Tag: Economy

The Bitter and the Generous Economies

I wrote this on screen tuesday morning. I just edited it to make it less of a mess. I’m not an economist, and the first draft had some questionable/waffley connections. My apologies if any remain.

Sometimes it seems to me that there are really only two economies: the bitter economy, and the generous economy.

The Bitter Economy – deserves everything that is gets and sees everyone as competition

The Generous Economy – sees itself as part of a community and its goods/services as one of many deserving options

I’ve been thinking and reading about the economy lately. How can we help our economy? Congress is looking at spending a whole bunch of money to help the economy… why is that?

The Federal Government really has very few options to influence the economy. Interest rates, and taxes/spending. If you never studied economics, I’d suggest skipping down to below the seond graph. If you have, please excuse some of the shorthand conclusions that I’m drawing toward my point.

Given that the country is already living with massive debt, and a large trade deficit, we have to be very careful to avoid inflation. When inflation gets out of control market actors end up in a spiral running after credit. Here’s a little image of the US CPI (Consumer Price Index.) You can see from this, or extrapolate, that our low unemployment and stable growth correlates to a stable CPI (controlled inflation rates.) Sorry the numbers are so small.

We’re looking at a global situation, and we have very few levers to push to influence things immediately. Interest rates are not a tools for us because of the potential to create inflation. We have to use taxes/spending. But we already have a massive deficit (which undermines the efficiency of the economy.) Any increase in spending will also increase the deficit.

We are not starting from moment one.  Over the last hundred years we have been using more and more efficient/complex means to help our economy.  We were employing all of these means as we descended into the current morass. It’s not like now we suddenly have new tools.  Our use of the ‘spending will help’ tool is has (helped) create our problems.

Looking at graphs of rising debt is like looking at graphs of rising green house gasses. It’s really easy to sort of say, ‘hey, that doesn’t matter’. But it really does. Deficit spending is like running up your credit card. At some point you end up having to make more and more money just to pay off the minimum. Deficits have to be controlled so that they don’t undermine the value of investment. If investment is less attractive, no matter where our currency and interest rates sit, our economy slows.

The government is looking at sector by sector investment, because everyone knows the debt is a threat to our economic health. Everyone knows that adding debt is unlikely to increase our economic health. But we ‘need to do something’.

The government can’t say, “Money for all my friends!!!”. So it is now in the process of prioritizing. Money for banks? Money for auto-makers? Money for green economy? Money for arts? The Institute for Policy Studies has suggested that one percent be spent on the arts. This would be an investment in human capital and communities.

We need to help our economy, but we also need to spend as little as possible helping our economy. The arts are an incredibly efficient investment. You get more bang for your buck with arts spending. It’s actually a little off-topic, but consider the following, which I pulled from Artslynx:

The three failed launches of satellites from Titan IV rockets in the 8.5 months before June 1999 totaled $3,000,000,000 in losses, an amount that could have funded the NEA for nearly ONE THIRD OF A CENTURY (AP & Denver Post 5/5/1999)

The $40,000,000 settlement made to the Italian victims of the ski gondola killed by US flier’s jockeying could have funded the NEA for more than HALF A YEAR (NPR Morning Edition 3/24/99)

On March 20,1999, The AP (read in the Denver Post) reported that The US Senate had voted to grant hog farmers an added $250,000,000 in aid to help them weather a free-market drop in prices. Such a subsidy could have matched our annulal NEA appropriation for TWO AND A HALF YEARS.

The arts are a very efficient economic investment, bearing many fruit. But like foreign aid, it is politically very bad. All government spending bears political risk. Arts funding is scary because when you give enough artists money you’re liable to end up with a piss-christ, and some flower penis, in addition to a mountain of bad poetry.

We need to encourage our politicians to fund the arts, and we must let them know that creative expression – even when it offends or bores – is part of what makes our country great. Politicians now need our vocal support to take risks, or, just like artists, we’ll only get more of the same.

What are our economic priorities? Innovation? Stability? Creativity?
How can the bailout be used for both short term good and to reinforce long-term priorities?

Arts sector investment makes sense as an efficient economic tool. In making immediate spending decisions arts spending must be considered a part of the generous economy, and must be defended from the interests of bitter economy actors.

Footnote:

Here’s a graph showing spending withing the US budget. Very simply: note that arts spending does not even register as a category.

Art, Activism, Advocacy

This is a video that I made about a year ago. I made it to accompany a dance – this video was gonna be projected. But I found that the video was much stronger than my dance, and that I was accompanying the video, not the other way around. So the video is now its own separate entity. Let me know what you think.

I’m involved with the DC Advocates for the Arts. We’re having a meeting that I think is gonna be really interesting on Wednesday December 17th from 6:30-8:00pm. A big thank you to the CUDC for hosting the meeting at the Source on 14th St.

In meetings leading up to this event, and in preparation for the series of events we’ll be running in the new year, the Steering Committee has had some interesting discussions about the difference between activism and advocacy.

We are the DC Advocates for the Arts. Our mission empowers us to increase awareness and support for local arts. As Advocates, our central program is lobbying the City Council. Local arts funding has a major impact on local arts. Not only is the money important, but in terms of germinating and supporting local art, local funding has a major impact on the focus of local art. Where local arts funding places emphasis, and priority, that portion of the arts community grows. The DC Advocates works to make sure that our local government sets appropriate priorities and funding levels.

While we are ‘advocates’, we do not consider ourselves ‘lobbyists’. Nor do we consider ourselves ‘activists’. I have been thinking about that.

We need an engaged and active arts community to make our (the DC Advocates for the Arts) voice heard. Basically, if we have no constituent support, why would the government representatives listen to us? So as an organization I feel like we need to work to encourage engagement from the arts community in local politics.

The meeting that we are having on the 17th is trying to work toward that.

According to DCist, in the next session of the City Council, there will be consideration of a Gay Marriage bill. I know a lot of us that think such a thing – especially in the face of Prop. 8 – would be a great step. In order to make our voices heard, we’re gonna need to learn how to advocate well. This meeting brings together several individuals with expertise in local politics.

Tom Birch serves as legislative counsel for the National Assembly of State Arts Agencies in Washington, D.C. His work focuses on the interests of artists and arts organizations, directing advocacy efforts, and advising state and local groups on advocacy and lobbying strategies. He served two terms in elected public office as Georgetown’s neighborhood commissioner.

Rick Rosendall was president of the Gay and Lesbian Activists Alliance for three years ending in January 1999, and is now its Vice President for political affairs. He is a columnist for the Boston gay newspaper Bay Windows and Washington’s Metro Weekly. He is a native Washingtonian.

Ben Young is the Chief of Staff for D.C. Councilmember David Catania. In this role, Young regularly interacts with advocates and lobbyists wishing to advance their agenda before the Districts legislature.

This is not a meeting about Gay Marriage, or promoting Gay Rights. At this meeting we will be looking at influencing local policy, with examples from arts funding and gay rights. There was some talk amongst the steering committee of whether or not this was taking us off track. Why have a meeting that deals with any subject other than the arts?

My sense is that artists have many interests, and since the DC Advocates need an engaged arts population to do our arts advocacy, it is in our interest to encourage all forms of advocacy. It increases the pool of engaged artists who might be a part of arts advocacy. That sounds a bit mercenary, but in my role with the DC Advocates for the Arts, that’s my line….

F showed me a video the other day that’s been making the rounds:

See more videos at Funny or Die

Please let your friends know about the meeting on the 17th. I know it’s the holidays, but we need to take the momentum we have from the national election and keep working for the things that matter to us.

Entangling Alliances 2.0

Like many, when I started reading recently about Sovereign Wealth Funds, I was stimulated. Now I KEEP reading about them – they seem to be everywhere in the news. I don’t know why they stick out in my mind, but I tried to figure out why by writing something. This is draft two…. in which I basically compare SWF investment to the secret alliances that caused World War I.

There have been a number of articles recently about Sovereign Wealth Funds. A Sovereign Wealth Fund is an investment fund owned by a sovereign nation. National investment itself is not new. The only thing thats new about Sovereign Wealth Fund (SWF) investment is that now countries are directly investing in businesses, not other nations.

Kuwait established the first SWF in 1953. The UAEs fund was established in 1976 and is the largest, capitalized at over 800 billion. Chinas fund, which was established in 2007, is now capitalized at over 300 billion dollars. Theres no complete list, but somewhere between 30 and 50 nations now run SWFs.

From a pure market perspective, we are very happy that these funds exist. Craig Hakkio of the Federal Reserve Bank of Kansas City wrote in the Economic Review (Third Quarter, 1995) that, “Because the United States is dependent on a steady flow of foreign capital to finance its current account deficit, a shift in market sentiment by private investors poses a risk to the U.S. economy. If private investors become reluctant to acquire dollar securities, foreign monetary authorities [can] take up the slack and increase their holdings of dollar reserves.” Extrapolating back to the market, foreign investment exerts a stabilizing influence. When our economy takes a downturn its really great for us that global investors (including sovereign nations) still see the United States as a good bet. Its great that China purchased 10% of Morgan Stanley last week. But some people get worried about China owning Morgan Stanley (just as an example.)

There are some genuinely scary overtones. Satoshi Kamoyashi in his May 24th piece in The Economist, quipped, “the last time governments were this involved in sinking money into private assets, the process tended to be called nationalisation.” However, with US GDP at 12 trillion, total value of traded securities at 50 trillion, and global value of traded securities at 165 trillion, the 3 trillion total of all sovereign wealth funds is not economically significant. Their impact, while symbolically great, is nothing to be afraid of.

George Will (in his Post column on February 3rd, 2008) argued just that, writing, “Remember the patriotic ruckus in 1989 when private Japanese investors bought Rockefeller Center? Remember the frenzied opposition two years ago to the attempt by a company owned by the government of Dubai to become the operator of some U.S. ports?…. Calmness, combined with vigilance, is sensible.” But there are potential political ramifications that go far beyond “Perror” (patriotic-terror) when foreign investment extends into the nations boardrooms.

The last ten years have shown us that individuals and small groups can bring down national institutions. Enron, Worldcom, Barings, and now Societe Generale have all been hit. What happens when some crook does something, or doesnt do something, that really hurts our nation? How would we have responded if Ken Lay had been Chinese or Arab? What if the impact is worse than what Lay did? Our fear should not be investor abuse of power, but our own xenophobia.

I believe there is no cause for actual concern that bad things happening will be caused by foreign governments, but bad things WILL happen. And at the wrong time, in the wrong place, you can bet that the right foreign nation will take the blame. All of this foreign investment does grant these nations influence in corporate governance which, over time, will impact personnel.

There is probably nothing to fear from foreign nationals owning or running our companies. But we should fear our own rage. When trauma – even of relatively insubstantial size – hits a sweet spot, history shows that the results are catastrophic.