Why we need Government: North Carolina and Duke Energy Ash Spill

I'm not a huge fan of overly expansive government. I think that, especially on matters of conscience, privacy and police powers, the federal and state governments have over the course of the last fifty or sixty years, become far too intrusive, too powerful, and dangerously unresponsive to the individual citizens they purport to represent. I still believe that. However government does have some fundamental core duties. One of these is broadly what I'll call public safety. Public safety is often thought to comprise the cop on the street or a military member guarding the nation. That's correct but public safety goes beyond that. Public safety also encompasses the ability to enjoy clean air and water. It involves the ability to eat food anywhere in this country without worrying that you have an excellent chance of consuming deadly molds, bacteria, viruses, fecal material, or other items unfit for human consumption. It means you can purchase goods and services and get what you pay for without always having to bring along your violent ex-con cousin to guarantee that the seller doesn't pull a fast one.

So far so good right? However there is a conservative and occasionally libertarian streak in politics which is fundamentally opposed to the very idea of government interfering with individuals business. When such people actually gain control over the government the results are often no different than if the drug dealer paid off the chief of police. The people on the streets suffer. This truism was recently affirmed in North Carolina, home to my maternal kin. Read the article excerpted below:

RALEIGH, N.C. — Last June, state employees in charge of stopping water pollution were given updated marching orders on behalf of North Carolina’s new Republican governor and conservative lawmakers.

“The General Assembly doesn’t like you,” an official in the Department of Environment and Natural Resources told supervisors called to a drab meeting room here. “They cut your budget, but you didn’t get the message. And they cut your budget again, and you still didn’t get the message.” From now on, regulators were told, they must focus on customer service, meaning issuing environmental permits for businesses as quickly as possible.  Big changes are coming, the official said, according to three people in the meeting, two of whom took notes. “If you don’t like change, you’ll be gone.”

But when the nation’s largest utility, Duke Energy, spilled 39,000 tons of coal ash into the Dan River in early February, those big changes were suddenly playing out in a different light.  Federal prosecutors have begun a criminal investigation into the spill and the relations between Duke and regulators at the environmental agency. The spill, which coated the river bottom 70 miles downstream and threatened drinking water and aquatic life, drew attention to a deal that the environmental department’s new leadership reached with Duke last year over pollution from coal ash ponds. It included a minimal fine but no order that Duke remove the ash — the waste from burning coal to generate electricity — from its leaky, unlined ponds. 

Environmental groups said the arrangement protected a powerful utility rather than the environment or the public. Critics say the accident, the third-largest coal ash spill on record, is inextricably linked to the state’s new environmental politics and reflects an enforcement agency led by a secretary who suggested that oil was a renewable resource and an assistant secretary who, as a state lawmaker, drew a bull’s-eye on a window in his office framing the environmental agency’s headquarters. 
“They’re terrified,” said John Dorney, a retired supervisor who keeps in touch with many current employees. “Now these people have to take a deep breath and say, ‘I know what the rules require, but what does the political process want me to do?’ ”

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This is what happens when government is captured by private actors. Government's beneficial roles are diminished, limited or as Grover Norquist approvingly said ,"made small enough to drown in a bathtub". I like "small government" when we're talking about nosy NSA operatives or SWAT teams in Iowa that invade people's homes for non-violent crimes or bossy child protective services mandarins that seize children first and ask questions later. But when you're talking about things like clean air and water I'm not so sure that small government is the answer.

Or to put it another way smaller government may still be a good thing but not if it's one that is subservient to big business. I see government as similar to a referee in some instances. As the saying goes, the best referees do their jobs and are barely noticed. A really bad referee insists on enforcing every last single rule violation, no matter how petty. A worse referee may even make up violations that don't exist, hand out technicals and expulsions like free candy and have both teams so on edge that the game itself suffers. A different but equally bad referee may be so incompetent that they don't know the rulebook and/ or may not care about the game enough to enforce it even if they did. He may sit back in blissful apathy and say "let the teams work it out". And then finally there are those referees that actively prefer one team over the other and so only call violations on one side while ignoring those of the other. If you were a coach and found out that your game referee was the brother-in-law of the rival coach, his poker buddy or a member of his church you'd probably want a different referee. But if you were the corrupt referee who had already worked for a super rich coach and knew you were going to make millions more after fixing the game for him you'd probably have a really stupid grin on your face and be very happy with life.

None of those types are any good for the larger game society. What we need is, prosaically enough, a balance. Now it's true that for me, as opposed to some other writers here that balance would be slightly more tilted to government staying out of people's business but even I wouldn't argue that government has no role to play. The North Carolina incident is the result of business control over government. We should never forget that by definition, if something is an externality to a business, as pollution certainly is, under our free-market system the business has no immediate economic interest in trying to reduce that externality. The free market is largely unable to influence the business on externalities, hence the name. What keeps the business in line is accurate information about the externality shared with an intelligent informed citizenry, the fear of being hauled into civil or criminal court, and the ability of referees regulators to throw the flag via fines and prevent the business from producing that externality or at least make the business capture the true cost of its process. 

Too many conservatives and libertarians have converted to the almost religious belief system that state and federal government never ever ever have any positive role to play in any business regulation and that we should let the free market sort everything out. This is not only wrong but very dangerous to humans and other living creatures.
Duke Energy’s coal ash pond in Eden, N.C., which dumped 39,000 tons of poisonous sludge and slurry into the Dan River on Feb. 2 — the third-largest such spill in U.S. history — has refocused national attention on the environmental damage these holding ponds can render. But the damage isn’t just confined to when the sludge leaks into busted storm-water drainage pipes that never should have been running under the ponds to begin with, like the situation in Eden. It’s quite possible the damage from coal ash ponds is ongoing even in the absence of accidental spills. 
“These coal ash ponds are unlined, and people don’t realize that,” said Dean Naujoks, the Yadkin Riverkeeper who has been monitoring the Dan River spill. “They are continuously leaching arsenic, chromium, cadmium, mercury, all kinds of toxic heavy metals, into the ground and eventually into groundwater. Duke Energy has 32 of these ponds on 14 sites around the state, and every one of them is unlined. Every one of them is a threat to groundwater.”

We see this over and over again. Government is not always the answer but neither is it always the problem. We must reach a balance between private power, which is only accountable to ownership, and government power, which theoretically represents and is accountable to everyone. North Carolina Governor Pat McCrory worked for Duke Energy for twenty-eight years. He has worked as Governor for the people of North Carolina for a little over one. I wonder which employer has influenced him more. I certainly know which employer has paid him more.

Thoughts?

China-The New Frenemy

There is a long ugly history of Yellow Peril in American and Western literature and thought. This phenomenon generally looks at the much more numerous Chinese and/or East Asian peoples and sees in them not only unfathomable cultural and racial differences but also finds an insidious threat to the American way of life. This fear and hatred was once so great and well respected that authors like Jack London  (Call of The Wild) could write fiction calling for the complete and utter annihilation of Chinese-total genocide. Obviously no one is calling for such steps today but people from across the socio-political spectrum are starting to realize that while China may not quite be a threat but it's very much not a friend to the United States. China may be something a bit more dangerous than a competitor. Some have pointed out steps that the US must take to aggressively pursue its own desires vis-a-vis China.

These calls to action are not necessarily based in racist thought but in the very real fact that China's rise to economic prominence, its relentless demand for natural resources and its increasingly muscular foreign policy is not necessarily in the United States' or even the world's best interest. And when I say United States' best interest I am referring to the military-security state, the corporate superstructure, and the generally muted concerns of labor and environmentalists.

All of these groups' concerns are somewhat endangered by China's growth and behavior over the past few decades. Labor's concerns are obvious. Cheap Chinese labor reduces job and wage growth within the United States. The corporate sector was generally in favor of this of course but some corporations have belatedly realized that China simply does not believe in intellectual property protection in the same way that the US does, at least not for foreigners. And the military-security state may finally be reaching a point where it's not only concerned by China's rather pugnacious statements about several Pacific regions, including but not limited to Taiwan but also worried about the allegedly successful and ongoing penetration of corporate and government databases by Chinese hackers. When Vietnam, Japan, S. Korea and The Philippines are all trying to get closer to the US to get backup against Chinese bullying and over the top territorial claims, it may be that China is overplaying its hand. With rising inequality in China, the state may be deliberately fanning nationalist furies to take people's eyes away from internal problems. Imagine that.

Because President Obama is meeting with Xi Jinping this weekend, there have been a remarkable series of analysis pieces and op-ends detailing what's going on and what the nature of the US-China relationship will and should be going forward. I'm only going to link to two. If you can find it there is a great piece on China in the latest ISR (International Socialist Review). The ISR piece is longer than the two I've linked here but takes the view that China is now acting as a classic imperialist power just as the United States has. It details more of the history and interactions between the two countries.

Economics professor and gadfly Peter Morici's piece  has a list of steps that the US can and must take in a variety of places to, if you will, stop the Chinese batter from hogging the plate. There's nothing like a brushback pitch high and inside to get someone's attention.

Again, the Obama Administration turns to diplomacy, and China responds with denials. If not to change China then at least insulate the U.S. economy and national security from reckless and cynical behavior, the Obama Administration needs to act more aggressively. Moderate and progressive economists, such as Fred Bergsten and Paul Krugman, as well as this conservative voice, have advocated direct action on the currency issue: U.S. market intervention to raise the value of the yuan, slash the bilateral trade deficit, boost manufacturing and accelerate growth.

Limit Chinese investments to those sectors posing no security threats and to only minority stakes—no wholesale purchases of U.S. assets without reciprocity for U.S. businesses seeking to participate in the Chinese economy. If China wishes to engage in cyber warfare, after fair warning and without not much delay the United States should do more than harden defenses, but rather go after China's commercial secrets and security defenses as well. 

Be plain, demand transparency and engage in talks from a position of strength. Through fruitless diplomacy U.S. presidents have permitted China to become stronger and bolder—the lessons of history regarding appeasement are clear. Only stronger recognizable actions that impose costs on China may bring real change in its conduct and cultivate Beijing to act more responsibly and constructively.

The NYT piece points out that China's state financed economic model is in the short run defeating the US' market driven one. This is not a good thing as it will lead to misallocation of resources and an even more unpleasant changes in US worker expectations.

It is important to remember what is really behind China’s global economic expansion: the state. China may be moving in the right direction on a number of issues, but when Chinese state-owned companies go abroad and seek to play by rules that emanate from an authoritarian regime, there is grave danger that Western countries will, out of economic need, end up playing by Beijing’s rules. 

As China becomes a global player and a fierce competitor in American and European markets, its political system and state capitalist ideology pose a threat. It is therefore essential that Western governments stick to what has been the core of Western prosperity: the rule of law, political freedom and fair competition.

They must not think shortsightedly. Giving up on our commitment to human rights, or being compliant in the face of rapacious state capitalism, will hurt Western countries in the long term. It is China that needs to adapt to the world, not the other way around.

However it turns out I think from self-interest more and more people are thinking twice about the Chinese-US relationship. But the barn door is already open. We can't go back to the 1970's vis-a-vis China. And Chinese cheap labor will continue to be quite attractive to US and European corporations. The question is how do people outside of China deal with what has been described, fairly or not, as a devouring dragon. We have to find a way to ensure that continued interaction with China is beneficial to both countries and the entire planet, not just for one nation or for a small number of elites within each country. I like the idea of raising the value of the yuan and taking steps to make China pay for any hacking.

Thoughts?