Larry Summers: It’s not the rich, it’s the ROBOTS!


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RobotThe popularity of Thomas Piketty’s Capital in the 21st Century has conservatives and economic elites in a bit of lather. As they try to refute an economic reality that has become obvious to most everybody, they end up making some transparently deceptive arguments.

Take Larry Summers, who headed up the US Treasury Department at the end of the Clinton Administration and has served as a top economic advisor to Barack Obama. This PBS News Hour piece in which Piketty refutes the criticisms quotes Summers, saying:

Even where capital accumulation is concerned, I am not sure that Piketty’s theory emphasizes the right aspects. Looking to the future, my guess is that the main story connecting capital accumulation and inequality will not be Piketty’s tale of amassing fortunes. It will be the devastating consequences of robots, 3-D printing, artificial intelligence, and the like for those who perform routine tasks. Already there are more American men on disability insurance than doing production work in manufacturing. And the trends are all in the wrong direction, particularly for the less skilled, as the capacity of capital embodying artificial intelligence to replace white-collar as well as blue-collar work will increase rapidly in the years ahead.

This argument is specious in the extreme. It says, in essence, “It’s not that elites like me are accumulating all this wealth; it’s that the ROBOTS are making us accumulate all this wealth.” Summers would have us think that robots are marching in from Robotland and taking over factories in some evil plot to destroy the middle class.

The reality is that economic elites have specifically developed these technologies to eliminate paid workers and increase profits for themselves. They know this, and now many other people know this. That second part kind of scares them because if enough people figure this out, they might actually do something about it.

Nota Bene: At no point does Summers actually say that wealth accumulation is not happening or that this factor is not what’s driving economic inequality or that economic inequality is not a big, big problem. He just says that it’s the robots that did it.

PVD City Council considers hotel minimum wage bill tonight


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Hotel Workers Providence City Hall 012As the Procaccianti Group moves ahead with plans for a new hotel in downtown Providence, employees at another one of its downtown hotels will take their fight for fair wages to the City Council tonight. Employees and activists are requesting the Council pass a $15 an hour minimum wage ordinance for local hotel workers.

The Providence City Council will hold a public hearing to consider the idea today at 6:00 pm.

“I hope the Providence City Council does what is best for the average working mother like me and passes this ordinance,” said Santa Brito, a housekeeper at the Renaissance Providence hotel. “As elections come around, it’s a perfect opportunity to see who’s in the pocket of big business and who actually stands with regular working people of Providence, people from the neighborhoods, people who vote and who they are supposed to represent.”

Hotel employees at two Procaccianti Group-owned Providence hotels – the Renaissance and the Hilton – have been fighting to organize a union for years. The effort gained global attention in 2011, when local brass band What Cheer Brigade played backup to Joey DeFrancesco quitting his job at the Hilton. This year the employee strife has moved to the Renaissance, where activists say two employees have been fired for publicly protesting for higher wages.

Watch what Providence City Councilors are saying about the proposed minimum wage ordinance.


The Procaccianti Group, a property management company that owns and operates hotels globally, receives millions of dollars in tax breaks for the Renaissance hotel. Steve Ahlquist recently reported it lost its TAG accreditation for being LGBTQ friendly in 2013. The company would not comment on the matter. Today, the Providence Journal reports the Procaccianti Group would like to develop a third hotel in downtown.

“As a housekeeper in the Hilton Providence Hotel, I do grueling physical work and make only slightly above $9.00 per hour after eight years of service,” Hilton housekeeper Andrea Hernandez said. “On this paltry wage, I live paycheck to paycheck and can only afford the bare necessities. If I earned just $1.85 more per room cleaned, I could shop at local businesses and invest in my home. The whole city would benefit. There are hundreds of hardworking women like me in Providence hotels who deserve better. We hope the City Council will step up for working women in Providence.”

Hotel workers and their supporters will begin to gather in front of Providence City Hall today at 5:30. See the Facebook invite here.

Green Party challenges campaign finance laws


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Greg Gerritt

I will appear at the RI Board of Elections meeting on Wednesday May 28 at 3:30 PM at Board of Election headquarters, 50 Branch Avenue in Providence to contest a ruling that The Green Party  of Rhode Island can not accept a $75 contribution from the Green Party of the United States.

In an age awash with political money, with Citizens United and related rulings giving more and more groups the opportunity to spend unlimited amounts of money and to hide the donors, How can it be that the Green Party of Rhode Island can not accept money that was donated by Rhode Islanders and is being returned to the Green Party in RI for party building activities? If this rule is not unconstitutional, it at least makes no sense in the current context.

The GPRI has since learned that it is relatively easy for the GPUS to register, and has been informed that the GPUS will register, but believes that a public discussion of these issues is critical for the functioning of democracy and is always happy to do its part to point out the hypocrisy in the political system.

Caprio: Ratings agencies hands weren’t clean in 38 Studios deal


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Frank_CaprioFormer Treasurer (and current candidate for Treasurer) Frank Caprio reached out to me concerning my stories about the deceptive ratings practices of the ratings agencies.

According to Caprio, the ratings agencies hands weren’t clean in the 38 Studios deal because they did in fact overrate the bonds. Furthermore, Caprio asserts that if he is re-elected as Treasurer, that he will dig into the ratings agencies.

As Ian Donnis reported in August 2010, Caprio visibly fought to prevent the 38 Studios deal from happening by going directly to the ratings agencies and investors. Unfortunately, his efforts were circumvented by the EDC, who had the discretionary power to issue the bonds. Some people have criticized Caprio for his initial support for 38 Studios and then changing his stance in opposition of the deal. In my opinion, it was courageous for Caprio to change his mind and he demonstrated leadership qualities by standing up for the taxpayers of Rhode Island.

To take action, Caprio said he would follow similar steps that he took in 2009 regarding the mismanagement scandal at the Central Landfill. Although he didn’t have an official oversight role as Treasurer, he pressured the State to take action. The result was that the right outside experts and attorneys were hired and without even having to file a lawsuit, his work led to a recovery against the Central Landfill board’s directors liability insurance of its policy limit of $5 million dollars.

Concerning the misdeeds by the ratings agencies, Caprio believes RI can look to the actions taken by the Obama administration and states such as CT and CA in seeing which law firms could be possible partners to work with RI against the ratings agencies.

Caprio also claims that the State can save substantial money by not voluntarily repaying the 38 Studios bonds. Instead, the State needs to call the bond insurer (Assured Guaranty) and the bond holders (large institutional investors) to the negotiating table to negotiate a settlement.  He thinks that under the threat of non-payment by the State the insurer (who faces an $80 million dollar payout) and the bondholders would entertain the following:

  1. Since the bondholders have received over $20 million in payments already and the fact they can agree to a waiver of default per the bonds, the state should get the waiver (holders of 50 percent of aggregate principal of bonds have to agree – which is USAA and Transamerica) and start a deliberate negotiation.  Caprio says, “I believe the bondholders will see it in their interest to take a haircut on future payments. The institutional holders of these bonds don’t want the national attention on this minimal investment they have in their multi-billion dollar portfolios.”
  2. The bond insurer should then be asked to be part of the solution with paying the new negotiated reduced amount to the bondholders and in return include them as leading the civil lawsuit currently being litigated against First Southwest, Wells Fargo, executives of EDC, etc. The bond insurer will then be in position to recover any payments it makes as part of this process.

All along this process the rating agencies will be briefed and updated by the State and it’s leaders. No default will happen since we will get time to negotiate per the waiver of default process allowed in the 38 Studio bonds (see page B-46: Waivers of Events of Default).

“I believe the State taxpayers will be relieved of having to make payments now for this failed deal. Remember that the RI taxpayers are not legally obligated to pay this bill per the bond nor by state law,” maintains Caprio.

Caprio has been outspoken on this issue for a while now. Last June, GoLocalProv reported:

Caprio says state, not Wall Street, has leverage

At a minimum, before making a decision on payment, Caprio said the state [needs to] convene a meeting of interested parties—including the bondholders and the insurer on the bonds—to attempt to negotiate a deal using the fact that it is not legally obligated to pay as leverage.

“I’m not going to lead the fight to defend multi-billion [dollar] insurance companies who are sophisticated investors to make sure they are made whole,” Caprio said, adding that the burden of paying back the bonds would fall on the average Rhode Island taxpayer. “If this money was coming out of every legislator’s personal pocket, would they be so quick to pay on debt which they have no legal obligation to pay?”

It seems to me that Caprio has a thorough understanding of the complexities of this issue and I commend him for that. I’ve been frustrated with a lot of other candidates and pundits who have simply been using Wall Street’s own talking points to bully Rhode Islander’s into thinking they have a bogus “moral obligation” to the 1%.

In my next feature, I’ll post candidate for Treasurer Seth Magaziner’s thoughts on how to deal with the ratings agencies.

Ratings agencies lose appeal but will RI stand up to them?


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This is a quick update to a couple of stories I’ve written about how ratings agencies should be held liable for their deceptive ratings practices. You can read them here and here.

An appeals court just rejected the ratings agencies claims that the opinions they expressed in a case involving the CA pension system were protected by free speech.

Kudos to Frank Caprio, who said that he asked the ratings agencies not to rate the 38 Studios bonds in order to stop the deal in 2010, for being vocal on this issue.

The question still remains – when will Rhode Island stand up to the ratings agencies? When will AG Kilmartin join the federal government and other states in suing the ratings agencies?

image courtesy of Rolling Stone
image courtesy of Rolling Stone

Wingmen: Should RI double down on tourism?


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wingmenIn the hallowed history of NBC 10 Wingmen segments, I dare say conservative blogger Justin Katz and I have never come so close to agreeing as we did when tourism was the topic. The backdrop for this conversation is, of course, Memorial Day weekend, and the post I wrote earlier in the week about the tourist economy here in the Ocean State.
News, Weather and Classifieds for Southern New England

Happy Memorial Day, or why tourism works for RI


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South County’s dramatic seasonal switchover happens this weekend.

A father and son vacationing at East Beach go fishing at dusk, Aug. 2013. (Photo by Bob Plain)
A father and son vacationing at East Beach go fishing at dusk, Aug. 2013. (Photos by Bob Plain)

Parking lots from Wickford to Westerly, vacant all winter, will fill with nicer-than-average cars bearing out-of-state plates. Those same cars will help turn otherwise rural routes 1 and 4 into a twice-a-day traffic jam. Every errand will take twice as long. All of a sudden it costs money to go to the best beaches. And your dog is no longer welcome.

For the next 90 days or so, we have to share our coastal paradise with the rest of the world. It’s really a tiny price to pay to get to live in one of the most beautiful corners of the country. “You should see it in September,” a Rhode Islander will inevitably say to someone visiting for a week in July.

With about a fifth of the state’s population, South County is essentially Rhode Island’s company town. The beaches are the Ocean State’s factory. And our chief export is an amazingly healthy and renewable resource: rest, relaxation, good times and memories.

Oakland Beach in Warwick.
Oakland Beach in Warwick.

Tourism is Rhode Island’s second biggest industry. It contributes billions annually to the economy and is responsible for almost 10 percent of total employment. It plays to our natural strengths and is a historically strong driver of growth here.

After the Ocean State unsuccessfully tried to boost business by cutting taxes and giving money to a baseball player to develop a video game, Democrats running for governor are beginning to understand tourism’s importance here. Providence Mayor Angel Taveras and General Treasurer Gina Raimondo both recently released plans to reinvigorate the vacation sector.

“A progressive government understands that our tourism industry is more than an amenity – it is crucial to economic development and to Rhode Island’s economic recovery,” said Taveras in his plan to invigorate the tourism economy.

The old Shooters building at the top of Narragansett Bay has inexplicably been vacant for years. (Bob Plain)
Tourism fail?: The old Shooters spot at the top of Narragansett Bay has been vacant for years.

“Tourism can be an incredibly powerful engine of economic growth, and Rhode Island is ideally suited to take advantage of it,” Raimondo said in her tourism proposal released in April.

Each offered similar bullet points to boost out-of-state visitors. Improve infrastructure, market the state better, support the arts and entertainment.

“Our tourism economy is a driving force in our sense of pride and sense of place,” Taveras wrote. “We have so much to be proud of in Rhode Island. It is time to let the world know.”

Sand Hill Cove, 2010. (Bob Plain)
Sand Hill Cove, 2010. (Bob Plain)

They each said they could create thousands of new jobs.

Raimondo, who often invokes her family vacations to Sand Hill Cove in stump speeches, said Rhode Island “on the whole spends less on investing in tourism and travel than almost any other state in the country.”

No wonder the Ocean State is mired in a recession! Rhode Island made big bets on tax cuts and Curt Schilling to grow our economy when perhaps we would have been better off doubling down on our natural and historical strong suit: tourism.

We may be the smallest state in the nation, but there’s no good reason we can’t also be America’s best destination.

beavertail
Looking west towards South County from Beavertail State Park in Jamestown.

Surveillance or education: which is a better use of technology


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What to do about our government surveillance problem? This post is about ensuring that our children get to live in a free world.

Step One is relatively easy: we turn the NSA’s Utah Data Center into the world’s next Great Library.

utah-data-center-entrance

I’m not kidding.

The forces that labor for our security are not composed of evil people, but yet they can not prevent themselves from sitting far outside the functions of our democracy. They have lied to Congress, and lied repeatedly to the American people and especially the people of the world. When their efforts to maintain security are successful, their work is a victim of its own success. They lament this problem, but they do not put in any real effort to democratize their role in society. Since whatever they do is never brought to public debate except through high-profile leaks, we are forced to assume that what they are doing is evil.

And in fact, what they are doing is evil. It is evil not because of the character of its creators, but instead because these behaviors poison the well of democracy itself. It smothers a free people to be watched and listened to. Even when it is not us that is under surveillance, it destroys our credibility to have such immeasurable power over others. Much like the atom bomb before it, the imbalance of power that we Americans have in the world makes us the defacto police state. We fiddle with a sword of Damocles, dangling it over the whole world, both free and otherwise. In doing so, we are inviting our neighbors to participate in their own arms race, goading them into gobbling up our communication and dangling a sword of their own over us.

We’ve moved into very dark territory with technology, as dark as unlocking the atom ever was. So what can we do about it?

The answer is simple. We harness this immense monster we unlocked for a public good. We can set a gold standard for civilization and retool a few of these weapons and hammer them back into plowshares. We can take a $1.5 billion data center, and use it to store the best of what the world has to offer, rather than the worst. What to do with it? I don’t know. Only a public discussion of what we can do with a yottabyte of storage could yield a decent answer. Surely we could use it for advanced research, or as an auxiliary to the Library of Congress.

But what we must not do, is let that facility sit there in Utah and store the communications of our neighbors. That is a disgusting and inhuman act, regardless of its motivations. There is a point at which we have to learn to behave as decent people if we are to pretend to have any moral authority in this world.

So if anyone wants to start a campaign to make that facility the next Great Library, I’d be happy to start it with you.

Todd Giroux should avoid marine mammals, politics


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Pluto2
Pluto, photo courtesy of Mystic Aquarium.
Curie Crate Open2
Curie. Photo courtesy of Mystic Aquarium.

Earlier this month, the good people at the Mystic Aquarium Animal Rescue Team did the unusual, releasing three seals – two harps and one gray seal – at the same time at Blue Shutters Beach in Charlestown. 

The three seals, Pluto, Pandora and Curie, plopped out of their carriers and waddled down to the water to begin their normal lives in the wild.

The Mystic folks warn people to be careful when they find an injured marine mammal and to contact local police or the Mystic Center first on their 24-hour hotline, 860-527-5955, extension 107.

Pandora
Pandora. Photo courtesy of Mystic Aquarium.

Rescued marine mammals come to Mystic from all over New England to be treated for illnesses or injuries before they are set free from one of Charlestown’s beaches.

They also run educational programs and also try to inform the public on the right thing to do when encountering a stranded or injuries marine mammal. If you read on, you’ll see how one guy who would like to be Rhode Island’s next governor obviously didn’t get the memo.

What not to do if you see an injured seal

Todd Giroux seal
Giroux took this picture and posted it on Facebook. The seal was supposedly still alive at this point.

Giroux is a construction contractor not a veterinarian.

Of course, he took the obligatory photo for his Facebook page, perhaps thinking this will somehow boost his chances with the voters.

Giroux is not the sharpest pencil in the pencil box.

Neighbors called the police who went to Giroux’s house to tell him to put the seal back, and contacted DEM.

girouxBy the time DEM arrived, the seal was gone. They did not find a body. DEM told WPRO that the feds are investigating since Giroux’s action was a violation of federal law.

Giroux is one of several candidates running for state office this year who have no business doing so. I regret to say that Giroux is running as a Democrat, although he is picking up some right-wing Republican support.

In this age of shrinking news coverage of real news, Giroux has been treated as if he’s a real candidate with real ideas, rather than a crank. I’ll be writing more about Giroux soon to back up my assessment of his qualifications. There’s a lot more wrong with him than just acting like an idiot with that injured seal.

This article originally ran in Progressive Charlestown, where you can see even more pictures of the seals Mystic Aquarium released in Charlestown.

‘The Mother of All Strikes’ at Slater Mill in Pawtucket


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Mother of All Strikes“The Mother of All Strikes: The 1824 Textile Worker Turnout,” presents labor history and contemporary art side by side on the floor of the historic Slater Mill (67 Roosevelt Avenue, Pawtucket) from now until July 31st.

The title of the exhibit refers to “one of America’s first factory strikes and the first US strike to be led by women.”

In May of 1824, women power loom weavers of Pawtucket took action on the growing chorus of workers and artisans who faced circumstances of transitions in labor and in their agricultural ways of life. Reduced wages, increased length of the working day, erosion of the value of their work, and loss of land and interests led to discord among a new working class. The 1824 strike was a flashpoint that inspired countless subsequent collective labor actions in the Blackstone Valley over the next several decades.

The exhibit was conceived and co-curated by Slater Mill interpreter and labor activist Joey L DeFrancesco and well worth a day out with the family. Check out some of the art and exhibits below.

DSC_7802

DSC_7807
The Selvage (detail) Kristina L Brown
DSC_7819
102 Changing Threads (detail) Priscilla Carrion
DSC_7826
The Turnout (detail) Christine G. Asley

DSC_7823

DSC_7811

Insuring unemployment ensures unemployment


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Unemployment LineIt is outrageous to have millionaires collecting unemployment insurance payments, according to a Golocal article in which I am quoted. Maybe Golocal is on to something?

Certainly their employer paid a premium to be insured against a layoff, but it’s also unlikely that they are actually in as dire a need for the assistance as someone who has been laid off from a lower-paid job. But the real problem with UI is the I. That is, unemployment is structured as an insurance program: your employer pays a premium and when unemployment happens, you can make a claim. Why is that a problem?

In structure, it’s just like property and casualty insurance. You pay a premium, and if your house burns down, you can make a claim to the insurance company. The difference is that only criminals incorporate burning down houses into their business strategy, while layoffs have become an accepted part of corporate management in the United States.

These days, my knees can only be counted on to remind me how old I am, but another way that I feel old sometimes is that I remember when layoffs were considered big news. In those days, permanent layoffs and factory closings were unusual events, not so unlike floods and lightning strikes, reasonable things to insure against. The problem is that when layoffs become common — when the health of the communities and workers who made a company successful ceased to be a part of managements’ concerns — the insurance structure of the unemployment program becomes less sustainable. (In fact, layoffs that are common now were actually illegal within my memory, but that’s a different, though equally maddening, part of the story.) Worse than unsustainable, it can become farcical when a company helping to cause the problem has the temerity to complain about it.

This came to my attention years ago, when Cranston Print Works complained to the General Assembly that it paid $500 per employee for UI in Rhode Island, but only $20 per employee in North Carolina. Quoting from a letter I wrote in 1996:

Dell [at the NC Labor Dept] speculated that the Cranston Print Works unemployment tax rate differential cited… was due not only to the difference in tax rates, but also to the fact that, over the past decade or so, as production has moved from here to there, Cranston has been laying people off here in RI and hiring them in NC. Since a company’s unemployment tax rate is largely dependent on how many people they’ve laid off, this would obviously make their rate much lower in NC than here. The whole thing becomes something of a self-fulfilling prophecy for businesses: they move to NC to lower costs, but by moving (hiring in NC, laying off in RI), they make the costs higher for their remaining divisions, and for those companies who stay. [emphasis added]

What has happened around here over the last few decades is that the companies who fled early have actually increased the costs borne by the companies who have not. This is true not only in unemployment insurance, but in a host of other ways. Fewer companies sharing the costs of infrastructure investment means higher electricity distribution costs for each individual company, parts distributors have fewer customers so the margins they charge have to go up, and the costs of other government expenses, like roads, water, and education, find fewer companies to share the costs, too. Costs go up for the companies who remain, who then complain that high costs force them to move, too. It’s not always as ironic as when the same company is doing both the moving and the complaining, but it’s the same dynamic.

What have we done to address this problem? Pretty much nothing, except where we’ve made it worse, by reallocating some of those burdens in disregard of a company’s ability to pay. Not only do we have a failure of policy to contend with, but we have a failure of policy development. You hear routine complaints about business costs in Rhode Island, but when has the analysis ever led to anything more substantive than just more tax cuts? The Assembly leaders who make economic development policy in our state seem to have only that single play in their playbook and they keep running it, hoping against hope for a different outcome each time. What I hear from the statehouse is that there is plenty of talk about further tax cuts this year, despite the anticipated budget shortfalls.

Rereading that old letter seems a little bit sad with 18 more years of perspective:

There are dozens of creative and exciting economic development ideas that are proven to work by virtue of the fact they exist in other states, and are working there…The only special thing about the conditions here in Rhode Island is the lack of leadership and vision and commitment–from the Assembly, from the EDC, from the Governor–that are necessary to make them work. This means money, but not necessarily extravagance. Yes, the budget is tight, but as long as we simply complain that the pie is shrinking and there’s nothing we can do about these great ideas, there will continue to be less and less money with which to do anything. This is the great death spiral we’re in, and the tragedy is that no one seems to feel it important to resist.

Sheldon Whitehouse keynote speaker at Secular Summit


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Sen. Sheldon Whitehouse at Forward on Climate rally
Sen. Sheldon Whitehouse at Forward on Climate rally
Sen. Sheldon Whitehouse at Forward on Climate rally. (Photo by Jack McDaid.)

Rhode Island’s own Senator Sheldon Whitehouse will be addressing an audience made up of atheists, agnostics, Humanists, freethinkers and other nontheistic Americans at high noon on Friday, June 13th in Washington DC for the 2014 Secular Summit & Lobby Day, according to the Secular Coalition for America (SCA), the group holding the event. The SCA was founded to “increase the visibility of and respect for nontheistic viewpoints in the United States, and to protect and strengthen the secular character of our government as the best guarantee of freedom for all,” according to its mission statement. Locally, the organization is endorsed by the Humanists of Rhode Island.

Senator Whitehouse is an excellent choice for speaker at an event where the participants will be more concerned with science and facts than with religion and theology. Whitehouse has taken a strong stand on the dangers of climate change (as should be expected of a Senator from the “Ocean” State) and has maintained a pro-science stance on the issue. He famously rebuked Republican lawmakers who believe that Climate Change is unimportant because “God won’t allow us to ruin our planet” just over a year ago in one of his “Time to Wake Up” speeches, asking,

We are to continue to pollute our Earth, with literally megatons each year of carbon, heating up our atmosphere, acidifying our seas, knowing full well by His natural laws what the consequences are, and instead of correcting our own behavior, we’re going to bet on a miracle?  That’s the plan?

Sheldon Whitehouse is not an atheist. He identifies as an Episcopalian, and speaking before an audience of Humanists and atheists is bound to get some people inappropriately riled up. The local chapter of the SCA, the Secular Coalition of Rhode Island, as well as the Humanists of Rhode Island and many more unaffiliated atheists, agnostics, Humanists and freethinkers appreciate the Senator’s appearance at the event.

Note: I am the president of the Humanists of Rhode Island and on the board of the Secular Coalition for Rhode Island.

Will Kilmartin stand up to the ratings agencies?


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image courtesy of Rolling Stone
image courtesy of Rolling Stone

In a recent post, I highlighted how the US Department of Justice is suing ratings agency S&P concerning their suspicious ratings practices that essentially fueled the financial crisis. In the same post, I also wrote about how I believe ratings agencies S&P and Moody’s also artificially inflated the 38 Studios bond ratings as investment grade.

Although not impossible, it is difficult for taxpayers to file lawsuits due to what is known as the standing law doctrine. It is therefore the obligation of attorneys general to defend taxpayers when they have been wronged.

Colorado became a recent addition to a list of attorneys general (both Democrats and Republicans) from Arizona, Arkansas, California, Delaware, the District of Columbia, Idaho, Iowa, North Carolina, Maine, Missouri, Pennsylvania, Tennessee, Washington, and Connecticut that have joined the DOJ in alleging that the ratings agencies violated their respective Unfair Trade Practices Acts:

Colorado Attorney General John Suthers filed a lawsuit ….. against Standard and Poor’s (S&P) in connection with the ratings that it issued on structured finance securities, including residential mortgage backed securities (RMBS) that were issued at the height of the market from 2004-2007. This lawsuit is part of a joint federal-state effort to hold those responsible for their part in the foreclosure and financial crisis. The congressionally-appointed bipartisan Financial Crisis Inquiry Commission concluded in its final report that the financial crisis “could not have happened” without ratings agencies such as S&P.  Colorado’s lawsuit alleges that S&P put its financial interests above its self-described objectivity and independence.

Connecticut began the process in 2010 (you can read the filing here) and has been urging other states to join them in taking on the ratings agencies:

Inflated ratings of mortgage securities are considered a key cause of the 2008 financial crisis. Critics accused the ratings firms of lowering standards to win business and misleading bond investors to buy debt they thought was safe but turned out to be toxic .

It would seem that the ratings agencies were up to a similar ratings scam with regard to the 38 Studios bonds. Attorney General Kilmartin was the Majority Whip in the State House of Representatives at the time of the 38 Studios deal, so he might have to recuse himself from such a case, (correction: Kilmartin resigned as Whip in February 2010, prior to the 38 Studios vote) but taking no action on such an important matter would be a huge disservice to the citizens of Rhode Island.

Will Attorney General Peter Kilmartin stand up to the ratings agencies and fight for the taxpayers of Rhode Island? Dawson Hodgson, the Republican challenging him, has already staked out a strong position on 38 Studios – which promises to define the election this year up and down the ballot. Why hasn’t RI joined the other states and federal government in taking on the ratings agencies for their role in the financial crisis? Will the AG’s office sue S&P and Moody’s for artificially rating the 38 Studios bonds as investment grade?

Toward a Loyal Opposition in Rhode Island


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Political oppositionData shows us that Rhode Island has one of the least polarized legislatures in the country. It is governed by a centrist consensus that fails to please policy demanders on the wings. Yet those demands from the wings are essential to maintaining the consensus – politicians can portray themselves as fighting against so-called “special interests” from whichever side is useful.

The sudden ascent of Speaker Nicholas Mattiello shows us how dominant the Rhode Island consensus is; a Democratic speaker was elected with the majority support of the Republican caucus. Within the Democratic caucus, the opposition (equivalent to 16% of the vote) was equally split between the alternative candidate and abstention. Some of Mattiello’s erstwhile opponents even turned their coats and voted for him when it was apparent they could not win. Defeated opponent Rep. Blazejewski described the decision by saying that “…egos shouldn’t get in the way. We have to elect a new leadership team and move forward with all of the problems facing our state.”

And yet, despite saying his rise was a “sea change” in how the House was to be governed and calling for unity, Mattiello’s ascension fit previous patterns – a majority leader takes the speakership. Those who oppose him are cast into the wilderness, those who support him are rewarded with the spoils of victory. Perhaps that those sharing the spoils were marked with Rs as well as Ds was not so typical, but it’s been done before.

This is the consensus that governs Rhode Island politics and creates a government that swerves from right to left on fanciful whims. This is a consensus that either co-opts or isolates those who would oppose it. This is the consensus that creates a de facto one-party system and cripples Rhode Island’s government from taking more than a piecemeal and ineffective approach to change. Thus a “Rhode Map” is issued that addresses an imaginary problem rather than the real one, tax cuts are passed without an honest plan for how they’ll increase economic activity – or how the State will leverage their issuance, and minor electoral tweaks made that will fail to make a real impact on building a flourishing participatory democracy.

Somewhere along the way, I’ve read that a democracy with a single-party system isn’t really a democracy. While I leave it to others to debate whether Rhode Island is more oligarchy than democracy, I think the problem lies in the lack of an organized and disciplined opposition. Right now, Rhode Island’s government is similar to Britain’s in the early 19th century, dominated by factions who rapidly change allegiances based on their interests. Until a real opposition is constructed, I do not foresee much in the way of real change happening in Rhode Island.

The old, unsuccessful way to build an opposition has been to construct an alternate party. Robert Healey’s Cool Moose Party in the 90s has vanished and the Green Party and the Libertarian Party are unsuccessful in getting anywhere. Ken Block’s Moderate Party proved that with enough cash the media will listen, but the project of building a centrist party when the Republican Party already occupies a centrist position was really nothing more than a re-branding of the Republicans that proved to be a spoiler in the 2010 elections. Block has since succumbed to the reality that the Republican brand is still the better one than the Moderate brand.

And they are brands, symbols to differentiate one political organization from the other. The party organizations themselves are extraordinarily weak in Rhode Island. Does anyone truly believe that it matters very much whether a Bill Lynch, Ed Pacheco, or David Caprio “runs” the Democratic Party? Even less can be said for the impact of Ken McKays, Mark Zaccarias, or Mark Smileys on the direction of the Republican Party. Success in Rhode Island’s political environment depends on associating yourself with the Democratic brand, and these days it seems even House Republicans understand that.

The current state of Rhode Island’s political system has given rise to a network of organizations that generally support the candidates of the Democratic Party; a national brand that is extremely popular within the state. In place of the old machine method of politics, politicians must now build a coalition from the organizations within the network, gain support of activists, and successfully win voters. It is a significant boon to start with the popularity of the Democratic brand.

The old way of organizing an opposition was to start without the benefit brand. That’s like shooting yourself in the foot when you set out to win a marathon. A real opposition must take a page out of the past and form a “Loyal Opposition”. Just as there is a Democratic government, there must be a Democratic opposition to this government. This isn’t about egos, this is about solving our state’s problems by providing a genuine alternative from a genuine opposition.

That opposition must also come from the left. The Moderate project supposed an opposition could be built in the center, while ignoring that both Democrats and Republicans already occupy that space. From the broad support the Democratic Party enjoys, we know that its values are supported. The current consensus pays, at best, lip service to those values. There is simply more room for opposition at the Democratic left.

I’m not alone in realizing this. What Rhode Island needs is an independent political organization that will organize and rally an opposition – endorsing and supporting candidates in primaries and the general election. It fits in with current trends within the Left. It fits in with historical trends. The Working Families Party is using this strategy with a not inconsiderable amount of success.

This is a project which is the building of a substitute political party. It’s not a small order, it’s not a short-term thing, and it’s not a goal for the weak-willed. But for Rhode Island’s democracy and Democrats (both small d and big D) to flourish, it must be done.

Today at 5pm: Sound your alarm for climate change


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Set your alarm for 5 pm today. That’s what Sheldon Whitehouse and his counterpart from California on the Senate Climate Action Task Force Barbara Boxer are asking climate activists from all over the country to do.

At 5pm on the dot, we’ll all be setting off the alarms on our smartphones or tablets to send a signal: it’s time for Congress to wake up and take action on climate change,” according to Whitehouse’s website. “If you can’t be here in person, you can participate from home by setting your own alarm, and by tweeting along at #SoundTheAlarm4Climate.”

He and Boxer will be leading an event inside Congress at 5pm to “bring climate change to center stage in our country.” You can follow it on Twitter using the hashtag #SoundtheAlarm4Climate. And Whitehouse is livestreaming the event on his website here.

climate alarm

 

Mattiello is meeting with ratings agencies, but what will he learn?


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mattiello2House Speaker Nick Mattiello is in New York today meeting with representatives of Standard and Poor’s and Moody’s, the two biggest of the credit ratings agencies. (No word on how Fitch feels about the snub.) It’s not perfectly clear what he thinks he’s going to get from this trip. Perhaps he’s going to look into the Moody’s representatives eyes and “get a sense of his soul” the way George W. Bush did with Vladimir Putin? That went well, didn’t it?

So what will Mattiello find when he meets with these guys? I predict he will find earnest, intelligent, kind, and solicitous people. They will make sympathetic noises about the awkward plight of our poor state and the unwise choices made by our previous governor and speaker of the House. They will understand immediately the ramifications of our difficult position. But they will point out all the worst-case scenarios, because they are also people who believe very strongly that the end of western civilization will be nigh if a state is allowed to renege on a commitment they imagine it to have made. Where, I ask you, will their commissions come from if the bond market changes even a tiny bit? They will see their job in these meetings as making Mattiello’s hair stand up even straighter than it usually does, and will probably succeed.

There are times when personal contact is misleading. After all, the earnest, intelligent, kind, and solicitous people he will meet represent agencies that are deeply corrupt, in the pay of the banks whose bonds they rate, constantly trying to curry favor with the very institutions they are supposedly there to police, while abusing the powerless. There have been virtually no changes to their business model since that very business model led our financial markets to the verge of collapse in 2008.

If Mattiello was in search of actual answers to actual questions, he would do far better to spend time interviewing the bond buyers for the insurance companies who hold most of our state’s bonds. Those are the people whose opinion will actually be important, because those are the people who actually give us the money we need to borrow. I’m more interested to know whether they are capable of reading a bond prospectus and understand the difference between a general obligation bond approved by the voters and a bond that says all over it that it is not such a thing.

There is a class of questions out there that cannot be answered by asking them. I learned years ago, for example, that I cannot learn whether today is opposite day by asking my daughter. If it is opposite day, she will say no when I ask, and if it is not, she will also say no. I have to think of another way to answer the question. There’s a lovely discussion of exactly this point in Snow et al’s 1991 book, “Unfulfilled Expectations: Home and School Influences on Literacy“, where the authors speculate about the futility of having well-dressed Harvard education researchers with clipboards ask poor mothers how many times a week they read to their children.

Here are some other questions whose answers cannot be found by asking:

“Hey Mr. Rich Person, will you leave the state if we raise your taxes?”

“Hey Mr. Business Owner, will you bring jobs back to this state if we lower your taxes?”

“Hey Mr. Bond Rater, will you leave our state bond rating alone if we let an independent agency default on its bonds?”

Incalculable damage has been done to our state by people who imagine that the way to answer questions such as these is simply to ask them directly and take the answers at face value. (Typically by people who will then call me naive.)

The public nature of Speaker Mattiello’s trip, and the people he intends to visit and to hear imply that what is going on here is not actually a fact-finding trip, but Kabuki theatre, the beginnings of political cover for making the unpopular decision to give in to the threats and repay the bonds. If true, this is unfortunate. Perhaps we can only hope that somehow weak knees will ward off the tax-cut fever that I hear is infecting the back rooms of the House this past month.

Providence: Top 10 freeway miles per capita


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We have many things to be proud of, friends. Providence is one of several great cities in our state. Sadly, we’re in the top ten for something we should not be so proud of–Providence tops the ranks of U.S. cities for freeway miles per capita.

image

I was blown away when I attended a Rhode Map recently and found that we have no plan yet through that planning process to address urban highway removal, as has been done in cities great and small throughout the country. Providence should take its top ten status as a new impetus to remove expensive nightmares like Routes 6 & 10, to manage capacity on highways like I-95 and I-195 through bus rapid transit lanes, and to save on road expense throughout our urban areas through judicious use of road diets. These solutions are not only green, but reduce state infrastructure liabilities in a way that can give left and right what they each want: more money for services, and less need for high taxes to upkeep aging infrastructure.

As you can see, Kansas City & St. Louis are outliers. But Providence is well within the ranks of cities in Texas, as well as Rust Belt Cities like Cleveland and Pittsburgh. Pittsburgh is working very hard though to add protected bike lanes and build a more reliable transit system, though, so its situation (just a hair better than us on the chart) is probably a result in part of historical inertia. Maybe that’s partially the case with us too. And we should have hope that we can turn it around. Seoul, South Korea has removed fifteen freeways, and we can certainly handle our smaller lot of removing many fewer. This is another area where being a really small city gives us an opportunity–yes, we have problems, but they’re geographically small, so we can turn them around much faster.

In any case, it seems that we have a problem, and it’s quantifiable. I’ve often felt like a Providence map, from far away, looks fairly close to a Philly map, but the difference is the geographic size of the cities. You have the same pattern of a freeway here and a freeway there cutting this or that area off, but if you pay attention to scale you realize that in some parts of Providence it may be just a ten or fifteen minute walk from one freeway obstacle to another, whereas for Philadelphia you may have to walk an hour or more. So it’s gratifying to see the numbers and realize that the feeling is true.

In Philadelphia, certainly the feeling of crossing the Schuylkill Expressway is almost on par with crossing I-95 in Providence, but that has been improved recently with rebuilds of older, car-oriented bridges towards more multimodal ones like the South Street Bridge (which could still get better. . . Can we get some trees, or does that go against AASHTO requirements? Sigh. . . ). People in Philadelphia complain (rightly so) about the crossing to Penn’s Landing, which feels similar to the bridge into India Point Park, but by Providence standards that crossing is quite nice. You have plants on either side of the bridge (somewhat) guarding you from the reality that you’re over a huge interstate, and the streets on either side are unpleasant but at least not as bad as the I-95 service roads.

But I didn’t write this to get people upset or to leave people without hope. Providence is a remarkable city in between its highways. It can turn things around very quickly in the areas where it’s not a nice place. The first step, though, is seeing the measurable difficulty we face from our unnecessary urban freeways.

Legalizing marijuana enjoys ‘tripartisan’ support


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Beth Comery is a former Providence police officer who has become an advocate for taxing and regulating marijuana in her retirement.
Beth Comery is a former Providence police officer who has become an advocate for taxing and regulating marijuana in her retirement.

Bipartisan support can be hard to come by in modern politics. Not for legalizing marijuana in Rhode Island though, which activists say enjoys “tripartisan support.”

Regulate RI says Democratic, Republican and Libertarian party leaders will all speak today (3pm) at the State House rotunda to call on the legislature to make Rhode Island the third state in the nation to legalize marijuana.

The Republican in the group is Providence mayoral candidate Dan Harrop, who is also chairman of the divisive right wing think tank RI Center for Freedom and Prosperity. Their policy director, Justin Katz, is opposed. Like marriage equality, legalizing marijuana enjoys more popularity among the Republicans than with Democratic leadership. House Minority Leader Brian Newberry is a co-sponsor of the so-called tax and regulate bill.

The Libertarians include Mike Rollins, chairman of the local Libertarian Party and Richard Ford, chairman of the Republican Liberty Caucus. Democrats include from Edith Ajello, the progressive East Side state representative who sponsored the bill, Pat Smith, a Barrington resident who is very active with the RI Progressive Democrats, and Kristina Fox, former president of the Young Democrats of RI who now works for Providence mayoral hopeful Jorge Elorza. Click here to listen to more Democrats (Gov Chafee, Rep Frank Ferri and Senator Josh Miller) talk about legalization.

A recent analysis shows legalization would mean between $20 and $80 million in additional revenue for Rhode Island and the Providence NAACP, and other social justice advocates, support legalization because pot prohibition has unfairly targeted poor and minority communities. A poll found legalization is popular with the average Rhode Islander too, with 53 percent in support. But pundits believe there is little political will to take up the legislation this session because it’s an election year.

Clay Pell: ‘progressive values are Democratic values’


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clay pellClay Pell may boast a lot of liberal street cred in the Democratic primary campaign for governor, but when he paid the RI Future newsroom a recent visit he shied away from being defined as the progressive in the race. Or even drawing a distinction.

“Progressive values are Democratic values,” he told me, “and that’s why I talk about being a Democrat, and beliving in core Democratic values. I believe the party should be about helping people who want to be a part of the middle class.”

In a pretty wide-ranging 25-minute interview, my big take-away is that Pell sees himself as a change agent for Rhode Island who will focus on improving public education, perhaps looking to build on his grandfather’s legacy.

But what I really wanted to know was why should one support him rather than Angel Taveras, the progressive mayor of Providence from whom Pell has siphoned crucial liberal support. Here’s what he told me when I asked him:

Rhode Island’s path to economic strength involves building on the industries that play to the Ocean State’s natural strengths like maritime-related business, Pell said.

As is the case whenever one speaks with a candidate for office, some of our conversation veered off into the real of platitudes. But I must admit, I really like his idea of a future Rhode Island.

And I really liked how he showed a strong commitment to restoring state aid to struggling cities and towns.

You can listen to our whole conversation here:

PVD City Council backs Rep Handy’s climate change bill


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art handy memeThe Providence City Council wants the state of Rhode Island to address climate change.

At its meeting on Thursday the Council unanimously endorsed a resolution calling upon the General Assembly to pass Rep. Art Handy’s (D-Cranston) climate change bill, known as the Resilient Rhode Island legislation. (Listen to a podcast with Rep. Handy about his bill here)

The Providence resolution about the bill was put forward by Council Majority Leader Seth Yurdin.

“Climate change is the biggest challenge that we face in our time,” he said in a press release. “As a coastal community, Rhode Island is especially susceptible to the dangerous effects of climate change, such as rising sea levels, coastal erosion, and flooding. As elected officials, we have a moral obligation to do all we can to combat climate change.”


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