 2016, the San Francisco Board of Supervisors appointed Quentin Kopp to the City’s Ethics Commission. He resigned from the post in March 2019, noting the uselessness of the Commission in denting its backlog or tackling important reforms in its job of enforcing governmental ethics laws.

Term limits might keep Quentin Kopp from serving once again in the California Senate. His argument is that since his previous service occurred before passage of legislation implementing term limits, the rule would not apply to him. And, as is Kopp’s stand-up-and-fight nature, he declared that he will sue if the Secretary of State decides he is not eligible.

Today’s Gen X and Millennial voters, accustomed to undistinguishable politicians forever uttering prescribed sound bites, might want to get acquainted with Quentin Kopp, who might soon turn out to be nemesis to Scott Wiener’s hubris.

His column in the neighborhood newspaper, the Westside Observer, appears monthly.

America First vs. US Dollar as Major Reserve Currency

With the fall of every major currency there are winners and there are losers. Today, some powerful potential winners are working to be the successful contenders in replacing the dollar, or working to implement their agenda by dethroning it.

The Internet has been crawling with articles about the “death” of the U.S. dollar as the world’s principal reserve currency. Although reports of such “death” have been greatly exaggerated, the amount of U.S. dollars held by the world’s central banks in relation to the amount held in other reserve currencies has been fluctuating downward.
Reserve Currencies Historical 2
Why Should You Care?

Why care? Why would the U.S. dollar present status as major reserve currency be of interest to the average American?

The U.S. has an enormous national debt, a huge trade imbalance, and a disappearing middle class due to focus on either high-paying tech jobs or low-paying service jobs. Add to these concerns a push toward more of the same from current legislators that propose vote-getting green deals and Medicare for everybody.

The U.S. dollar status as a major reserve currency has a significant effect on all of these matters.

Background

Reserve currencies are held by governments and institutions to facilitate international payments. They also serve to influence the value of national currencies – for example, a country can buy or sell its national currency to boost or deflate the currency’s value.

What becomes a reserve currency depends on the global market. The currency of a developed country with a reputation for a stable economic and monetary system becomes popular, government central banks start shoring up their reserve accounts with it, and pretty soon the International Monetary Fund declares that currency a reserve currency.

Today the major global reserve currencies are: U.S. dollar, euro, Chinese renminbi, Japanese yen, and pounds sterling. The latest entrant is the Chinese renminbi, declared a reserve currency by the IMF in October 2016, as a result of China’s economic growth.

Benefits of Being the Issuer of a Reserve Currency

The issuers of these elite currencies enjoy two principal benefits only dreamt of by non-reserve-currency countries.

* Reduced exchange risks: Example – Commodities such as oil are sold in U.S. dollars. So the U.S. can purchase oil without needing to do any exchange of currency. But Brazil, for example, needs to first exchange its currency into dollars in order to purchase oil. Currency values fluctuate hour to hour, so planning and executing currency exchanges are risky and expensive propositions.

* Reduced borrowing costs: Reserve currencies enjoy higher demand than non-reserve-currency ones, since countries need to keep them in their portfolio in order to engage in global trade. This demand translates into low borrowing costs for the issuing country. The same would hold true if, say, Apple or Facebook issued corporate bonds that were in high demand – the companies could promise lower yields than if fewer investors wanted to purchase the bonds.

The Drawbacks

Unfortunately, being the issuer of a major reserve currency brings curses as well as benefits:

* Reduced borrowing costs induces more borrowing. That is true whether we are talking about a family taking advantage of lower credit card rates to purchase a new washing machine, or a legislators taking advantage of lower bond rates to finance his promises of more benefits for his constituents. Easy money eventually results into detrimental and unsustainable debt, such as we have today in the U.S.

* Countries that hold reserve currencies issued by another country are slow to rise against issuers, thus allowing issuers more leeway in economic and monetary policies. The U.S. for example can keep its voters happy by showering them with a variety of programs, paying for them by printing money. As the pile of fiat currency backed by nothing but “full faith and credit” rises, global trust eventually diminishes.

* Issuers of reserve currencies must be willing to operate under a current account deficit, which is mostly caused by importing more goods than exporting. For example: If U.S. consumers buy a lot of computer equipment made in China, a lot of U.S. dollars end up in China. China can then use those dollars to invest in bonds issued by the U.S. government. With money from the sale of those bonds, the U.S. can finance road construction, green new deals, etc. The U.S. factory worker, though, is left behind.

To put it in simpler terms, if the USD weren’t the world’s major reserve currency, probably its value would have fallen, US exports would be more competitive, and more people in the US would have jobs making goods for exports … While some people have said that the use of the dollar as the world’s major reserve currency is an “exorbitant privilege,” other people argue that it’s actually an “exorbitant burden” for just this reason.” What Happens if the US Dollar loses its Status as the World’s Major Reserve Currency, Quora.com, April 15, 2019.

Reserve currencies

* Major currencies have come and gone throughout history, so there is no reason to expect the U.S. dollar to retain its status forever. This chart developed by JP Morgan’s Michael Cembalest, is helpful in visualizing the turnover of reserve currencies.

Source: We Believe the US Dollar Could Lose Its Status as a World Reserve, Zero Hedge, July 23, 2019.

The Contenders

* China makes no bones about wanting the renminbi to replace the dollar as the principal global reserve currency.

* Germany, France and the U.K. adopted the Instex system in January 2019 in order to allow their companies to get around U.S. sanctions, dollars and banks, and trade with Iran.

* Even Facebook has gotten into the act by developing its own “global currency.” Some say FB has aspirations that the Libra will someday serve as a reserve currency, although that goal is not listed in the white paper that describes the objectives of this blockchain currency.

* The United Nations is not a country nor a jurisdiction such as the Eurozone (really!), so theoretically it cannot issue currency that might compete for reserve status. However, the U.N. is an amazingly powerful force that can drill its ideas into the heads of globalists everywhere. One of its ideas is the “retooling” of the current reserve currency system. The current system still has as its basis, albeit tangentially, in the economic market. Countries get to be reserve currency issuers because the market finds their currency desirable. Conversely, the U.N. wants a managed system based on what one could call “from each according to his ability to each according to his need.” Sound familiar?

… the build-up of global imbalances to global crisis levels may be traced back to a trap inherent in the reserve and payment system whereby reserve-creating countries are able to run payment deficits as long as other countries find it in their interest to keep building up their international reserves in the currencies of the reserve-creating countries … What is required is a reserve and payments system that does not rely on national deficits to provide reserve assets … Of great interest are proposals to shift to the allocation of SDRs based on need or performance, instead of on economic significance that determines voting shares in the IMF. Ocampo (2009) proposes giving larger allocations to countries with the highest demand for reserves and allowing IMF to use unutilized SDR’s to buy bonds from developing countries.” UN report Retooling Global Development and Governance edited by Bloomsbury, June 2010.

So the pressure is on, and the U.S. is at a crossroads. As with so many things in life, the choices are based on short-term gains that benefit the here and now and long-term gains that make present perpetrators pay for their sins.

Decisions should be made, hopefully in favor a retaining the market-based system of reserve currencies.

What To Do?

More folks need to care about real issues. The eventual unraveling of the nation’s economy due to unsustainable national debt and negative trade will harm everyone – conservatives, progressives, the privileged by birth and the unfortunate by circumstances.

Conventional wisdom has embraced a “strong dollar” and defense of its status as the principal reserve currency no matter what. However, today’s scenarios are developing into something quite different. The current administration and President Donald Trump in particular have called for the following U.S. goals,

* Growth of good-paying manufacturing jobs in order to diversify from the trend toward high-paying white collar jobs and low-paying service jobs. A strong dollar would hinder sales of U.S. made goods to domestic consumers who could easily keep buying imported goods. Assuming that U.S.-made goods would not depend heavily on imported components, a strong dollar would hinder U.S. manufacturers’ ability to export their goods.

* Lowering the level of the national debt. U.S. administrations always give lip service to the need to control the gargantuan national debt, without ever doing anything about it. The dollar’s strong position as the major global reserve currency, as noted above, aids and abets the continued growth of debt.

For decades, the U.S. stood out as the one nation that traditionally preferred its money superpower-strong. Investors flocked to it, enabling the U.S. to borrow lots of money at low interest rates. American consumers feasted on it, buying imported goodies for less … The president obliterated any remaining strong-dollar allegiance with a July 20 tweet saying the strengthening dollar was “taking away our big competitive edge.” …
By abandoning the strong-dollar mantra, Trump may be signifying he’s willing to toss tradition aside and join ranks with other countries that have weakened their currencies to get a leg-up in world trade. The Strong Dollar, July 20, 2018.

President Donald Trump’s viewpoint as expressed in the above-mentioned tweet might be something for conservatives who traditionally support the idea of a strong dollar to consider.

Progressives who claim to want everyone taken care of might note that blue collar workers have been left behind since the U.S. push to focus on the white collar financial and technical sectors.

And everybody might consider what our current piling up of cheap debt to support our lifestyles will do to our children, grandchildren and generations to come that will have to deal with that can that we have kicked down the road.

Time for Congress to Solve the Border Crisis

Taxpayers are paying Congress to bicker. Our legislators are not effectively solving the nation’s challenges, including the tragic situation at our Southern Border.

Are We Paying Congress to Bicker or to Deal With the Nation’s Challenges?

Right after the Mueller Report, the more sanely-inclined among the U.S. population Border Patrol hoped that Congress would go back to work. Unfortunately, that has not happened. Taxpayers are paying Congress to bicker. Congress is not working with the Administrative Branch in developing an effective foreign policy. It is not addressing the nation’s unsustainable level of debt. It is not producing a realistic immigration policy. The latter is the most egregious inattention of the current members of our Federal Legislature.

Theatrics Won’t Help

Tears, fake or real, are not going to solve the problem of what to do with thousands of undocumented people who presented themselves voluntarily at the U.S. border. Mainstream media profiting from the dialog of “caged children” will not address why parents would subject their children to such conditions. Demonstrations and sign waiving will not speed up the process by which the case of each detained individual can be reviewed and decided upon. Constant harangue on the subject of impeachment will not ease the crowding, the unhealthy conditions, the diseases, the tragic deaths. It will not give relief to exhausted border agents.

Such theatrics are useless in remedying the border crisis because none of it offers effective or lawful solutions or contribute to productive dialog.

Disorderly Patchwork is Not Sustainable

Because Congress has failed to develop effective and lawful solutions acceptable to the nation as a whole, the Administrative branch has felt compelled to resort to what has proven to be disorderly patchwork.

Perhaps making undocumented people as uncomfortable as possible and scaring them as relentlessly as possible might discourage more from attempting to enter the country. However, one would need to ask whether such efforts bring desired results, are sustainable, or present the nation in a positive image before the world.

ICE raids on individuals who have lived peaceably in the U.S. for decades might instill enough fear that some of them might leave or advise relatives not to come. But the tactic also results in advocates rallying their forces to protect immigrants, sometimes including the ones who have not lived in peace.

Endless busloads of detainees dropped by Border Patrol agents into various communities certainly serve to show what border agents are going through, but is equally unsustainable:

“They’re catching 3,000 to 4,000 people across the whole southwest border a day,” DeSio [Ralph DeSio, spokesperson for the San Diego office of U.S. Customs and Border Protection] said. “You could fill a stadium with these people in a few days. The enormity of this is flying over many people’s heads.” Orange County Register, as quoted in GOPUSA, May 27, 2019.

In the progressive mind, and in the mind of many libertarians who believe in freedom of movement, the border crisis could be easily solved by simply not making much of an effort to apprehend those crossing the border without U.S. authorization. Maybe that is what Native Americans did back in the 16th Century when the Pilgrims started to arrive – for a while.

“Now, in Coachella, the places that can offer shelter are at capacity. Meanwhile, the Greyhound station in Indio, where many migrants hoped to catch a bus to get to their families didn’t have enough capacity to transport so many people. After that,” Amaya [Emilio Amaya, executive director of the San Bernardino Community Services Center] said, “agents started taking people further north, to San Bernardino … It’s a capacity issue more than a political issue …” Orange County Register, as quoted in GOPUSA, May 27, 2019.

Yes, it is a capacity issue.

Time for Voters to Take Action

It is time for the people in each precinct, county, township or parish to hold their legislative representatives’ feet to the fire. Demand Town Halls and demand representation. Once representatives have orders from their constituents and understand their job is on the line if they do not perform, they will start working on solutions based on realistic and amicable negotiation.

Of course, the folks back home need to also remain flexible, and they need to eschew bickering themselves. This nation has ultra progressive areas that stand by their immigrant populations and ultra conservative areas that emphasize the need for law and order. Thus, any effective immigration reform would need to be the result of compromises. But a solution that is not perfect to each taste is better than the unhappy turmoil we have now.

With AB 1487 There is No Opt Out

California legislators are devising a superb way to remove land-use planning from the hands of cities and counties: A regional housing authority that can levy taxes, and provides for no opt out.

What is California Assembly Bill 1487?

Authored by Assembly Member David Chiu (D-San Francisco), this bill enacts the San Francisco Bay Area Regional Housing Finance Act, which authorizes the creation of a region-wide housing authority with powers to “raise, administer, and allocate funding for affordable housing in the San Francisco Bay area.”

Thus, the Bay Area Housing Finance Authority (BAHFA) would act as a permanent agency, the purpose of which would be to place on the ballot of all nine Bay Area counties concurrently identical ballot measures proposing fees, taxes and bonds to finance construction of affordable housing, preserve existing rent-controlled housing, and to provide tenant protections. BAHFA would be one more regional agency operating under the wing, and sharing staff with, the Bay Area Metropolitan Transportation Commission.

CA Housing Junta The passage by the California legislature of numerous housing-related bills during the past four or so years made it possible for developers to receive ministerial stream-lined approval of housing developments throughout the state – regardless of city or county zoning rules. (Pictured are Senator Scott Wiener, Assembly Member David Chiu, and Senator Nancy Skinner, the more prolific affordable housing advocates in the California State Legislature.)

Fees, taxes and bonds approved regionally by voters under AB 1487 would help finance development projects regionally – regardless of whether voters in each individual county voted to approve such measures or not.

Examples of the success of such region-wide measures enabled by state legislation are Measure AA (enabled by AB 746) approved regionally by voters June 2016, and Regional Measure 3 (enabled by SB 595) approved regionally by voters June 2018.

AB 1487 is currently housed in the Senate Appropriations Committee. As of today, no hearing date has been indicated. Perhaps legislators are having second thoughts about the viability of AB 1487? After all, the Appropriations Committee was the one that summarily placed Senate Bill 50 (the bill some have labeled WIMBY – Wall Street in My Back Yard) in hibernation.

Highlights of AB 1487

* The findings and declarations in Section 64501, i.e. why the bill’s author thinks his bill should be enacted, follow the by-now required mantra that there is a grand housing crisis due in essence to cities and counties failure to provide “enough” housing, and therefore, legislation needs to be enacted overriding local laws and regulations.

The housing crisis in the San Francisco Bay area is regional in nature and too great to be addressed individually by the region’s 101 cities and 9 counties.

However, the current process is anything but regional; instead each city and county is each responsible for their own decisions around housing …

Regional funding is necessary to help address the housing crisis in the San Francisco Bay area by delivering resources and technical assistance at a regional scale …

* The version previous to amendments made to AB 1487 on July 10, listed in great detail the powers of the Bay Area Housing Finance Authority. The current version does not. In other words, the door is left wide open as to what the Authority would be empowered to do. Here is what is left of the list of powers, in Section 64514, including the bills applicability to any other agency that might replace the Metropolitan Transportation Commission.

The board may make and enforce rules and regulations necessary for governing the authority, the preservation of order, and the transaction of business.

In exercising the powers and duties conferred on the authority by this title, the board may act by resolution.

It is the intent of the Legislature that the powers granted to the authority and the executive board under this title shall be transferred to a future regional agency if an agency is established to replace the Metropolitan Transportation Commission and the Association of Bay Area Governments and integrate regional transportation and housing funding and policy decisions within the San Francisco Bay area under one governing board, subsequent to a robust public engagement process at the regional level.

* Because California legislators have labeled the current high-cost housing in the state a crisis – not state and regional land-use policies unbeneficial to the general public – they can enact legislation that overrides any and all local laws and regulations. For example, AB 1487 specifically indicates the bill is not subject to either the orderly reorganization of city and county governments, or the relative independence of charter cities.

The formation and jurisdictional boundaries of the authority are not subject to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Division 3 (commencing with Section 56000) of Title 5).

The Legislature finds and declares that providing a regional financing mechanism for affordable housing development and preservation in the San Francisco Bay area, as described in this section and Section 64501, is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this title applies to all cities within the San Francisco Bay area, including charter cities.

California’s Acme Co.

Acme Co Remember Willie E. Coyote? He tried so hard to defeat the Road Runner, but he consistently used products manufactured by the Acme Co. that failed to operate at all, exploded prematurely, or otherwise caused Willie Coyote the worst of harm. Some folks just don’t learn….

If after half a dozen or so years, say from the implementation of Plan Bay Area, and after numerous state mandates purportedly intended to make housing more affordable, California still sports the most unaffordable housing in the nation, then it would appear the state is facing a Willie E. Coyote vs. The Road Runner struggle.

The main characters in the struggle: On one side homeowners who worked hard to purchase a single-family home in a nice and quiet neighborhood, and wish to keep their neighborhood nice and quiet, as well as their home values astronomical. On the other side newcomers who want to live in those neighborhoods, whether the neighborhoods remain nice and quiet or not, and whether they can afford the market cost of those neighborhoods.

The supporting characters: Legislators at all levels of state government understand that clustering job-creating businesses as well as homes within narrow areas increases the value of both, which translates into higher state GDP and higher revenue from property taxes. Couple that with residents in the quiet nice neighborhoods that do not want job-creating businesses anywhere near them.

So, everybody in California seems to be a fan of the Acme Co. Will AB 1487 reach the finish line and thus change the entire character of city and county land-use planning? Will California residents realize AB 1487 offers no opt out for cities and counties?

The Ballot Box is the Ultimate Decider

AB 1487, as all affordable housing bills, will surely come with a price tag, because somebody has to pay for somebody to benefit. In the case of AB 1487, the price tag will be in the billions,

The San Francisco Bay area faces an annual funding shortfall of two billion five hundred million dollars ($2,500,000,000) in its efforts to address the affordable housing crisis. Section 64501 (e)

So far, legislators have not succeeded in doing away with voters’ rights to weigh in on tax proposals. Therefore, the expectedly huge amount of taxes needed to fund AB 1487 would have to be approved at the ballot box.

Since the bill does not offer residents an opt out, the ballot box will become the only venue available to those opposed to the bill to just say no.

Update July 13, 2019

It now has surfaced that on July 9, two days before the scheduled hearing before the Senate Governance and Finance Committee, the sponsors of AB 1487 wrote a letter “To Whom it May Concern” saying they are “temporarily hitting the pause button…” on AB 1487 to allow for more time for feedback from the two main Bay Area bureaucracies deeply involved in land-use issues, the Metropolitan Transportation Commission and the Association of Bay Area Governments. The Marin Post has a good article about the letter.

Good time for voters to use the “pause” to provide their own feedback.

California AB 1054 Says PG&E is TBTF

Assembly Bill 1054 is being called an unfair bailout of PG&E and crucial to the economic well-being of the state.

California is once again divided. This time it is over state Assembly Bill 1054, which opponents call a bailout of the utility company PG&E and supporters view as necessary if the state is to enjoy stable and increasingly “clean” power. The bill is presently in committee process and will be heard at the state Senate Appropriations Committee on 07/08/19.

By Way of Background

PGE Truck Pacific Gas & Electric is facing liabilities that could exceed $30 billion as a result of law suits arising from California’s devastating 2017 and 2018 fires. PG&E has been cleared of responsibility for the 2017 Tubbs fire, but residents that suffered losses in that fire can sue PG&E anyway. Conversely, PG&E was found culpable in the 2018 Camp Fire.

As a deep-pocket presence, PG&E is vulnerable when losses of lives and property occur in areas serviced by PG&E; even though other factors today contribute to the intensity and destructiveness of wildfires, mainly, warming due to climate change and housing development increasingly closer to fire-prone areas.

To deal with the onslaught of liabilities, PG&E filed for bankruptcy protection on January 2019. In June, the bankruptcy judge decided the court has sole jurisdiction over PG&E’s disposition of its contract obligations, including obligations with major clean-power energy suppliers.

Fiscal instability of a major utility company like PG&E places billions of dollars in retirement accounts in jeopardy, individuals and families invested with PG&E stock as part of their savings might see no dividends and maybe no stock, energy suppliers may not get paid, lenders that financed nascent clean power-suppliers might not see repayment. So, California is facing a too-big-to-fail situation which no doubt was the catalyst for AB 1054.

Highlights of 1054

Assembly Bill 1054 applies to utility companies in California. Language, however, refers to “certain electrical corporations,” among which PG&E would be included. The bill is especially convoluted, so here are a few very basic highlights of AB 1054:

* Creates a California Wildfire Safety Advisory Board consisting of 7 members appointed by the Governor, Speaker of the Assembly and Senate Committee on Rules, who would serve 4 year terms and make recommendations related to wildfire safety.

* Establishes a Wildfire Fund to pay eligible claims arising from a wildfire.

* Creates a Department of Water Resources Charge Fund, and requires proceeds and revenues from bonds, which the Department of Water Resources are at present authorized to issue, to be deposited the Charge Fund. Monies from the Charge Fund can be transferred to the Wildfire Fund.

* The Wildfire Fund will be replenished by money from the Charge Fund, contributions by PG&E, and charges to ratepayers.

Here is Just Vote No Layperson’s View

PG&E is under bankruptcy protection. All claims against PG&E will be filed before the general bar date of October 21, 2019. After that date, the Court will sift and mull over those claims and eventually decide who is entitled to what, based on merit of each claim and funds available for payment.

Meanwhile, pretty much nobody gets paid and PG&E has a chance to build some reserves. Therefore, AB 1054 would seem an effort to make sure everybody gets paid and contractors are not dropped (think the clean energy folks) by spreading the cost of payments. Taxpayers will pay for the expanded bureaucracy and for servicing the bonds issued by the Department of Water Resources. Ratepayers will pay a “nonbypassable charge” intended for the Wildfire Fund.

During the proceedings, the Court will decide whether PG&E is to remain a going concern, able to continue its job of providing energy to its customers, or be mortally hobbled by a Court order that it must sell assets to satisfy creditors. One might expect significant battles between supporters and opponents of either choice.

Justin Amash Declared his Independence

Justin Amash maybe did not leave a political party, but joined the growing number of disaffected unaffiliated voters who had enough of the present dysfunctional two-party system.

Picture of Justin Amash

Fifth-term Congressman from Michigan Justin Amash declared his independence from partisan politics on July 4th. He made his announcement in an op-ed in the Washington Post, citing disenchantment with the present system and quoting George Washington’s warning regarding the detrimental influences of partisanship:

In recent years, though, I’ve become disenchanted with party politics and frightened by what I see from it. The two-party system has evolved into an existential threat to American principles and institutions.

Washington said of partisanship, in one of America’s most prescient addresses: “… It serves always to distract the public councils and enfeeble the public administration. It agitates the community with ill-founded jealousies and false alarms, kindles the animosity of one part against another, foments occasionally riot and insurrection…”

Indeed, we can clearly see the results of partisanship gone amok in our current constantly-bickering leadership.

As one of the 63 members of Congress elected as a result of the Tea Party Movement and as Chairman of the House Liberty Caucus, Amash is considered a conservative-libertarian. Perhaps he proved to be more of a libertarian in the tradition of former Congressman from Texas Ron Paul than a conservative in the Tea Party mold. Thus, Amash is not only out of step with Democrats, but also with conservative Republicans. Notoriously, he is the only Republican at present to support the impeachment of Donald Trump.

A recent exchange between five GOP Representatives working on a deal to bring a missile defense site to Fort Custer in Michigan and Justin Amash might provide insight where Amash stands regarding the powerful military-industrial complex.

The GOP Representatives highlighted figures showing the missile defense site could have an estimated $3.2 billion in economic impact, including 300 direct jobs and 1,800 support jobs; and Amash replied that the Defense Department is not a jobs program.

“It appears that Congressman Amash’s consistent opposition to all defense spending bills over the years was too much for the Pentagon to accept,” the statement from the five other members of Congress read. “It did not help and now they selected New York for the new missile defense site.”

Amash replied in a statement released Friday that “taxpayer dollars for defense should be used to boost American’s safety, not to boost politicians,” he said. “The Department of Defense is not a jobs program.” The Battlecreek Enquirer, June 28, 2019.

Perhaps Justin Amash is not leaving a political party but joining a growing number of equally disaffected voters who have no party affiliation. For clarification, citizens do not need to belong to a political party to be able to vote.

A pair of Nike sneakers

Unaffiliated voters are voting with their feet. They are registering their disdain for the current dysfunctional, bickering, do-nothing-productive two-party system that reflects the divisiveness we see in the general public. When so much focus is placed on the design of some (over-priced) sneakers, we are all in trouble.

4th of July: Hotdogs But No History?

In his first draft of the Declaration of Independence, Thomas Jefferson condemned the importation of slaves into the colonies as an “abominable crime.” Delegates to the Continental Congress of 1776 removed that language and replaced it with ambiguous reference to “domestic insurrections” so as to ensure support for Independence from the Southern colonies. What would you have done instead?

On Thursday, communities across these United States will celebrate 4th of July with hotdogs and fireworks, but all too often without much understanding of what the Founding Fathers aimed to create when they signed the Declaration of Independence.

Understanding requires objectivity, emotional stability, and perspective – all of which in short supply. Students do not study history objectively, people readily respond to sound bites and catchphrases, and single-minded views take the place of perspective of events. Thus, Thomas Jefferson has descended to the level of a mere slaveholder. Thus, schools call for the removal of statues and murals depicting our nation’s history. Once history is erased, there is no way to learn from it, or avoid repeating horrendous acts such as building an economy based on indentured servitude.

So, what is going on? Are voices calling Jefferson and Washington brigands uncovering ugly truths that need to be told, or do such voices represent another agenda? Let’s compare what the Founding Fathers aimed to create vs. what today’s politicians want to do.

What the Founding Fathers Wanted

When leaders in the American Colonies decided to break with Great Britain, they were faced not only with a War of Revolution but also with a clean slate upon which to design a new nation. They did not wish another Britain or France, but a nation that embodied the ideals of individual liberty and self government. To do that, they needed to codify the ideas contained in documents that discussed such ideals. For example: The Magna Carta (1215) spoke of curtailment of a King’s absolute power and of limited government. In his Second Treatise on Government (1690), John Locke discussed natural rights that everyone is born with and the duty of government to protect those natural rights.

Revolutionaries like Thomas Paine (“If there must be trouble, let it be in my day, that my child may have peace.”) and Patrick Henry (“Give me liberty or give me death!”) are best known for the oratory that spread the word about Independence. George Washington led the War of Independence. John Adams, Benjamin Franklin, Thomas Jefferson, and James Madison were the principal architects of the new nation. Thomas Jefferson wrote the first draft of the Declaration of Independence. All these and many more placed their lives, their fortunes and their sacred honor to create a republic in which the individual was paramount, and government existed only to protect the natural rights of the people.

What Today’s Politicians Want

With few exceptions politicians today want unlimited government, an obedient populace that does not understand government is their servant not their master, and replacement of natural rights with civil rights.

But the words of those pesky Founding Fathers and that bothersome old U.S. Constitution are in the way. Give such politicians a chance and they will do away with just about every single word in the Constitution. However, since they feel that time has not yet come, best alternative is to crank out rules and laws that keep expanding the reach of government and malign those who called for limited government.

Have a Great 4th of July! Here is a Suggestion:

If you are having a 4th of July get together with family and friends, maybe take a moment to reflect on what you are celebrating. If you want to frame your call for reflection with a topic du jour, pose the question: If you were a Founding Father creating a new nation out disparate colonies, how would you go about changing the structure of colonies whose economy was based on slave labor?

Would you visualize such an endeavor as challenging for the new Republic? For example: In his first draft of the Declaration of Independence, Thomas Jefferson condemned the importation of slaves into the colonies as an “abominable crime.” Delegates to the Continental Congress of 1776 removed that language and replaced it with ambiguous reference to “domestic insurrections” so as to ensure support for Independence from the Southern colonies. What would you have done instead?

Do you view individuals even possessing the best intentions to be fallible? Do you see a comparison between the fallibility of today’s politicians who are unable to remedy tragedies such as homelessness and deaths from drug addiction with the fallibility of yesterday’s politicians who failed to end slavery in a rational and peaceful manner?

Enjoy your Independence Day!

patrick-henry-1775-granger

Free Speech Rights Do Not Exist in the Private Sector

There is no such thing as “free speech rights” in the private arena, and the U.S. Supreme Court just told us that.

Internet platforms, especially dominant social media arenas, are now the populace’s principal venues for personal, community, business and political communication. With the growth of social media, platform users benefitted from massive reach and ignored the potential perils of oligarchies. Now we hear howls about some users being excluded from social media and accusations of violation of “free speech rights.”

Well, there is no such thing as free speech rights in the private sector. With some specific exceptions (such as your shouting “fire!” in a crowded theater when you know there is none, engaging in libel, or making serious threats) government is prohibited by the First Amendment of the U.S. Constitution from abridging your freedom of speech. The Constitution says nothing about private individuals or entities choosing not to propagate speech they do not like for whatever reason. So, if you are banned from a social media platform, at present you are probably out of luck. On June 17, 2019, the U.S. Supreme Court may have cemented this state of affairs.

MNN v. Halleck

Manhattan Community Access Corp., also known as Manhattan Neighborhood Network (MNN), is a non-profit public-access television network serving New York City. As a community media center, it offers media production, education, and distributions services for Manhattan residents and community organizations. MNN is the entity New York City chose to operate the public access channels on Time Warner’s cable system in Manhattan. Its website says that MNN’s purpose is,

…to ensure the ability of Manhattan residents to exercise their First Amendment rights through moving image media to create opportunities for communication, education, artistic expression and other non-commercial uses of video facilities on an open and equitable basis.

DeeDee Halleck and Jesus Papoleto Melendez, Manhattan residents and participants in MNN’ activities, produced a film called The 1% Visits El Barrio; Whose Community? The 1% refers to the politicians, government agency representatives, and corporate officials who were invited to the grand opening of the Barrio Firehouse (a former firehouse on East 104 Street that MNN converted into television studios), to the exclusion of “the 99%” Papolete Melendez says he represents. The film did air on MNN, but was removed, and Melendez barred from using MNN’s facilities, due to viewers’ complaints over inappropriate content in the film, according to MNN.

MNN Halleck Case — Video by Dee-Dee Halleck and Jesus Melendez that resulted in the MNN v. Halleck lawsuit

Halleck and Melendez were not pleased, and filed a lawsuit, against MNN, claiming the network violated their free speech protections under the First Amendment of the U.S. Constitution. The District Court dismissed the claim on the grounds that MNN is not government but a private entity. The Second Circuit State Court of Appeals reversed the lower-court decision saying MNN was a “state actor,” since it was designated by New York City as the community access network.

The U.S. Supreme Court heard arguments on Manhattan Community Access Corporation et al v. Dee-Dee Halleck et al in February 2019, and issued its decision on June 17, 2019. Justices Kavanaugh (delivering the majority opinion), Roberts, Thomas, Alito, and Gorsuch did not view MNN as a state actor subject to First Amendment responsibilities. Justices Sotomayor (delivering the dissenting opinion), Ginsburg, Breyer, and Kagan did not agree.

Justice Kavanaugh indicated in his remarks that this decision applies only to the case at hand. However, his concluding statement contains broader implications.

It is sometimes said that the bigger the government, the smaller the individual. Consistent with the text of the Constitution, the state-action doctrine enforces a critical boundary between the government and the individual, and thereby protects a robust sphere of individual liberty. Expanding the state-action doctrine beyond its traditional boundaries would expand governmental control while restricting individual liberty and private enterprise. We decline to do so in this case.

MNN is a private entity that operates public access channels on a cable system. Operating public access channels on a cable system is not a traditional, exclusive public function. A private entity such as MNN who opens its property for speech by others is not transformed by that fact alone into a state actor. Under the text of the Constitution and our precedents, MNN is not a state actor subject to the First Amendment.

Justice Sotomayor and her colleagues in their dissenting opinion argued that although MNN is indeed private, government rents it. The situation would be akin to government renting a billboard to communicate with passersby, then excluding from that billboard messages it did not like. The billboard is private, but the communicator is not.

This is a case about an organization appointed by the government to administer a constitutional public forum. (It is not, as the Court suggests, about a private property owner that simply opened up its property to others.) New York City (the City) secured a property interest in public-access television channels when it granted a cable franchise to a cable company. State regulations require those public-access channels to be made open to the public on terms that render them a public forum. The City contracted out the administration of that forum to a private organization, petitioner Manhattan Community Access Corporation (MNN). By accepting that agency relationship, MNN stepped into the City’s shoes and thus qualifies as a state actor, subject to the First Amendment like any other.

The Conservative/Liberal Divide

As often happens “conservative” justices and “liberal” justices disagreed, as indicated in their decisions. Commentators disagreed as well.

Property and free speech rights both scored a big victory at the Supreme Court this week, when the Court decided Manhattan Community Access Corp. v. Halleck. Although the facts of this case focus narrowly on public access television networks, the Supreme Court’s decision has significant implications for all property owners, the internet, and social media more specifically. The Pacific Legal Foundation, June 17, 2019.

The Court is unconvinced by the fact that the private company running New York’s public access channel was specifically selected and is heavily regulated by the city government. And while the dissent, authored by Justice Sotomayor, disagrees with the majority about whether the facts of the case reflect a government property interest in the forum at issue, it largely signs onto the idea that property rights precede political rights. MerionWest, June 23, 2019.

The First Amendment only limits governmental actors—federal, state, and local—but there are good reasons why this should be changed. Certain powerful private entities—particularly social networking sites such as Facebook, Twitter, and others—can limit, control, and censor speech as much or more than governmental entities. A society that cares for the protection of free expression needs to recognize that the time has come to extend the reach of the First Amendment to cover these powerful, private entities that have ushered in a revolution in terms of communication capabilities.” David L. Hudson, Jr, “In the Age of Social Media, Expand the Reach of the First Amendment,” The American Bar Association.

Interestingly, there appears to be fans of free speech for owners of social media platforms and fans of free speech for non-owner users of such platforms. Also, what are “political rights?” Further, the U.S. Constitution Bill of Rights serves only to protect individual liberties against tyrannical behavior by government; therefore, it seems awkward to call for extending the reach of the First Amendment to private entities regardless of how big or powerful such entities become.

So what to do?

The Just Vote No Blog likes the Court’s decision and Justice Kavanaugh’s suggestion that the bigger the government the smaller the individual, and thus a narrow definition of “state actor” serves the cause of liberty. If some of us are harmed by social media curbing our ability to reach community and customers, well, that is the price we must all pay for ignoring the growth of enticing behemoths. Competition is a good antidote to institutional transgressions, but there cannot be competition in an age of gigantic oligarchies.

Perhaps in a post-MNN vs. Halleck world folks that hold views different from those preferred by the dominant social media players need to imagine new ways of outreach. Efforts toward enforcing existing but largely ignored antitrust laws would also help in the blossoming of a wider variety of platforms.

Now a Credit Card Crisis?

U.S. Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez plan to introduce legislation that would cap credit card interest rates at 15%. Sounds good – just cap interest rates, and consumers will benefit. But is that all that would happen?

U.S. Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez plan to introduce legislation that would cap credit card interest rates at 15%. Proposals such as this sound great on paper – cap interest rates, and consumers will benefit. But is that all that would happen?

Consider the Following Track Record

* College Tuition

If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase. In 1978, subsidies became available to a greatly expanded number of students. In 1980, college tuitions began rising year after year at a rate that exceeded inflation.” William Bennett, Secretary of Education, Our Greedy Colleges, The New York Times, February 18, 1987.

* Health Care

Rise in health care cost The U.S. “health care cost crisis” didn’t start until 1965. The government increased demand with the passage of Medicare and Medicaid while restricting the supply of doctors and hospitals. Health care prices responded at twice the rate of inflation. Mike Holly, How Government Regulations Made Healthcare So Expensive, Mises Wire, May 01, 2017

* Housing

Rent controls protect tenants when rents rise faster than incomes. Because it makes owning rental properties less profitable, rent control discourages landlords from maintaining apartments and encourages them to convert apartments to condominiums, thus reducing housing supply. California’s current housing crisis has resulted in calls to expand rent controls, despite evidence that this practice may drive up rents in uncontrolled buildings. Jenny Schuetz, Under US Housing Policies Homeowners Mostly Win, While Renters Mostly Lose, Brookings, July 10, 2018

* And Now Credit Cards

Like any other economic good or service, interest rates are subject to the laws of supply and demand. The supply of genuine savings and the demand for those savings embody the interest rate, and this is reflected by its price. When the price of a good or service is capped, this produces a disincentive for entrepreneurs and suppliers to engage in economic activity in the affected industry. This is simultaneously coupled with an artificially low price, which in turn increases demand. The result of a decreased supply and an increased demand is a shortage. Logan Davies, Ocasio-Cortez’s Plan to Cap Interest Rates is a Horrible Idea, Eccentric Economics, Being Libertarian, June 9, 2019.

Caveats and Externalities

Seldom there is just one reason that explains a situation; although often there is a fundamental reason. Also, it is sometimes difficult to establish whether concurrent events are causal or incidental; but if the incidence of a type of concurrent event produces similar results, one would suspect a causal relationship. Thirdly, economics is a fungible discipline that can regard John Maynard Keynes as well as Milton Friedman with equal seriousness, although the economic theories of these two folks are diametrically opposed.

And fungibility of economic theory is good at both including widely – collective-leaning hypothesis are as acceptable in the economic arena as are market-leaning ones – and excluding imprudently. A couple of lines on a diagram cannot possibly take into account the countless characteristics in human behavior; therefore, those lines simply illustrate a scenario whereby “all other things being equal,” which hardly ever happens in real life.

Subsidy diagram For example, the diagram at left is often used to illustrate the benefits of subsidies. The higher “S” is pre-subsidy price, and the lower “S1” is post-subsidy.

A college administration’s greed response to government subsidies as described by Secretary William Bennett would be difficult to include in this diagram. Greed, that is, the capture of any marginal benefit, negates the assumption that all things remain equal. Thus, as subsidies grew, so did the number of college administrators, the variety of student services outside of basic instruction, and employee benefits such as pensions. It was not just demand that grew.

Are We Dealing With Microwave Mentality?

People use microwaves because they want their edibles now, not later. Microwave users want theirs now!

When politicians insists on, say, free college for all, universal health care, rent control, or a cap on credit card interest rates, they are catering to voters’ microwave mentality. In order to get elected or re-elected, politicians need to showcase immediate events that benefit constituents and ignore negative externalities that harm them.

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Consider the Following Track Record

Caveats and Externalities

Are We Dealing With Microwave Mentality?

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