The Barista Economy

Falling unemployment numbers allow politicians to take credit for a recovery that has truly eluded the lower and middle classes. For anyone in the upper reaches of our economy, life is good. More wealth is concentrated at the top, new oil finds (through fracking) is enriching those who drill and own the resources, new earnings gains have almost entirely gone to those who are at the crest of the food chain, as manufacturing returns to the U.S. those who own the automated machinery get the money that once went to skilled labor, and the benefits of cost-cutting and automation have pushed the stock market to new (unsustainable) heights.

For everyone else, it’s about rising college tuition costs without off-setting financial aid, chronic long-term unemployment, fewer benefits by reason of term-limited “temporary contract” work, part-time jobs and the not-so-subtle threat that if you think you are overworked and underpaid, there are dozens of applicants who would kill to take your place. Too many Americans have just stopped looking for jobs. As we examine the new jobs that have appeared, the lucky ones are finding work in generating climate-killing fossil fuels. Healthcare, construction (hard to export), hospitality and food services are hiring too, but most of those jobs are most certainly in the lower-paying reaches of our economy. But for entry-level workers, even many with advanced degrees, they are forced to accept jobs with low pay and little or no opportunity for advancement. The new barista economy.

Average Americans also see through the master illusionists’ “lying with statistics.” They may buy into simplistic and unworkable sloganistic solutions from politicians left and right, but Americans actually do know what the macro-issue really is: under/unemployment. There are corollary fears reflected here, almost all directly relating to the rather obvious trend of a declining standard of living for the vast majority of Americans. It may stem from a more general malaise in the Western world as it yields its economic holdings to the rising stars of the developing world, but whatever the cause, Americans know it is real.

“Unemployment has retaken its place in Americans' minds as the country's biggest problem, according to a new Gallup poll published [on February 17^th]… 23 percent now consider unemployment the greatest challenge facing the nation, while only 16 percent said the same in January.

“More people named joblessness as the nation's top problem than ‘government and politicians,’ which had been the most popular answer among survey respondents since the government shutdown last year… Before the shutdown, jobs and the economy had topped the list… The poll was conducted between Feb. 6-9. On Feb. 6, Senate Democrats mounted another unsuccessful attempt to extend long-term unemployment benefits, which lapsed for more than 1.7 million Americans at the end of December.

“Only 63 percent of working-age Americans have a job or are actively looking for one -- the lowest share of the population participating in the labor force since 1978. (The population of working-age Americans here includes anyone over the age of 16, including those who have retired and students)… And while the jobless rate fell last month, the drop was due in large part to the long-term unemployed giving up on looking for work.” Huffington Post, February 18^th. So Americans just plain do not believe that the Bureau of Labor Statistics numbers are particularly relevant. They are facing the BIG RE-SET.

As droughts slam some of our most productive agricultural lands, as rising demand for higher-quality foodstuffs places greater demand on the food that is produced, Americans are going to face steadily-rising prices of their basics. And has the pent-up demand for cars and homes dissipates (as people slake that thirst), expect prices and demand to drop. Real “average” buying power has declined every year for well over a decade; discretionary income has severely dissipated, and for teens who once held part-time and summer jobs, the availability of some “spending cash” has crashed and burned. The law of unintended consequences is kicking in. Like the impact of massive student debt.

“The staggering amount of outstanding student debt — nearly $1 trillion owed – is beginning to impede the U.S. economy as a whole, a new report from the New York Federal Reserve suggests, chiefly by robbing the housing market of its richest crop of new buyers: young college graduates.

“The statistics in the report are dismaying in themselves. With the number of borrowers approaching 40 million nationally, including more than 40 percent of 25-year-olds, the average balance on their loans has risen to $25,000. About 6.7 million of all student borrowers, or 17 percent, are delinquent on their payments three months or more.

“For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.

“The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.” CNBC.com, March 4, 2013. With mid-term elections coming up, nothing can be more pertinent than the most basic political maximum of them all: It’s the economy, stupid!

I’m Peter Dekom, and unless these polarizing long-term trends are reversed, we may be at that inflection point where the viability of the United States of America as a continuing and unified global power may yield to an actual fracture into several component geographical states.

Ukraine Update

The protestors ignored the new accord that promised constitutional reform, a coalition government and an early election. Instead, without any shots being fired, they moved out of the capital city’s streets and Independence Square, entered the area where the government buildings are concentrated and occupied all the relevant buildings. Facing this bloodless coup, “President Viktor F. Yanukovych fled Kiev on Saturday [February 22^nd] to denounce what he called a violent coup, as his official residence, his vast, colonnaded office complex and other once impregnable centers of power fell without a fight to throngs of joyous citizens stunned by their triumph.

“As President Yanukovych’s nemesis, former Prime Minister Yulia V. Tymoshenko, was released from a penitentiary hospital, Parliament found the president unable to fulfill his duties and exercised its constitutional powers to set an election for May 25 to select his replacement. But with both President Yanukovych and his Russian patrons speaking of a ‘coup’ carried out by ‘bandits’ and ‘hooligans,’ it was far from clear that the day’s lightning-quick events were the last act in a struggle that has not just convulsed Ukraine but expanded into an East-West confrontation reminiscent of the Cold War.

“In the capital, protesters carrying clubs and some wearing masks were in control of the entryways to the presidential palace Saturday morning, and watched as thousands of citizens strolled through the grounds, gazing in wonder at the mansions, zoo, golf course and enclosure for rare pheasants, set in a birch forest on a bluff soaring above the Dnieper River.” New York Times, February 22^nd.

Think it’s over? In 1956, as Hungarians celebrated their overthrow of the Communist incumbents, Soviet troops and tanks invaded and crushed the revolution (above), reinstalling the puppet communist regime. Could Russia be contemplating a parallel move? If asked by Yanukovych to intervene? Do they have to wait until the Olympics are over? Or will they relent and let this pro-
Western rebel force take control of this neighboring country, where about 7.7 million (out of 46 million) ethnic Russians live? Will the West counter if the Russian military attacks? Applies other non-military sanctions? Stay tuned. The fat lady is nowhere near the microphone!

I’m Peter Dekom, and remember that Russian President Vladimir Putin doesn’t tolerate humiliation very well.

Ukraine Your Neck, I Cut It Off!

When the Soviet Union ceased to exist on December 26, 1991, 15 new nations were born (reborn?), although by far the biggest was the new Russian Republic (11 above, currently with approximately 144 million people). With about 46 million people, Ukraine (14 above) was leaning towards the neighboring growth areas of the European Union, and while the eastern section of that country is heavily ethnically Russian (where most of the nation’s 7.7 million ethnic Russians live), the call of Europe grew louder over the years.

What really rubbed salt in Ukrainian wounds was the alarming growth of neighboring Poland at it became a part of the European Union. Somehow, this former satellite even missed the big recession: “With much of Europe still struggling to recover from the impact of the 2008 financial crisis, Poland stands out as an unlikely island of economic success, a place where companies and individuals plan for growth rather than decline. In 2009, when the gross domestic product of the European Union contracted by 4.5 percent, Poland was the only country in the union to see its economy grow, by 1.6 percent. The EU economy as a whole remains smaller than it was at the beginning of 2009 and isn’t expected to recover its losses until the end of [2014].” Bloomberg, November 27^th.

Meanwhile, Ukraine – an agrarian economy with large natural gas reserves – was mired in steep economic decline. Its cash reserves gone, deeply in debt, it was clear that Ukraine was facing economic collapse absent extrinsic loans or cash infusions from somewhere “out there.” Russian President, Vladimir Putin, had long dreamed of some sort of new Eurasian bloc, led  of course by mother Russia, unified against China’s rising star, America’s seemingly unending economic and political power and, most of all, the lure of the West represented by the European Union (EU).

Putin’s vehicle of choice is the Eurasian Customs Union (ECU), a free-trade association binding Russia, Kazakhstan (6 above) and Belarus (3 above). As Ukraine entertained a new relationship with the EU, Putin felt a threat but also saw an opportunity to begin to implement his notion of regional hegemony with the promise of immediate financial aid… if Ukraine would turn away from the EU and back to mother Russia. The EU, facing its own economic issues, did not counter this “offer.”

“But Putin's plan is for the ECU to grow into a ‘powerful, supra-national union’ of sovereign states like the European Union, uniting economies, legal systems, customs services and military capabilities to form a bridge between Europe and Asia and rival the EU, the US and China by 2015… While he has described the end of the Soviet Union as ‘the greatest geopolitical catastrophe of the 20th century,’ Putin denies he is seeking to resurrect it. The west is not so sure; former US secretary of state Hillary Clinton has described the Eurasian Union as ‘a move to re-Sovietise the region,’ adding ominously: ‘We know what the goal is.’”  The Guardian (UK), February 18^th.

Despite massive oil and gas reserves, untold mineral wealth and vast tracts of tundra slowly turning into new viable farmland as global warming begins to benefit Russia at the expense of most of the rest of the planet, Russia’s economy is stagnant and getting worse. Oligarchs and even middle-level businesses who didn’t play ball with Putin faced the crush of the Russian governmental fist, sometimes involving confiscation and imprisonment. Business leaders are fleeing Russia and finding ways to move whatever capital they can to safer countries. This image is not lost on the vast majority of Ukrainians, many of whom remember what it was like living under the Soviet boot.

Ukraine’s President Viktor F. Yanukovych is the man who bent and then broke under pressure from Moscow, returning his country to the Russian side of the equation. He switched off the entente to the EU. Believing that his country’s need for immediate financial aid trumped any aspiration to move to the West, he turned back to the Soviet empire, enraging too many for whom moving back to Russian hegemony was the worst possible alternative. Putin also believes that Russia’s own economic future depends heavily on the success of his expansion of the ECU. And Ukraine is considered an essential add to this union.

Ukrainian protests began and escalated. The incumbent Yanukovych regime, arguing that it was the legitimate elected government, pushed back. Protests turned violent, and the government reaction reacted with guns, killings and imprisonment for protestors, now labeled by Yanukovych and Putin as “terrorists.” The protestors escalated their violence – with their own guns, Molotov cocktails and throwing rocks. Barricades. The smell of burning tires cut through the air. Rubber bullets became real bullets. The country teetered on the brink of all-out civil war.

Putin blamed the uprising on Western interference, making covert threats and suggesting that Russia might intervene. Western Europe and the United States countered with threats that sanctions would attach to Ukrainian leaders responsible for unwarranted killings, beatings and imprisonment of innocent protestors. Visas for international travel were denied to many Ukrainian leaders. On February 17^th alone, the death toll hit 25.

Yanukovych partially succumbed to the pressure, and with the acquiescence of the protesters’ leaders, accepted a ceasefire and a general stand-down against the growing insurgency. But on February 18^th, the truce collapsed and violence reasserted itself. Civil war seemed unavoidable as representatives from Western foreign ministries rushed to Ukraine’s capital, Kiev, to try and find a peaceful solution to this train-wreck of a country.

“Also raising concerns was the fact that American officials have sought to contact senior Ukrainian military officials by phone and ‘nobody is picking up,’ a senior State Department official said. The United States has been warning against the imposition of a state of emergency ‘for months and months,’ the official said.

“Throughout the day on [February 18^th], thousands of Kiev residents braved the riot police and roaming bands of pro-government supporters to visit the besieged protest encampment in Independence Square, now a harrowing vista of charred buildings and smoldering debris… The residents brought supplies to the young men in masks and helmets who, for the authorities, are now the only true face of the country’s political tumult.

“With the subway system shut down, they walked, carrying bags of groceries, tires and scrap wood for the protesters’ protective ring of fire, and jerrycans of gasoline. Two middle-aged women walked nonchalantly down a central street of Kiev toward Independence Square, known as Maidan, pushing a shopping cart rattling with ready-made firebombs.

“The protesters are a hodgepodge of groups, some radical enough to alarm some European diplomats, who have been arguing for weeks over whether to impose sanctions on Ukrainian leaders, many of whom have assets outside the country. But few, if any, share Mr. Yanukovych’s — and also Russia’s — view that the government is simply a victim.” New York Times, February 19^th.

While most of the government’s reaction has been implemented through its police forces, the probability of full-on civil war seemed to increase as Yanukovych threated to declare a state of emergency, escalating the violence with these words from the Defense Ministry: “Military servants of the armed forces of Ukraine might be used in antiterrorist operations on the territory of Ukraine.” Assault weapons have now been widely issued to police, and real bullets are flying from both sides. The first day of post-truce deaths may have crossed the 100 mark, number that has been impossible to verify.

The U.S. reaction has been less-than-subtle: “President Barack Obama says the U.S. is outraged by violence in Ukraine and is urging President Viktor Yanukovych … to withdraw forces from downtown Kiev immediately… Obama says the U.S. urges Ukraine's military not to get involved in a conflict that must be resolved politically. He's expressing outrage about images of Ukrainian security forces firing automatic guns on Ukrainian people… Obama says in a statement that Ukraine should respect the right of protest and that protesters must be peaceful. He's calling for dialogue to reduce tensions and address the people's grievances.” Huffington Post, February 20^th.

As the Sochi Olympic Games played on, a war between Russia and the West raged in Ukraine, one that will impact global power alignments for decades to come. As Russian, EU ministers and representatives from both sides of the Ukrainian conflict wrangled all day and into the night on February 21^st, another accord – promising the early elections and constitutional reforms demanded by the protestors – offered a ray of hope to end the violence. Will it hold? Will the reforms be implemented? What exactly is Ukraine’s future? Last headline (Feb. 21^st, Huffington Post): “Thousands of protesters have remained in Kiev's main square despite a deal aimed at ending Ukraine's political crisis, in which dozens have died.”

I’m Peter Dekom, and every day diplomatic forays become explosions of military hardware as harsh conflicting political agendas escalate more quickly than ever.

The Other Polarization

We love our kids, and we know that, for the most part, they love us. But there are signs that besides the great divide between and among the cultural fortresses of the Islamic, the Russian “muscle,” rising Asian Tiger, Latin American new society and the shrinking power of the mainstream developed Western worlds, there are other mega-chasms defining our future. Nowhere is more pronounced that in the change of perception of the young from the traditional views of their elders. For countries that are graying (Japan, the United States and several European nations) – where there are more new retirees than there are new workers to support the retirement system and concomitant healthcare demands – there is an ancillary antagonism in the mix.

For those exposed to hyper-accelerating change (very much articulated in the writings of thinkers like Singularity theorist, Ray Kurzweil), events and technology shifts moving at warp speed, the notion of what constitutes a generation brings the question of what is a meaningful cohort of people to use in understanding our demographic segments. Boomers? 20 years is peachy. But as you slide into younger age-groupings, that long time period just isn’t relevant anymore. In fact, there is a good case to be made that for those born today, the relevant cohort could easily be 3 to 5 years!

Think about ancient history: the Vietnam War, the first use of “mobile phones,” man’s first walk on the Moon, the formation of the European Union, the fall of the Soviet Union, the Gulf War, the ascent of China into hyper-modernity… and the near ancient history: 9/11 attack on the Twin Towers and the Pentagon, the beginning of the Iraqi and Afghani wars, etc. Add in the proficiency of the ultra-young in the technology that surrounds them and was developed in their lifetimes: Tablets, rich media capacity on smart phones, content without traditional televisions, loss of fax machines and landlines, Twitter, Instagram, and acronyms that parents cannot fathom.  The Arab Spring, protests and continued expression of revolution and dissatisfaction all over the world are spoon-fed by social media.

An intergenerational communications disconnect is nothing new in our experience. Teenagers rebel and define their “cool” away from parental values, only to grow into “older” traditional roles as the years pass, and as they too become parents. But where the older generation imposes a police state to crush the hope and aspirations of the young, perhaps this pattern might slowly be broken in more than one country on earth. Take modern Egypt for example, where the young are railing and openly protesting – and getting beaten, occasionally shot and more frequently arrested – against the government’s clampdown on personal freedoms.

“After attending three meetings about the issue at the presidential palace in recent weeks, Mr. Ghazaly Harb, a 35-year-old political organizer, rejected the latest invitation because, he said, the authorities have not heeded advice to stop arresting so many young people, or at least to alleviate the grim conditions in the jails where they are held. Instead, the police arrested scores more, including friends of his who were involved in organizing the Arab Spring uprising here.

“‘A lot of youth groups are saying, ‘We cannot come and sit with you like this while our colleagues are behind bars — we cannot find this ethical,’ ’ said Mr. Ghazaly Harb, who played a prominent role in the 2011 uprising against the rule of President Hosni Mubarak and then campaigned for the removal of Mr. Mubarak’s Islamist successor, Mohamed Morsi of the Muslim Brotherhood.

“A growing number of young Egyptians say the government’s heavy-handed crackdown on any opposition is widening a generation gap, which poses a longer-term threat to stability.

“Three out of four Egyptians are under 40, and more than two out of three are under 35. With the government’s most important leader, Field Marshal Abdul-Fattah el-Sisi, retracing the 60-year-old footsteps of former President Gamal Abdel Nasser — even flying to Moscow last week to try to restart arms deals that were last seen at the height of the Cold War — young bloggers and activists are complaining that they feel caught in a time warp.

“They are lashing out at their parents’ whole generation, which presided over three decades of economic, cultural and political stagnation and now seems to be repudiating the 2011 uprising for interrupting that stasis.” New York Times, February 16th. There are so many factors wedging us apart without this excessive use of violence, religious tolerance, climate change, redefining human rights… that we really need to find reasons why we need to hold together to meet the global challenges that will really impact our future lives. We need to stop crushing those we disagree with. There are other answers.

I’m Peter Dekom, and we are truly too focused on our differences and ignoring our common ground to make coping with the real challenges of the now and the future effective.

Cities, Climate and Costs

Austerity and climate change make horrible bedfellows. Federal disaster relief is the crème-de-la-crème of climate-driven revenue support. Whether it is in response to powerful slams – like Hurricane Katrina and Superstorm Sandy – or the reaction to interminable drag-outs of drought and water shortages – federal relief is clearly essential to many communities hoping to survive and perhaps “re-prosper” in these climate-altered times.  Research into hydrology, alternative energy, developing drought-resistant crops, issues concerning battery efficiency and power transmission and even disease control are also heavily dependent on federal research dollars. Federal dollars for interstate infrastructure build-outs and repairs are necessary but woefully inadequate.

Drop down to the state level, and the ability to generate the kinds of local relief is impaired by the tax-generation reduction from unemployment realities or the fact that most of the new jobs that have emerged primarily in the lower-paid segments of our earning power, has hurt states cope with basics – education and infrastructure being the giant sacrificial lambs. For those finally able to generate modest budget surpluses, debates on what to do with recent windfalls (California being at the top of that conundrum discussion) – reallocate to programs cut back in horrible times or put some money aside for the inevitable downslide – are tearing legislators and governors apart.

But by the time you drop down to the local, usually city, level, it seems abysmally clear that this is where the pain is the greatest. From out-and-out bankruptcy – the plight of modern Detroit – to total unpreparedness for climate-change harshness, cities seem to be the weakest link in our financial capacity to deal with the cost of these seemingly irreversible weather patterns of destruction. Struggling with huge public sector pension commitments made in better times, particularly to uniformed services, cities have decreasing discretionary ability to deal with the costly unexpected consequences of new weather extremes.

But old man winter seems to have been exercising in that big weather gymnasium in the sky. His strength has generated a series of polar vortexes and rolling snow and ice storms, carried by the “big dip” in the Gulf Stream which has itself been shoved southwards by high pressure systems (read: temperatures that are 30 or 40 degrees warmer than normal) built up in places like Alaska, northern Canada and Greenland, that have serially decimated the Midwest, the Eastern Seaboard and even the deep South.

As power poles in the Atlanta, Georgia area succumbed to ice-crushed tree branches and power lines that were never designed for such extremes. As homeowners faced exploding plumbing systems from frozen pipes – have lost the necessary power to keep them at a non-freezing level – entire city systems have collapsed under a macro-application of the same unanticipated pounding of weather extremes. And when you picture how the United States was built over time, you know that the oldest infrastructure, water supply and sewage systems started in the east, moving to the Chicago area and the south and then west, you can pretty much guess where the infrastructure systems are most badly in need of replacement.

“With revenues and staffing still below pre-recession levels, many local and state governments face a new financial strain from storm-related increases in spending on overtime pay, contractors and supplies... ‘Cities still do not have a lot of cash available, so this particular storm season is having a really severe impact on their budgets,’ said James Brooks, a director for community development and infrastructure at the National League of Cities. ‘We’ve also had many years of disinvestment in things like roads, bridges, water and sewer systems, which makes them more vulnerable when something like this happens.’”

“Stephanie A. Miner, the Syracuse mayor, said such things are too often overlooked when politicians want to spend money on economic development. ‘You don’t cut ribbons for new water mains, but that’s really what matters,’ she said… Northern regions tend to have older pipes and bridges, while areas farther south tend to be ill-equipped for snow drifts and subfreezing temperatures that can snarl traffic and buckle pavement. Officials around the country said the costs would be steep, but many said they would not worry about tabulating them until the crisis was over.

“‘We don’t ask those questions, but we do keep receipts,’ Gov. Pat McCrory of North Carolina said in an interview. ‘At this point in time, you’re putting out the fires.’ He said he expected to tap into the state’s emergency fund to pay for storm response. Local governments will also have to bear some of the burden, he said, and should not expect the state to pick up the whole tab… Whoever is paying, the repair work will be extensive and expensive.

“In Baltimore, 353 water mains ruptured in January, about one-third as many as in all of 2013. South Carolina officials estimated that a single weather system last month drained $2 million from the state’s budget. A 137-year-old main that popped in Lower Manhattan turned some of the most stylish streets in Greenwich Village into a temporary Venice, and a break in Boston’s Chinatown nearly swallowed a public works truck.

“Chicago budgeted $20 million for 2014 to plow snow and salt roads, but it has already spent $25 million. City crews are filling potholes at double the rate of last year — which means buying twice as much patching material for that purpose — yet drivers are still doing what look like drunken swerves to avoid yawning gaps in the streets. So far, according to the National Weather Service, the city has had its third-snowiest and fourth-coldest winter since the service began keeping track in 1872.” New York Times, February 15th.

That we are bursting with pride over our fracking-driven ability to generate increasing supplies of domestically extracted fossil fuels, taking big slab of pressure off the cost of energy but equally seriously deincentivizing the move to energy alternatives that do not accelerate the creation of greenhouse emissions from burning fossil fuels, is nothing short of shocking. How much more will we pay, in lifestyle and hard dollars, for not addressing climate change at its core? I would suspect a huge multiple of any savings we may think we are implementing by finding more oil and natural gas to burn.

Nothing drilled our massive stupidity home more than Rep. Marsha Blackburn (R-TN), Vice Chair of the House Energy & Commerce Committee, speaking on NBC’s Meet the Press (February 15th) and citing as fact, ignoring well over 95% of established scientists who have considered the issue, beliefs of a really, really few academic skeptics that global climate is simply a natural phenomenon that is not materially influenced by human energy use. That such idiots even exist is bad enough, but that they are elected leaders in positions of serious responsibility is nothing short of appalling.

I’m Peter Dekom, and it seems clear that as stupid and short-sighted as individual human beings can get, those traits become outright deadly when the apply to society as a whole.