The Crash of 2016
Page 26
Tipping Point Reached
A new study by the research firm Bloomberg New Energy Finance has found that unsubsidized renewable energy is now cheaper than fossil fuels such as coal and gas.
In fact, it’s a lot cheaper.
Data show that wind farms in Australia can produce energy at AU$80/MWh (megawatt hour). Meanwhile, coal plants are producing energy at AU$143/MWh and gas at AU$116/MWh.
Unlike the United States, where energy companies can pollute and have the costs (from illness to environmental degradation) picked up by the taxpayers, Australia has a carbon tax, which partially explains why renewables have a price advantage. But the data show that even without the cost of the carbon tax factored in, wind energy is still 14 cents cheaper than coal and 18 cents cheaper than gas.
And this is in a nation that relies more heavily on coal than any other industrialized nation in the world. But that coal reliance will soon change, because companies in Australia are quickly adopting new, cheaper, renewable energies. As the study found, banks and lending institutions in Australia are now less and less likely to finance new coal plants, because they’ve simply become a bad investment.
And while Australian wind is cheapest now, by 2020—and maybe sooner—solar power will also be cheaper than coal and gas in Australia. The energy game is rapidly changing in that country.
Michael Liebreich, the chief executive of Bloomberg New Energy Finance, noted, “The perception that fossil fuels are cheap and renewables are expensive is now out of date.”
Well, here’s a news flash: That perception has been out of date for a while now—even right here in the United States.
According to the Energy Information Administration,199 looking ahead to 2016, natural gas is the cheapest energy in the United States at roughly $66/MWh. Coal comes in second at $94/MWh. But right behind coal is renewable wind at $97/MWh, which in large part accounts for why US wind energy production has tripled since 2000.
And, unlike in Australia, none of those US prices account for the externalities associated with fossil fuels, consequences such as pollution, cancers, the need for military protection, or global warming. In America, the fossil-fuel industry has made sure those externalities are paid for not by the coal and gas energy producers but instead by you and me.
The fossil-fuel industry doesn’t pay a penny of the cost of rapidly accelerating climate change. Or the health care costs from exhaust- and refinery-driven diseases and deaths from air, water, and other pollution. Not to mention the community costs of decreasing property values when a coal plant is put in your backyard. Nor do they put a cent toward the cost of our navy keeping the oil-shipping lanes open or of our soldiers “protecting” the countries that “produce” all that oil.
All of these externalities come with fossil-fuel production, but pretty much don’t exist with renewable-energy production. And those externality costs are not only not paid for by the fossil-fuel industry—they’re never even mentioned in the corporate-run “news” media in America.
Research from the Annals of the New York Academy of Sciences concludes that the total cost of these externalities, if paid by the polluters themselves, would raise US fossil-fuel prices by as much as nearly $3/MWh.200 And that’s an extremely conservative estimate. Which puts wind power on parity with coal in America.
The trend lines here are pretty clear: Buggywhip, meet automobile!
Renewables are getting cheaper, and fossil fuels are getting more expensive.
Which is why we as a nation need to throw everything we have at making renewable energies our primary way of powering America into the twenty-first century.
Think of it as a new Apollo Project. We need green energy, local energy, and a twenty-first-century smart grid to handle it all.
Over time, the marketplace could do this. But markets are reactive, not active. With just about every developed country in the world ahead of us, and our dependence on oil making us more and more tightly bound to Middle Eastern dictators and radicals, to wait and hope that big transnational corporations will help birth a new America is both naive and stupid. Instead of depending on them, we should be recovering from them the cost of their externalities with a carbon tax that can be used to build that new energy infrastructure for America.
Let’s take a lesson from Australia and the Eurozone, which have both set up carbon taxes to make nineteenth-century energy barons pay for at least some of the damage they’ve done. And then use that revenue for a green-energy revolution here in America.
The way to get there is known. The products are available. The pressure is growing, from climate change–induced disasters to a growing recognition that transferring $1 billion a day to other countries (and big transnational corporations) to buy oil is no way to live.
In January 2013, in Chattanooga, Tennessee, a massive solar-power facility comprising over 33,600 individual solar modules capable of producing 13.1 gigawatt hours of electricity every year was turned on.201 It’s big enough to power 1,200 homes, but will be used to power a Volkswagen manufacturing plant. And it’s the biggest solar installation ever built in the state of Tennessee.
Also, the United States just surpassed Germany as the number two country in the world when it comes to producing wind power. The largest wind farm in the world, the Alta Wind Energy Center,202 is located right here in the United States in Kern County, California. The Department of Energy estimates that 20 percent of our national energy could be produced by wind come 2030.203
After the Crash of 2016, we must move forward with new energy.
Chapter 15
Democratize the Economy
The few own the many because they possess the means of livelihood of all… The country is governed for the richest, for the corporations, the bankers, the land speculators, and for the exploiters of labor. The majority of mankind are working people. So long as their fair demands—the ownership and control of their livelihoods—are set at naught, we can have neither men’s rights nor women’s rights. The majority of mankind is ground down by industrial oppression in order that the small remnant may live in ease.
—Helen Keller, 1911
I got picked up in a cab by a lawyer.
I was in Madison, Wisconsin, to speak, for the second year in a row, at the “Fighting Bob Fest,” where about ten thousand progressives from the upper Midwest have gotten together every year for the past decade (at the suggestion of Jim Hightower, and organized by Ed Garvey) to celebrate the memory of progressive Republican “Fighting Bob” La Follette. I gave one of several keynote addresses along with Senator Bernie Sanders, Cornel West, and Greg Palast, among others.
But this year was different from previous years at Fighting Bob Fest. The new governor, Scott Walker, had launched his attack on unions, sparking hundreds of thousands of Wisconsinites and other supporters of unions from across America to gather on the lawns of the capitol in Madison in protest. With the unions mobilized, recall elections were launched against several Republican state senators, and were successful against two, nearly tipping the balance of power in the state senate back to the Democrats. Soon, a recall campaign would be launched against Governor Scott Walker himself.
So there was an incredible energy among progressives in Wisconsin that year, one that was most palpable at the Fighting Bob Fest. But it was when I was being shuffled around the Badger State by taxicab that I caught a whiff of true progressivism at work. It was on a ride back to my hotel that I encountered an economic model that could be our nation’s savior after the Great Crash of 2016.
The Silent Revolution
There’s something just below the surface that most of us are unaware of in America.
While the all-powerful profit motive dominates the global economy, there’s a new and very far-reaching economy that’s sprung up in just the last few decades that’s trying something different. It’s the cooperative economy.
Currently, one billion people around the world are members of cooperatives.
While
each cooperative is run differently, they all have the same characteristic: democracy in the workplace. There is no all-powerful CEO determining the pay for himself and his workers, there is no secret board of directors looking out for the best interest of unknown shareholders.
A cooperative is managed and owned by its workers. Usually through a small fee, an employee can buy a stake in the co-op and be part of the decision-making process—one person, one vote. As business gets better, the profits don’t go to the very top, they are spread among the workers, incentivizing everyone to work harder and sell more together—hence the name “cooperative.”
In communism everything is owned by the entire state, by everybody. That is a profound and radical difference from co-ops. Worker-owned co-ops are arguably a form of capitalism, where workers hold the capital in individual companies. With communism, the state controls the means of both supply and distribution.
And a billion people around the world rely on cooperatives—from people banking at credit unions to farmers joining together to sell their crops as a cooperative enterprise. Not only that, the United Nations estimates that 3 billion people, nearly half the global population, has been positively affected by a cooperative enterprise. It’s no coincidence that cooperatives are popping up so frequently and having such an impact around the world at this particular moment.
In his book America Beyond Capitalism, historian and author Gar Alperovitz refers to the emerging cooperative model as the new way forward in a global economy that has witnessed state socialism fail and is now witnessing corporate capitalism fail.
I had a conversation with Gar and he told me, warning about the impending failure of corporate capitalism, “There’s either another way forward over the long haul or I think we’re in for real trouble and decay—and decay is what we’re seeing.”
The rest of the world has already seen that decay and has moved toward co-ops.
In 2001, Argentina went into an economic crisis after it told the IMF to get off its back and defaulted on its $132 billion foreign debt. Suddenly, the world’s seventh largest economy at the time collapsed. A quarter of the population was unemployed; the middle class disappeared into the working-poor class. People went hungry and turned desperate, leading to a surge in violence and crime. And many of the 1 percent fled or moved their money and assets offshore.
I was in the nation’s capital, Buenos Aires, in September 2002 to give a speech. I was staying with friends in an upper-middle-class part of town (Palermo), and the crash was beginning to resolve. The looting of the previous year was over, the new president was stabilizing the country, the peso was becoming stable, but the unemployment crisis was still very, very real.
One of the clearest memories I have of that time and that visit was of driving down the streets of this nice neighborhood and seeing, in front of every third or fourth house, a pile of furniture or TVs or tools with a for-sale sign and price. People were selling their belongings just to pay for food and rent.
With no one able to buy their goods, factory owners in Argentina had shut down in search of new consumers and new workers elsewhere. Collapses aren’t good for business. This was a nation that had seen its social democracy overthrown and replaced by a corporate capitalist system; and that system had just imploded and hit rock bottom. The country was now desperately searching for a new way forward.
And they found it right in front of their eyes.
In the weeks after the crash, the people began returning to the now-empty and gutted factories that they had worked in before the crash. Initially, they just started sleeping there, hoping they’d be first in line to work should the CEOs ever return and open up shop again. But that never happened.
And then they just started working on their own. They fixed up the machines, elected a small commission of people to coordinate the work, and went right back to manufacturing stuff. Through democratic procedures, the workers decided how they would spend the profits, first paying off the debts the factory owed to get it back on its feet, then spreading the rest out in salary among themselves.
Since then, the cooperative model has flourished, and Argentina is again a thriving economy less than a decade after the crash. Today, there are 16,000 cooperatives in Argentina, employing 300,000 people and making up 10 percent of the nation’s GDP. One out of every four Argentinians does business with a cooperative and thus has some sort of say in how money is spent in the economy.
Gar calls this “democratizing capital,” which is taking the flow of money—whether it’s workers’ wages, reinvestment, or profits—and putting it up to a vote among those who are most affected by that money, such as the workers themselves, the customers, and the community. That’s different from corporate capitalism, in which the CEO or a small board of directors and shareholders exclusively makes the decisions about capital.
For decades, our economy has felt the pain of corporations deciding to close millions of factories and send tens of millions of jobs offshore. It has been polluted by millions of tons of toxic gas into the atmosphere and ground and water that have poisoned entire cities. And it has been victimized by theft, as 100 percent of the excess profits made thanks to forty years of automation and increased efficiency have gone to corporate executives rather than paid to workers through higher wages and more leisure time. Given all of this, democratizing capital sure seems like a damn good idea.
Not only that, cooperatives can be just as competitive in the global market as transnational corporations.
The Dragon’s Mountain
There’s a small town in Spain, nestled away in the shadow of a mountain that used to house a vicious dragon. It’s called Mondragón—and it’s home to the largest cooperative federation in the entire world.
That dragon—now long extinct—was likely a brutal lord or local king who terrorized the people of the small town during the feudal dark ages. But now, as the United States and other Western economies descend into a form of neofeudalism with predatory transnational corporations terrorizing labor around the world, Mondragón is a beacon of hope for a new capitalism.
Back in 2009, Louise and I visited the town that lies in the shadow of the mountain, as well as the Mondragon Cooperative, which employs more than ninety thousand people in more than 250 different companies focused on retail, finance, industry, and knowledge. In 2008, Mondragon’s revenue was $24.2 billion—and every single penny of profit was either reinvested back in the business, given to charity, or paid as dividends to Mondragon’s worker-owners.
Unlike the top-down nature of most capitalistic businesses—and even communism—Mondragon and other cooperatives have flipped the pyramid upside-down. There are no CEOs making two thousand times more than the average worker, there is no board demanding higher and higher profits and pushing for offshoring, there is no contract with an outside acquisition firm, such as Mitt Romney’s Bain Capital, to “trim the fat.” The workers are trusted to determine the best direction for their company, for themselves, and for the economy.
I saw firsthand how decisions are made at Mondragon as I stood on the spotless factory floor of a washing-machine manufacturing plant within Mondragon. All around me, worker-owners at the state-of-the-art industrial facility were converting sheet metal into finished washing-machine parts and assembling electronics to go in those washing machines on a U-shaped assembly line. That’s when a “manager” walked up asking for everyone’s attention. He notified his colleagues that the following Thursday there needed to be a schedule change due to a local event and therefore a different number of units would have to be produced.
Rather than giving new orders regarding how the workers were supposed to deal with the change, he ceded his authority to those on the assembly line and asked, “How do you think we should do this?”
Then a conversation took place. The workers offered suggestions, critiquing the strengths and weaknesses of each idea. There was no arguing or complaining or fighting; it was an exchange of ideas, with the “manager” listening
attentively as though he was actually the one who was being told how things would change next Thursday.
Ten minutes or so passed and a consensus was reached on how the factory would adjust; the “manager” thanked everyone and walked off; and the machine and conveyor belts were turned back on. It was true democracy in the workplace.
But cooperatives are just one way of “democratizing capital.” Germany has another way.
The Mercedes and the Labor Union
When the American auto companies were on the verge of failure following the financial crisis of 2008, the Obama administration moved to bail them out.
Conservatives were outraged. Mitt Romney in particular called for letting the American auto industry go bankrupt. Since most of the American auto plants employed unionized workers, a bankruptcy would have allowed the companies to renegotiate union contracts and pensions, thus continuing the right-wing assault on unions.
At the time, the Economic Royalists argued that American auto companies were failing not because they were getting destroyed in the market by better-quality cars made overseas or by irresponsible free-trade policies but instead because they were paying unionized workers far too much. In today’s global economy, the Royalists insisted, workers had to take pay cuts so that the corporation they worked for could be more profitable and more competitive in the global market. You can call it the growing pains of globalization.
But is it true? Do American workers really need to lose wages for the sake of our economy?
Not if we just do what Germany is doing. In 2010, Germany manufactured 5.5 million cars. The United States manufactured less than half that—just 2.7 million cars. So according to the logic of the Economic Royalist—Germany must pay their autoworkers jack, right?