The essential paradox with affordable housing is that everyone is in favor of it in theory--but no one wants the value of any property they have invested in to decline.
Last fall, OregonPEN and others helped sponsor an Oregon tour for Chuck Marohn, founder of the national membership nonprofit "Strong Towns," a tiny outfit that has brought more clear thinking and profound insight into national conversation about urban planning and development in a few years than any convention center full of developers, financiers, contractors, lenders, and government officials have since 1945.
Marohn spent a few days in Portland before going to spend a day in Salem and visit towns like Newberg and Independence as well. He penned a powerful series of essays over the next few weeks, reflecting on causes and possible treatments (he would reject the idea of "cures") for the affordability crisis that the Legislature is trying to grapple with.
This series is Strong Towns at its best, iconoclastic, penetrating, deceptively simple prose, and discomfiting to sacred cows and conventional wisdom on the right, left, and center. The entire series is reprinted in this issue of OregonPEN, in hopes that some among the Legislature will read and consider a better approach to housing affordability than the current ones, which are mostly variations on a theme of trying to control a powerful automobile by stomping on the brakes and the accelerator as hard as possible while at the same time looking only at the rear-view mirror.
What's the matter with Portland?
Last week was my first experience with Portland, Oregon. We've been trying to schedule a Strong Towns event there for some time so a trip has been long overdue, but still. When I was in graduate school pursuing a degree in urban and regional planning, it seemed like one out of four lectures contained Portland as a case study and that at least half of my class intended to move there upon graduation. It has a certain lore in my mind.
From an urban design standpoint, downtown Portland didn't disappoint. It's a planner's Disneyland. Block after block of the consistently best urban form I've experienced in North America. I spent a lot of time just walking around and taking it all in. Very impressive.
And perhaps it was the unquestionable greatness of the downtown that made most everything outside of it seem really bad in comparison (although there were some bright pockets there too). Or perhaps it actually was really bad. I had three forays into the outskirts, two by automobile and one by rail, and I was struck, not only by how ordinary by North American standards most of it was, but also by how run down it felt.
We took the MAX -- Portland's light rail system -- out to neighboring city of Gresham.
Again, the urban design of each rail stop was amazing; there are clearly some brilliant people working on transportation there.
Outside of the right-of-way, however, things got really bleak. For miles along the route, within walking distance of many of these nice rail stops, the housing looked run down and neglected.
It was hard to reconcile what I was seeing with what I was hearing. I was repeatedly told that affordable housing was a huge problem. I met some neighborhood activists in Gresham, one in particular who told me that he used to live near the downtown and kept getting forced further and further out because he couldn't afford the housing. In my tour, I was shown building after building -- all very low value and some quite derelict -- with some enormous price tags attached, millions of dollars for structures a stiff wind away from being condemned.
If housing values are so high, and demand is so high, why isn't the housing stock nicer? Why were many people not maintaining their yards, keeping the paint up and doing the little things you'd expect to see in a place where modest homes were selling for prices well into six figures?
I think one possible answer to these questions gives a clue to the unaffordable housing problem facing Portland and a number of other cities. Before we get into that, however, I'd like to take some time to review -- and question -- the standard reasons given for why housing in Portland is so expensive.
1. So many people want to live here and they'll pay anything because Portland is so nice.
I'm always reflexively skeptical of this kind of thinking. I want to live here and am willing to pay high prices to do so and thus others must be making a similar decision. This reasoning can give us blinders that keeps us from realizing that different people do different things for different reasons, especially those not in our own economic strata.
“This reasoning can give us blinders that keeps us from realizing that different people do different things for different reasons, especially those not in our own economic strata.”
Case in point, there was nothing really nice about Gresham. In fact, it was not really nice at all. Why are all these people willing to pay inflated prices to live in Gresham? I don't think it is because they love living 35 minutes by train from Portland. It's not like the people I saw there were living in small, overpriced apartments because they valued the opportunity to ride the MAX into downtown, sip a local latte and eat at a food truck.
Put another way, Portland may be nice and the culture may be great for some, but there are a large number of people who are paying really high prices for sub-par housing and an experience they could get far more affordably somewhere else. While it is a happy notion for people in Portland to believe that they're so wonderful -- and I don't ridicule because, as a Minnesotan, I know everyone living here is well above average -- it doesn't make any sense as the influence of a broad economic trend.
As I've said before, I absolutely can't get enough lobster at $1 per pound. At $25 per pound, I'm more discriminating. At $50 per pound, I'll stick with hamburger. Love of something can drive a market, but only so far.
2. We are not building enough housing to meet demand.
This is the more intellectually rational argument and I heard it a lot. Essentially, there is a supply and demand curve problem. Too much demand and not enough supply thus higher prices. The answer then is to build a lot more housing and eventually....what? Reverse the Portland housing bubble and bring housing more in line with wages? Slow the increases so that people scraping by can continue to scrape by?
I don't buy this argument either. Yes, supply and demand curves are real and the demand for housing certainly drives up price, but I don't find this to be the cause of sustained massive price increases. Supply and demand curves suggest that, when prices increase, demand will decrease when supply stays constant. You can't sustain increasing demand while also sustaining increasing prices and increasing supply. You can do it for a while, but not over many, many years.
This logic would have us believe that, if Portland housing prices fell by 25%, instead of 10,000 people per year planning to move to Portland (supposedly -- more on this in a follow up post), 20,000 people or more would show up year after year until housing prices went back up to what people were willing to pay to live in such an amazing place. Maybe someone can put together a model that pretends to demonstrate this; I don't find the argument credible.
3. It's cheaper than San Francisco.
I heard this one a couple of times: people from San Francisco look at Portland as a huge bargain and are bidding up the prices. It felt like an old wives' tale, something that someone heard or perhaps even experienced once or twice that has now become legend throughout the community in complete disproportion to its actual influence.
Let's say a large percentage of the (supposedly) 10,000 people per year I was repeatedly told are moving to Portland come from San Francisco and other areas with over-inflated housing markets. The theory then is that they are influencing peak prices which is having an economic trickle down effect to all these other marginal places? Again, I think that is a comfortable theory and if I was in real estate or development I would certainly want people to believe it, but it doesn't explain high prices at the margins. Luxury condos: sure. Dilapidated hotels renting for $2,500 per month for a two bedroom: not credible. Something else is keeping the market from finding a lower equilibrium.
4. The Urban Growth Boundary creates artificial scarcity and drives up price.
This is the Randall O'Toole argument and I've thrown it in just so it's not brought up later. It's a ridiculous argument to anyone who has gotten out of the ivory tower, freed themselves of dogma and actually walked around the areas outside of Portland's downtown. There's so much space, so much underutilized property, that it's a ludicrous notion that land scarcity is part of the problem.
“The highest valued real estate in Portland is in the core downtown. That’s what the market is demanding.”
But Chuck...without greenfield development we can't build the auto-oriented, single-family homes that the market is demanding. It's such a joke. That's what it is valuing most. If it was just a matter of meeting a massive demand, you would never build single-family homes on cul-de-sacs.
The only reason that is even a lament is because a certain kind of developer with a certain kind of financing knows how to make nearly-guaranteed profits delivering it. It's a financial train wreck and, if Portland can avoid it, they will be much better off.
If there is a lack of anything -- and I am really not confident that there truly is -- it certainly is not land for development.
So what is going on? In my next article, [Distorting Housing Prices, below] I'll put forth an argument that the way Portland has done its rail investments along with the planning theories they've adopted on transit oriented development have combined with a social stickiness in housing to artificially inflate Portland's housing market in a way that is really dangerous. Those dogmatically committed to a certain set of beliefs and/or outcomes in this debate may want to skip my next few posts. If you're a planner, this could be a little depressing. The theories I outlined above are far too comforting and convenient. You've been warned.
If you have your own theory, I'd love to hear it.
Distorting Housing Prices
Two weeks ago I wrote about all the ways people explain the very high housing prices in a place like Portland, Oregon, and why I found those explanations lacking.
While Portland is nice, it's not so extraordinarily nice as to defy natural market mechanisms. Portland could build more housing, but there's no evidence that housing is not keeping up with demand at current prices. Yes, Portland is cheaper than San Francisco, but so are a lot of places that are not experiencing such huge distortions. And there is decades -- perhaps centuries -- worth of developable property within the current urban growth boundary; the UGB is not creating an artificial scarcity.
So what is going on?
There are two parts to this conversation. One is psychological and one is financial. I've chosen to deal with the financial today and will tie in the essential psychological element in a follow up.
To explain the financial, I'm going to present a hypothetical situation that I've seen in Portland as well as other bizarre housing markets like Austin, Texas (where I'll be this week) and Northern California.
Consider three adjacent parcels of identical size, shape and all other defining characteristics. One contains a single family home that was built prior to the construction of Portland's light rail line. The second is a vacant lot. The third parcel contains a condominium unit that was built along the rail corridor consistent with the theory of Transit Oriented Development (TOD), the idea of promoting increased density in areas where significant transportation investments have been made (i.e. "build it and they will come").
Let's consider a situation where the vacant lot in the middle is put up for sale. What should the asking price be? The most logical way to make that determination is to look at the adjacent properties and determine how the parcel could be developed. What is its highest and best use? We see that the single family home is valued at $200,000 while the condo building is valued at $10 million.
You could look to the left and see a single family home and deduce that, if the purchaser of the parcel was going to build a single family home consistent with the local market, they could pay up to $30,000 for your parcel and still make the math work. However, if you look to the right, you'll realize that someone buying the parcel with the intention of building a condo unit could pay 50x that much, about $1.5 million.
Of course, the sale price of the parcel is going to reflect the highest reasonable possible use.
With the TOD regulations in place encouraging the maximum use of that rail investment, that means the vacant parcel is going to sell for $1.5 million, a nice haul for the lucky individual who wound up with land near the rail line (I'm assuming there was no assessment when the rail line was built) and sold before the real estate bubble burst (more on that later).
Let's turn our attention now to that single family home. It now sits next to a vacant lot worth $1.5 million and a condo unit worth $10 million. How much is that single family home worth?
Whatever the answer is, we can clearly see that it's not worth $200,000 anymore.
With the vacant lot going for $1.5 million, all of the value of the single family home is now in the land. The home itself is essentially worthless, a scrape off building that actually lowers the value of the property due to the demolition costs.
The single family home in this situation is worth nearly the same as the vacant lot, $1.5 million.
In my next article, [Suspicious Economics in Portland, below] I'm going to explain how these elevated values get transmitted outside of the TOD areas, but before I finish today, I want to point out how this financial mechanism explains two unique features in cities where this is happening.
I mentioned last week that I was shocked by how nice the nice parts of Portland were and how bad the bad parts of Portland were. There wasn't a lot in between, at least not that I saw. I believe that is because the development approach I've explained today represents an all-or-nothing, binary kind of endeavor. If you owned that single family home, would you install granite counter tops? Would you put in a Jacuzzi tub? Would you do an addition to create a theater room? Of course not. You own a home that's worth over a million dollars, yet it has none of the things a million dollar home would have and the reason is simple: you would never get that money back. The house is going to get torn down whether it has granite counter tops or not. Adding them may marginally improve your life, but it doesn't change the value and thus is a bad investment.
“The land values are so high, and the building values comparatively so low, that it actually makes financial sense for the very affluent to buy the parcel, tear down the building and build their own multi-million dollar home.”
As is mowing the yard or picking up the trash, I'll note.
You see this artificial distortion creating all kinds of unnatural side effects, such as the McMansion scrape off. The land values are so high, and the building values comparatively so low, that it actually makes financial sense for the very affluent to buy the parcel, tear down the building and build their own multi-million dollar home. That kind of thing may seem normal to those that have grown accustomed to it, but historically it's an aberration.
One last thing to note: If every parcel in Portland (or Austin or Northern California) that had unnaturally elevated land values were to be redeveloped to its highest and best use—the use that would justify those property values—then Portland would need millions more people. Perhaps tens of millions. That will not happen in any kind of reasonable timeframe so what is going to happen -- what must happen -- is that, at some point, supply will exceed demand and prices will fall dramatically. Everyone who sold before the inflection will be huge winners (condo-inflated prices). Everyone who sells after will get normal single-family home prices.
It's just like a stock market bubble with all the animal spirits and irrational exuberance, except for the fact that housing prices, like wages (but unlike stocks) are sticky. More on that in a later article.
And by the way, if you're new to Strong Towns, don't start thinking that I'm anti-transit. I'm very much not. What I'm against is the build-it-and-they-will-come gambling and the market-distorting theories that go along with it. I also find immoral a system of local government finance that benefits -- by creating financial bubbles -- today's office holders and bureaucrats at the expense of tomorrow's America.
Suspicious economics in Portland
I'm hearing the frustration of many of you regarding my two articles on housing affordability in Portland (What's the matter with Portland and Distorting Housing Prices). In the history of Strong Towns, I've gotten this kind of feedback every time I've encountered a deeply held belief. And really, it's the deeply held belief -- the dogmatic adherence as if to a religious doctrine -- that raises my alarm bells.
When I'm in Portland and everyone tells me how much Portland is growing, I find it interesting. When the issue of housing affordability comes up again and again, it is always tied to the agreed upon narrative that Portland is growing and will continue to grow, world without end. When I see neighborhoods where the homes are $500,000+ yet they look like they should be $50,000, the narrative is, of course, Portland is growing. When I run into people making minimum wage working retail and they are somehow living in Portland despite paying thousands a month in rent, well....Portland is growing.
The thing that really makes me skeptical is that the "Portland is growing" narrative is just really convenient for those who hold that belief. Who would not want their choice of places to reside confirmed by hordes of people being willing to pay ever more irrational prices for housing? Of course they want to live here, Portland is growing.
And don't we kind of need to believe that? I mean, I'm going to be more willing to pay exorbitant prices for a home -- and cash out equity to make ends meet -- if I am convinced of the belief that even more irrational people will follow and take prices higher (in stock trading, we call this the greater fool theory).
"Portland is growing" is also really convenient for the local government and all of those who theorize, plan and design the systems of Portland's growth. Inflated housing prices make it tons easier to balance the annual budget; you can get used to a tax base that grows by 10% or more each year. It's fun to work with big budgets doing big projects to handle this big challenge of "Portland is growing". If we can focus on accommodating the growth that we all agree is happening -- world without end -- then we don't have to ponder very deeply the effects that our policies are having on housing affordability. High prices are obviously due to a lack of supply and so, if we want to deal with the impacts of high prices, we just continue to work harder and harder on accommodating all that growth. It's just such a comforting narrative, which is why I'm highly skeptical of it.
That and I hear the same thing in places like Austin, where I'm at today. Austin is awesome and everyone wants to be here and so, despite the laws of supply and demand and the impact that price has on reducing demand, the laws of supply and demand tell us that it is a lack of supply that is increasing price. The only way that's not an incoherent statement is if you believe that growth is a given.
Austin is growing. Portland is growing. Of course.
So I've received a number of emails on this including one yesterday with the subject line Suspicious Economics in Portland Articles. Here's what that email said:
Re: Suspicious Economics in Portland Articles
Reading your last couple of articles on Portland, I'm disappointed by the sloppy economic analysis. I say this with utmost respect for your work and Strong Towns - you've changed my mind about many things. Your analysis of supply restrictions seems to assume a fixed number of people living in Portland.
You can't sustain increasing demand while also sustaining increasing prices and increasing supply. You can do it for a while, but not over many, many years.
Portland's population has been increasing for decades now, and people and jobs are increasingly attracted to dense city centers. Both of these will move a demand curve rightward. Yes, this increases prices, and at some second-order level this might slow the growth of the demand curve, but demand has and will continue to increase. If supply is not increased commensurately, prices will continue to rise.
Then you resort to the standby that the housing market is in some sort of bubble.
Reverse the Portland housing bubble and bring housing more in line with wages?
The logic seems to be that higher prices must mean there's a bubble, but that seems silly when you look at high prices in dense cities with supply restrictions all over the world. Places with flexible supply like the sunbelt cities, Houston, or even Tokyo have (comparatively) low prices, despite huge population growth.
The answer then is to build a lot more housing and eventually....what?
Then the equilibrium point on the increasing demand curve and increasing supply curve will land at a lower (or at least slower-rising) price, and a rapidly increasing quantity. This is a much simpler argument, and it's how almost every other market for goods works, so why are you dismissing it out of hand?
See what I mean? This email is a series of very comforting assertions and beliefs. Growth is a given; it is unaffected by price. Demand is not subject to price equilibrium of the supply/demand curve, only supply is so impacted.
Chuck, it's such a simple argument, why are you dismissing it? Because it's not simple enough, it's too affirming for those who want to believe it and it doesn't adequately explain the world as I have experienced it.
In my last piece, I explained how large jumps in the development pattern -- such as those planned for Portland's many TOD sites -- dramatically distort land prices upward while unnecessarily stagnating underutilized property, land that would otherwise be improved.
In my next post, [Spiking a Rising Tide, below] I'm going to put forth my notion of how that distortion -- which is actually a simpler explanation than the entire voodoo belief system of ignoring the effect of price on demand -- is transmitted across the greater Portland area. In a subsequent post,
I'll then propose a simple set of policies that would prick Portland's housing bubble, move prices closer to their supply/demand equilibrium price point and thus restore housing affordability, albeit by negatively impacting the government's cash flow as well as the paper assets many Portlanders believe is theirs.
Spiking a Rising Tide
A wave laps up on the beach. The force of the surge pushes water up against the wet sand. The action is understandable, a rhythm that is quite predictable. Even little children find it easy to discern the areas where their feet will get wet from those places where the effort of building a sand castle won't be wasted.
Up the shore is a seawall. The waves act differently there. When the water hits the wall, it explodes upward, the force of the wave ultimately dissipated by gravity instead of friction. Kids play near the edge of the wall, but not too close (unless they want to get splashed by the mist).
Some Strong Towns readers have been frustrated with me for not acknowledging what you see as the obvious wave of growth impacting housing prices in cities like Portland and Austin. While I've said that I'm not convinced that the housing emergency in Portland in due to these causes, there is clearly a wave of demand that is putting upward pressure on price. What I've reacted to is the seawall, the self-created impediment that is dramatically forcing that wave skyward. That seawall is the city's fetish with high density development.
I've been on the road nearly all of the past two weeks and so I've not had a time to push this conversation forward at the pace many of you would like. As a makeup, today's post is going to be rather dense. As you'll see, however, the density of this post builds incrementally on what came before it; it's the next step in years of conversation we've had here. To make the point even more, this conversation is not an intellectual leap into the unknown, one that carelessly and recklessly skips over necessary iterations of development just to get to the desired end.
Last week I explained how large leaps in the development pattern -- from single family home to multi-story tower -- distorts land values and, in doing so, artificially drives up prices on lands zoned for such a leap. At the same time that a number of you were responding negatively to what I think is an obvious and hardly-even-debatable phenomenon, I was experiencing yet another example of it in San Marcos, Texas.
On a walking tour there, we strolled through blocks and blocks of gaps -- empty and underutilized lots -- just off of their core downtown. I pointed out a nice little home as an example of what the city should be striving for to fill in these gaps and then pointed to the adjacent vacant lot as the perfect place to start. That was when I was informed that the vacant lot was zoned T-5 Urban Center (2-5 story multi-family housing) and that the owner wanted $600,000 for it, making my proposed modest home financially impossible.
I asked why this land was zoned T-5 when there was so much underutilized property in the area, so much dead space. The answer was exactly what I heard in Portland and exactly what I heard in Austin: we're growing.
Supposedly there is so much demand for housing in San Marcos that T-5 zoning is needed -- all that high density development is necessary -- to meet the demand. I walked around for hours and experienced an endless amount of underutilized property, just as I had outside the cores of Portland and Austin. It was more property than would ever be utilized as T-5 and it was sitting there, high priced and waiting for the right buyer to come by and make the owner rich.
And the property owner had good reason to find this wait rational. It was reported to me that prices had been going up dramatically. There were a couple parts of town where high density development -- in this case some five story apartments -- was going on. With the land consistently going up in value and the cost to hold it minimal -- it is being taxed as raw land -- why not wait for a windfall? San Marcos is growing -- everyone knows it -- so sit back and let the growth make you rich.
This is the same thing I experienced here in my home town in a personal way over the past twenty years. My parents purchased the 80-acre Marohn homestead back when I was a little boy for something like $500 per acre. In the mid-1990's, development was taking off in the Brainerd area and raw land started to skyrocket. The narrative was that all those rich people from the Minneapolis/St. Paul area were moving up and they could afford to pay outrageous prices. Heck, they thought land was so cheap they just threw money at it.
We heard reports of land selling for $20,000 per acre. Then I, in my capacity as an engineer, worked with someone who paid the insane price of $30,000 per acre for land about a mile away from our farm. A little later, one of the old farms just up the road sold for $35,000 per acre. My parents were convinced that their much nicer property was certainly worth $40,000 per acre, at least. They still own it with the assessor having it worth six figures but with their own balance sheet valuing it in the millions.
Here's the absurd thing: there is so much land here that the price should be zero. Or, at most, the price of the land should be as if it were used for forestry, agriculture or hunting. Years ago, I did some simple math and showed some bankers that there is over 100 year's worth of supply of developed lots in the area. That excluded the raw land, land that the owners still expect to be worth millions.
John Maynard Keynes observed that wages are sticky. That is, when market conditions falter and businesses start to see profits drop, they are more apt to lay people off than they are to cut wages. People are very resistant to wage decreases because humans are wired to to be very sensitive to loss, far more than we are to gain. Freeze wages for three years and people will gripe. Cut wages for three years and they will revolt.
Land prices are subject to this same human condition. Unless forced to sell -- such as in an estate sale -- many people mentally book gains and will not sell until those gains -- or something near them -- can be realized. This is why rumors of free-spending Chinese, wealthy San Franciscans and tech workers dripping with dollars are so widespread. They are part of a cultural belief system that explain -- in an affirming way -- what we see happening.
Portland grew by 1.5% last year. These are growth rates not seen since before 2008. Just ponder that number -- 1.5% growth -- and contrast that with housing prices and rents that are growing by double digits. Portland has spent billions -- BILLIONS -- preparing for growth. They have built rail lines all over the place, built highways throughout and run thousands of miles of pipe in anticipation of growth. Yet, they can't handle 1.5% growth without blowing up housing prices?
Think of any other entity in any other realm that grows by 1.5% per year and contrast the reaction of that system with the hysteria of Portland. If this is only a 1.5% wave, it doesn't make sense. That kind of wave should roll across the sand and dissipate. Something is magnifying it.
In Portland today, there are three types places where this wave is being accommodated. The first is the core downtown, what I've called an urban planning Disneyland, where truly high demand for a unique place combine with high building costs and relative scarcity to price this area out of reach for most. The second place is in the remaining greenfield areas, where single family homes are being built in the insolvent suburban style we see all over North America. Neighborhoods are built all at one to a finished state; there is no next increment of intensity anticipated.
The third -- the spike -- is in those corridors zoned for high density, where the highest and best use is priced into the land. In these areas, the government has already made the investment -- the rail line -- and put in place the regulatory environment that has created a windfall for property owners. All those property owners need to do now is wait around until it is their turn to sell to a developer, someone ready to pay the price to build high density. In the meantime, any scarcity -- real or perceived -- just drives up the price and increases the long term payoff.
Scarcity also helps the high density developer. Assembling the land, acquiring the permits and going through the development process for a condominium tower or apartment complex involves taking on great risk over an extended period. It's best not to get too far out in front of a market -- one only growing 1.5% per year -- so that you don't get exposed if (when) there is a correction. High land prices are a bummer, but you can find good deals now and then and the high price of the finished product gives some added margin for error.
So how do we free up more raw land for development? How do we get these stagnating properties off the sidelines and into the game? How do we get developers to proceed more quickly? There is a very simple answer, but it is counter-intuitive and directly clashes with the planning profession's fetish with density.
The simple answer is downzoning.
What if along all these rail corridors and at all of these rail stops, instead of being able to build an eight-story condo unit, all a developer was allowed to build was the next increment of intensity? For most of that area, that would mean single family homes. In that case, what would happen to land prices? They would drop. They would crater, in fact. This would free up an incredible amount of land for cheap, affordable development while also taking a substantial amount of pressure off of the existing single-family neighborhoods.
But Chuck....Portland is growing (by 1.5% per year) and pretty soon all of that vacant and underutilized land is going to be built upon. Portland will be built out and we'll be pressured to extend the Urban Growth Boundary for new greenfield development. How you can possibly support single-family homes?
“There is no such thing as “built out” in a Strong Town. There is no such thing as being done.”
I'm not advocating for single family homes. I'm advocating for incremental development. Portland (and Austin and San Marcos and...) are trying to skip increments. They are trying to have a toned body without proper diet and exercise. They are trying to sprint before they have learned to crawl. They are obsessing over their theories of density and, in the process, they are stagnating their cities and leaving wide swaths of their population behind. There is no such thing as "built out" in a Strong Town. There is no such thing as being done. Cities that grow incrementally are on a continuum of improvement and so, when a block is so-called fully developed, the next increment of intensity must always be available. By right. Everywhere.
And for those of you who have suggested the last couple weeks that I'm a country bumpkin who found himself in the big city and had a sudden flash of crazy, I wrote about a floating height limit two years ago. That article also made people who have a fetish with density quite cranky with me, people who look at build-it-and-they-will-come rail investments in their cities and think the problem is the market not reacting correctly to this awesome public investment, that a little more density could sweeten the pie and get developers off the sidelines. They don't see how land speculators and developers were using the planner's zeal for density to squeeze their communities for low risk, publicly subsidized profit. The problem isn't the developer - it's the premature rail investment. Portland is an extreme example and it was that contrast that made it even more visible to me.
I know there is a lot to unpack here and I'll try -- despite an insanely busy schedule this week -- to be attentive to your comments and feedback, but let me address one final thing before signing off on this one. A comment by @Funktapus last week that received a really high number of upvotes included these rhetorical questions:
Suppose you're right and Portland has invested in transit oriented development, which by some voodoo has jacked up housing costs everywhere, snowballing the demand for more transit oriented development. What's the worst case scenario if growth abruptly halts? We are left with a bunch of high quality, sustainable, resilient neighborhoods with falling rent? That's not exactly a bad thing.
To be clear: I don't think the demand is for transit oriented development, per se. That's just the only development our fetish with density will allow us to consider in these places. You start with that given and @Funktapus's proposition becomes a self-reinforcing one. I don't start there.
Still, the worst case is we spend a couple of decades needlessly squeezing the poorest of Portland's residents further and further to the margins. We appease our guilt and anxiety over this problem by distorting the housing market further with rent controls and inclusionary zoning, things that, if they have worked at all (and I'm highly skeptical), have only worked on the margins. Planners get paid and have fun spouting Jane Jacobs while acting like Robert Moses. Developers and bankers get paid, of course. Corporations that can work at the scale demanded by Portland's development approach also do well while the small, incremental developer is squeezed out (that's okay - she can go be a barista as they are in high demand).
And after decades of squeezing, economic distortions so great that even middle class and upper middle class people find it hard to make it, the growth stops and all that inflated land adjusts back to normal prices. Hundreds of billions of dollars of wealth are lost, many decent and hardworking people are thrust into extreme financial distress and -- to make matters worse -- at the time of greatest need, the city (which is dependent on the artificially high land values for a large part of its revenue) struggles just to make their debt payments, let alone do anything to make life better for people that are suffering, the people who must -- if the place is to ever prosper again -- continue to find themselves in love with Portland, even when it isn't growing.
But yeah, at least you'll have some high density buildings to enjoy.
One of the reactions to my thoughts on Portland’s housing affordability emergency (their label) that I’ve found the most interesting is that my proposal is unworkable, Portland’s residents will never accept even small increases in density in their single-family neighborhoods. Chuck, you don’t understand the level of resistance. Better to get the most density where you can, when you can, and that is at the transit stops.
“Everywhere you turn you see Americans sacrifice their long-term interests for a short-term reward.” — Michael Lewis in Boomerang
In the Curbside Chat, I talk about the modern definition of a solutions as, “What can someone else change about what they are doing so that I don’t have to change anything about what I am doing?" We’re nearing the end of an insane election cycle where we are once again bombarded with such non-solution solutions. Benjamin Franklin never warned of a democracy where the electorate can vote themselves money, although it makes a good meme. Michael Lewis did suggest, at the end of Boomerang: Travels in the New Third World, that is precisely what we now have.
One of the key insights of Strong Towns is that our development pattern functions like a Ponzi scheme. The Suburban Experiment – development built in large blocks to a finished state – provides the illusion of wealth when everything is new and costs are low. In time, things start to go bad and the tragic truth begins to be revealed: that the long term costs of servicing and maintaining these places cannot be met by the wealth they produce. New growth and debt – mistaking insolvency for a cash flow problem – bridge the gap for a while until the growing liabilities overwhelm everything. What happens next is an open question, although we can see in places like Detroit – which got started on this experiment a couple of decades before the rest of the continent – one possible outcome.
And let me point out to the residents of Portland who believe their financial situation bears no resemblance to Detroit’s, trust me when I say that the people of 1960’s Detroit would believe the same thing about today’s Detroit. The vast majority of the land area in Portland – like practically every other city in North America – is functionally insolvent. That insolvency will come to bear at some point, and to a degree already is, so let’s stop pretending that it won’t.
I’ve said many times that the greatest challenge of this generation will be to avoid repeating the mistakes of what has come to be known as “white flight”, the abandonment of large parts of our cities by everyone except the very poor. When we concentrated poverty in our inner cities after World War II, we left people behind in neighborhoods that were largely coherent.
That was a tragedy on many levels, but it will be dwarfed by the catastrophe of abandoning poor people on the outskirts of our cities, where even during the best of times, life is despotic for people who can’t afford the high financial burn rate of such a lifestyle. Wait until those big box stores go empty, the drainage ditches and berms are overgrown with weeds and the infrastructure is no longer maintained. Again, Charlie LeDuff’s Detroit: An American Autopsy gives a firsthand account of how this is playing out in one scenario.
So please excuse me if I’m not very sympathetic to the notion that change is hard, that people who are comfortable will resist it. Of course they will. Our job as Strong Towns advocates is to find a way through that resistance, to share our message with our friends, neighbors and others in our communities, to keep bringing the conversation back to the persistent fact that our current approach is not working financially. We’re broke and so we must start thinking differently.
So I’ve suggested that all neighborhoods – those areas around our transit stops as well as the broad swatch of single family homes – should be allowed, by right, the next level of intensity in their development pattern. But no more. The ability to move to the next increment is to allow neighborhoods to mature and renew, to become antifragile by adapting over time to stress. The limit on how far of a jump can be made is an attempt to mitigate the distorting effects of our existing public investments, the build-it-and-they-will-come, winner-take-all delusion we’ve come to view as normal. It’s all about feedback loops. As Tomas Sedlacek suggests, trading growth for stability.
I want to help you think this through, to peer into the future and envision what I think – what I hope – would happen in such a system.
In the triage that will be the next generation of cities in North America – my apologies to Ed Glaeser, Richard Florida and others – there will be neighborhoods where the pipe is fixed and others where it isn’t. Where the fire department is staffed and where it is not. How do we determine which is which? Well, of course, the pipe where the rich people live will be fixed while the pipe where the poor people live will not. Let’s pretend, however, that we truly want to avoid that outcome. Let’s pretend that in enlightened places like Portland people really do care about everyone in their community (and I believe they do, in more places than just Portland).
What we should see, with my proposal (and other Strong Towns approaches), is that some neighborhoods receive a lot of incremental investment and other do not. With the high bar to development lowered – in price and in regulation – we should get a lot of Jimmy’s Pizza-scaled development. Small chaotic-but-smart stuff that seeds and reinforces a local economic ecosystem. In time, we’ll get a second generation in these places and even a third, increasing intensity in a feedback loop that mimics traditional development patterns. With each successive generation, the allowable increment climbs and so the places that people find strategic and valuable are those that will experience self-reinforcing growth.
And because it’s incremental, it doesn’t displace the way our big leaps do today; a much broader share of people share in the wealth being created. And, as we like to point out with Jimmy’s Pizza, it works at a scale that is inclusive of anyone with a dream who is willing to work hard. You know, what we Americans like to believe we are (instead of what we really are today).
In short, the system triages itself. In time, these places would (hopefully) become financially solvent, the cost of providing services easily justifiable by the tax base produced (not just the political influence). When we are forced to decide which pipe to maintain, which place to provide quality transit, where to maintain the best public safety response times, these are it. And you’ll not only have the math to back you up, you’ll have the critical mass of public support there as well.
As for those other areas….. I do not think the core of Portland will go away, although it will have to deal with the financial drag of subsidizing the transition happening on its outskirts. The rest – the neighborhoods of single family homes that reject incremental growth or are too far away from those emerging neighborhood centers to ever experience it – will go one of two ways.
Either they will wall themselves off into an affluent, yet fragile, enclave and use their political clout to try and force everyone else to continue to subsidize their preferred living arrangement. Or, their homes will go into steep decline and will eventually be used for salvage material.
Either way, we need to start framing the conversation today in terms of financial productivity. We need to drop our fetish with density, our grand dreams of converting those storage sheds and 7-11’s at each ill-conceived transit stop into a mini urban utopia, and start talking about how we build – and sustain over multiple generations – enough wealth to actually afford the places we want to inhabit.
Chuck, you don’t understand the level of resistance. No, I actually do. We need to stop talking about density and start talking about financial productivity.
Reprinted with kind permission of the author and Strong Towns, a membership organization.
The mission of Strong Towns is to support a model of development that allows America's cities, towns and neighborhoods to become financially strong and resilient. For the United States to be a prosperous country, it must have strong cities, towns and neighborhoods. Enduring prosperity for our communities cannot be artificially created from the outside but must be built from within, incrementally over time.
Bill would allow local governments to announce hearings on proposed rules via their webpages, providing better notice at a lower cost
OregonPEN was started two years ago for a number of reasons, not least of which was to help address the ongoing crisis in public funding for services for the public good. One of the ways OregonPEN proposed to address that crisis is by creating a new newspaper that would help state and local agencies and special districts be able to publish the many required public notices (over 300 statutes require publication of notices) at a fraction of the cost to publish in traditional newspapers.
Today, throughout Oregon, more than 1400 state and local governments and special districts are prisoners of monopoly newspapers that extract monopoly rents, charging hundreds or even thousands of times what it costs the publisher to deliver the notice, even as traditional newspaper circulation readership has melted down faster than ice cream in a heat wave.
There is nothing wrong with a requirement that government inform the public when it is proposing to take actions or make decisions that require or would benefit from public participation. It was a progressive idea when printed newspapers were the mass media of their day. But the world has changed dramatically since then. And now, giving notice means giving notice digitally, not in traditional newspapers.
So OregonPEN has published a new model of weekly newspaper for the digital age, providing local and transmitted news for over two years now, and OregonPEN will soon offer public and legal notices, providing governments and private individuals who have to publish a notice with a faster and better way to provide legal and public notices, and for a fraction of the cost, with the net revenue over costs going to fund public benefit programs such as Legal Aid.
Some Oregon legislators have noticed the high cost and declining utility of traditional newspapers, and they have proposed a bill to allow local governments to forego the publication of a notice about a rulemaking hearing in a traditional newspaper; instead, the local governments can publish the notice on the local government's website.
The bill is a clear sign of recognition that the age of the traditional printed newspaper as the vehicle for giving public notice is coming to an end.
79th OREGON LEGISLATIVE ASSEMBLY--2017 Regular Session
House Bill 2911
Sponsored by Representatives RESCHKE, NEARMAN; ESQUIVEL, NOSSE, Senator LINTHICUM
Authorizes local government to publish notice of public hearing regarding proposed rule on
agency’s website instead of in newspaper of general circulation.
A BILL FOR AN ACT
Relating to publication of notice of a hearing regarding a proposed rule; amending ORS 183.335.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 183.335 is amended to read:
183.335. (1) Prior to the adoption, amendment or repeal of any rule, the agency shall give notice
of its intended action:
(a) In the manner established by rule adopted by the agency under ORS 183.341 (4), which provides a reasonable opportunity for interested persons to be notified of the agency’s proposed action;
(b) In the bulletin referred to in ORS 183.360 at least 21 days prior to the effective date;
(c) At least 28 days before the effective date, to persons who have requested notice pursuant to
subsection (8) of this section; and
(d) Delivered only by electronic mail, at least 49 days before the effective date, to the persons
specified in subsection (15) of this section.
(2)(a) The notice required by subsection (1) of this section must include:
(A) A caption of not more than 15 words that reasonably identifies the subject matter of the
agency’s intended action. The agency shall include the caption on each separate notice, statement, certificate or other similar document related to the intended action.
(B) An objective, simple and understandable statement summarizing the subject matter and
purpose of the intended action in sufficient detail to inform a person that the person’s interests may be affected, and the time, place and manner in which interested persons may present their views on the intended action.
(b) The agency shall include with the notice of intended action given under subsection (1) of this
(A) A citation of the statutory or other legal authority relied upon and bearing upon the
promulgation of the rule;
(B) A citation of the statute or other law the rule is intended to implement;
(C) A statement of the need for the rule and a statement of how the rule is intended to meet the
(D) A list of the principal documents, reports or studies, if any, prepared by or relied upon by
the agency in considering the need for and in preparing the rule, and a statement of the location
at which those documents are available for public inspection. The list may be abbreviated if necessary, and if so abbreviated there shall be identified the location of a complete list;
(E) A statement of fiscal impact identifying state agencies, units of local government and the
public that may be economically affected by the adoption, amendment or repeal of the rule and an estimate of that economic impact on state agencies, units of local government and the public. In considering the economic effect of the proposed action on the public, the agency shall utilize available information to project any significant economic effect of that action on businesses which shall include a cost of compliance effect on small businesses affected. For an agency specified in ORS 183.530, the statement of fiscal impact shall also include a housing cost impact statement as described in ORS 183.534;
(F) If an advisory committee is not appointed under the provisions of ORS 183.333, an explanation as to why no advisory committee was used to assist the agency in drafting the rule; and
(G) A request for public comment on whether other options should be considered for achieving
the rule’s substantive goals while reducing the negative economic impact of the rule on business.
(c) The Secretary of State may omit the information submitted under paragraph (b) of this sub-
section from publication in the bulletin referred to in ORS 183.360.
(d) When providing notice of an intended action under subsection (1)(c) of this section, the
agency shall provide a copy of the rule that the agency proposes to adopt, amend or repeal, or an explanation of how the person may acquire a copy of the rule. The copy of an amended rule shall show all changes to the rule by striking through material to be deleted and underlining all new material, or by any other method that clearly shows all new and deleted material.
(3)(a) When an agency proposes to adopt, amend or repeal a rule, it shall give interested persons
reasonable opportunity to submit data or views. Opportunity for oral hearing shall be granted upon request received from 10 persons or from an association having not less than 10 members before the earliest date that the rule could become effective after the giving of notice pursuant to subsection (1) of this section. An agency holding a hearing upon a request made under this subsection shall give notice of the hearing at least 21 days before the hearing to the person who has requested the hearing, to persons who have requested notice pursuant to subsection (8) of this section and to the persons specified in subsection (15) of this section. The agency shall publish notice of the hearing in the bulletin referred to in ORS 183.360 at least 14 days before the hearing. The agency shall consider fully any written or oral submission.
(b) If an agency is required to conduct an oral hearing under paragraph (a) of this subsection, and the rule for which the hearing is to be conducted applies only to a limited geographical area within this state, or affects only a limited geographical area within this state, the hearing shall be conducted within the geographical area at the place most convenient for the majority of the residents within the geographical area. At least 14 days before a hearing conducted under this paragraph, the agency shall publish notice of the hearing in the bulletin referred to in ORS 183.360 and:
(A)(i) In a newspaper of general circulation published within the geographical area that is affected by the rule or to which the rule applies[.]; or
(ii) If a newspaper of general circulation is not published within the geographical area that is
affected by the rule or to which the rule applies, [the publication shall be made] in the newspaper
of general circulation published closest to the geographical area; or
(B) If the agency is a local government, as defined in ORS 174.116, on the agency’s website.
(c) Notwithstanding paragraph (a) of this subsection, the Department of Corrections and the State Board of Parole and Post-Prison Supervision may adopt rules limiting participation by inmates in the proposed adoption, amendment or repeal of any rule to written submissions.
(d) If requested by at least five persons before the earliest date that the rule could become effective after the agency gives notice pursuant to subsection (1) of this section, the agency shall
provide a statement that identifies the objective of the rule and a statement of how the agency will subsequently determine whether the rule is in fact accomplishing that objective.
(e) An agency that receives data or views concerning proposed rules from interested persons
shall maintain a record of the data or views submitted. The record shall contain:
(A) All written materials submitted to an agency in response to a notice of intent to adopt,
amend or repeal a rule.
(B) A recording or summary of oral submissions received at hearings held for the purpose of
receiving those submissions.
(C) Any public comment received in response to the request made under subsection (2)(b)(G) of
this section and the agency’s response to that comment.
(D) Any statements provided by the agency under paragraph (d) of this subsection.
(4) Upon request of an interested person received before the earliest date that the rule could
become effective after the giving of notice pursuant to subsection (1) of this section, the agency shall postpone the date of its intended action no less than 21 nor more than 90 days in order to allow the requesting person an opportunity to submit data, views or arguments concerning the proposed action. Nothing in this subsection shall preclude an agency from adopting a temporary rule pursuant to subsection (5) of this section.
(5) Notwithstanding subsections (1) to (4) of this section, an agency may adopt, amend or sus-
pend a rule without prior notice or hearing or upon any abbreviated notice and hearing that it finds practicable, if the agency prepares:
(a) A statement of its findings that its failure to act promptly will result in serious prejudice to
the public interest or the interest of the parties concerned and the specific reasons for its findings
(b) A citation of the statutory or other legal authority relied upon and bearing upon the
promulgation of the rule;
(c) A statement of the need for the rule and a statement of how the rule is intended to meet the
(d) A list of the principal documents, reports or studies, if any, prepared by or relied upon by
the agency in considering the need for and in preparing the rule, and a statement of the location
at which those documents are available for public inspection; and
(e) For an agency specified in ORS 183.530, a housing cost impact statement as defined in ORS
(6)(a) A rule adopted, amended or suspended under subsection (5) of this section is temporary
and may be effective for a period of not longer than 180 days. The adoption of a rule under this
subsection does not preclude the subsequent adoption of an identical rule under subsections (1) to (4) of this section.
(b) A rule temporarily suspended shall regain effectiveness upon expiration of the temporary
period of suspension unless the rule is repealed under subsections (1) to (4) of this section.
(7) Notwithstanding subsections (1) to (4) of this section, an agency may amend a rule without
prior notice or hearing if the amendment is solely for the purpose of:
(a) Changing the name of an agency by reason of a name change prescribed by law;
(b) Changing the name of a program, office or division within an agency as long as the change
in name does not have a substantive effect on the functions of the program, office or division;
(c) Correcting spelling;
(d) Correcting grammatical mistakes in a manner that does not alter the scope, application or
meaning of the rule;
(e) Correcting statutory or rule references; or
(f) Correcting addresses or telephone numbers referred to in the rules.
(8)(a) Any person may request in writing that an agency send to the person copies of the
agency’s notices of intended action issued under subsection (1) of this section. The person must
provide an address where the person elects to receive notices. The address provided may be a postal mailing address or, if the agency provides notice by electronic mail, may be an electronic mailing address.
(b) A request under this subsection must indicate that the person requests one of the following:
(A) The person may request that the agency mail paper copies of the proposed rule and other
information required by subsection (2) of this section to the postal mailing address.
(B) If the agency posts notices of intended action on a website, the person may request that the
agency mail the information required by subsection (2)(a) of this section to the postal mailing address with a reference to the website where electronic copies of the proposed rule and other information required by subsection (2) of this section are posted.
(C) The person may request that the agency electronically mail the information required by
subsection (2)(a) of this section to the electronic mailing address, and either provide electronic
copies of the proposed rule and other information required by subsection (2) of this section or provide a reference to a website where electronic copies of the proposed rule and other information required by subsection (2) of this section are posted.
(c) Upon receipt of any request under this subsection, the agency shall acknowledge the request,
establish a mailing list and maintain a record of all mailings made pursuant to the request. Agencies may establish procedures for establishing the mailing lists and keeping the mailing lists current. Agencies by rule may establish fees necessary to defray the costs of mailings and maintenance of the lists.
(d) Members of the Legislative Assembly who receive notices under subsection (15) of this section may request that an agency furnish paper copies of the notices.
(9) This section does not apply to rules establishing an effective date for a previously effective
rule or establishing a period during which a provision of a previously effective rule will apply.
(10) This section does not apply to ORS 279.835 to 279.855, 279A.140 to 279A.161, 279A.250 to
279A.290, 279A.990, 279B.050 to 279B.085, 279B.200 to 279B.240, 279B.270, 279B.275, 279B.280,
279C.360, 279C.365, 279C.370, 279C.375, 279C.380, 279C.385, 279C.500 to 279C.530, 279C.540, 279C.545, 279C.550 to 279C.570, 279C.580, 279C.585, 279C.590, 279C.600 to 279C.625, 279C.650 to 279C.670 and 279C.800 to 279C.870 relating to public contracts and purchasing.
(11)(a) Except as provided in paragraph (c) of this subsection, a rule is not valid unless adopted
in substantial compliance with the provisions of this section in effect on the date that the notice
required under subsection (1) of this section is delivered to the Secretary of State for the purpose
of publication in the bulletin referred to in ORS 183.360.
(b) In addition to all other requirements with which rule adoptions must comply, a rule is not
valid if the rule has not been submitted to the Legislative Counsel in the manner required by ORS
(c) A rule is not subject to judicial review or other challenge by reason of failing to comply with
subsection (2)(a)(A) of this section.
(12)(a) Notwithstanding the provisions of subsection (11) of this section, but subject to paragraph
(b) of this subsection, an agency may correct its failure to substantially comply with the requirements of subsections (2) and (5) of this section in adoption of a rule by an amended filing, as long as the noncompliance did not substantially prejudice the interests of persons to be affected by the rule.
(b) An agency may use an amended filing to correct a failure to include a fiscal impact statement in a notice of intended action, as required by subsection (2)(b)(E) of this section, or to correct
an inaccurate fiscal impact statement, only if the agency developed the fiscal impact statement with the assistance of an advisory committee or fiscal impact advisory committee appointed under ORS 183.333.
(13) Unless otherwise provided by statute, the adoption, amendment or repeal of a rule by an
agency need not be based upon or supported by an evidentiary record.
(14) When an agency has established a deadline for comment on a proposed rule under the pro-
visions of subsection (3)(a) of this section, the agency may not extend that deadline for another
agency or person unless the extension applies equally to all interested agencies and persons. An
agency shall not consider any submission made by another agency after the final deadline has
(15) The notices required under subsections (1) and (3) of this section must be given by the
agency to the following persons:
(a) If the proposed adoption, amendment or repeal results from legislation that was passed
within two years before notice is given under subsection (1) of this section, notice shall be given to the legislator who introduced the bill that subsequently was enacted into law, and to the chair or cochairs of all committees that reported the bill out, except for those committees whose sole action on the bill was referral to another committee.
(b) If the proposed adoption, amendment or repeal does not result from legislation that was
passed within two years before notice is given under subsection (1) of this section, notice shall be
given to the chair or cochairs of any interim or session committee with authority over the subject
matter of the rule.
(c) If notice cannot be given under paragraph (a) or (b) of this subsection, notice shall be given
to the Speaker of the House of Representatives and to the President of the Senate who are in office on the date the notice is given.
(16)(a) Upon the request of a member of the Legislative Assembly or of a person who would be
affected by a proposed adoption, amendment or repeal, the committees receiving notice under subsection (15) of this section shall review the proposed adoption, amendment or repeal for compliance with the legislation from which the proposed adoption, amendment or repeal results.
(b) The committees shall submit their comments on the proposed adoption, amendment or repeal to the agency proposing the adoption, amendment or repeal.
The new administration's budget-writing is underway, starting with the traditional GOP "Cooking of the Books" ceremony, in which the budget writers, fabulists of the first order, assume absurdly high levels of "Growth" will result from repeating the supply side playbook (cut taxes on the wealthy, cut services to everyone else) yet again, despite an unblemished record of failure every time the drill has been run.
One of OregonPEN's favorite thinkers, actuary and analyst Gail Tverberg ("Gail the Actuary) just posted an important piece, perhaps her clearest exposition yet of why the issue we need to deal with is contraction, not growth. Her blog's subtitle is "Exploring how oil limits affect the economy" and this latest essay deftly explains the relationship.
The term "dissipative structure" is unusual, technical and highly abstract. For most readers, the term "self-organizing system" might be a suitable synonym; for those who have studied systems, emergent system might also work. But despite that one bit of language difficulty, this essay is very much worth your time to read and re-read, as the future unfolds. The forces Tverberg studies operate regardless of the administration, and are as easy to reverse as the tide itself.
Reprinted with the author's kind permission from Our Finite World, where it appeared as "Oops! The Economy is Like a Self-Driving Car."
Oops! The economy is like a self-driving car
Back in 1776, Adam Smith talked about the “invisible hand” of the economy. Investopedia explains how the invisible hand works as, “In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.”
We talk and act today as if governments and economic policy are what make the economy behave as it does. Unfortunately, Adam Smith was right; there is an invisible hand guiding the economy. Today we know that there is a physics reason for why the economy acts as it does: the economy is a dissipative structure–something we will talk more about later. First, let’s talk about how the economy really operates.
Our Economy Is Like a Self-Driving Car: Wages of Non-Elite Workers Are the Engine
Workers make goods and provide services. Non-elite workers–that is, workers without advanced education or supervisory responsibilities–play a special role, because there are so many of them. The economy can grow (just like a self-driving car can move forward) (1) if workers can make an increasing quantity of goods and services each year, and (2) if non-elite workers can afford to buy the goods that are being produced. If these workers find fewer jobs available, or if they don’t pay sufficiently well, it is as if the engine of the self-driving car is no longer working. The car could just as well fall apart into 1,000 pieces in the driveway.
If the wages of non-elite workers are too low, they cannot afford to pay very much in taxes, so governments are adversely affected. They also cannot afford to buy capital goods such as vehicles and homes. Thus, depressed wages of non-elite workers adversely affect both businesses and governments. If these non-elite workers are getting paid well, the “make/buy loop” is closed: the people whose labor creates fairly ordinary goods and services can also afford to buy those goods and services.
Recurring Needs of Car/Economy
The economy, like a car, has recurring needs, analogous to monthly lease payments, insurance payments, and maintenance costs. These would include payments for a variety of support services, including the following:
Needless to say, the above services tend to keep rising in cost, whether or not the wages of non-elite workers keep rising to keep up with these costs.
The economy also needs to purchase a portfolio of goods on a very regular basis (weekly or monthly), or it cannot operate. These include:
Some of these goods are needed directly by the workers in the economy. Other goods are needed to make and operate the “tools” used by the workers. It is the growing use of tools that allows workers to keep becoming more productive–produce the rising quantity of goods and services that is needed to keep the economy growing. These tools are only possible through the use of energy products and other minerals of many kinds.
I have likened the necessary portfolio of goods the economy needs to ingredients in a recipe, or to chemicals needed for a particular experiment. If one of the “ingredients” is not available–probably because of prices that are too high for consumers or too low for producers–the economy needs to “make a smaller batch.” We saw this happen in the Great Recession of 2007 to 2009. Figure 1 shows that the use of several types of energy products, plus raw steel, shrank back at exactly the same time. In fact, the recent trend in coal and raw steel suggests another contraction may be ahead.
The Economy Re-Optimizes When Things Go Wrong
If you have a Global Positioning System (GPS) in your car to give you driving directions, you know that whenever you make a wrong turn, it recalculates and gives you new directions to get you back on course. The economy works in much the same way. Let’s look at an example:
Back in early 2014, I showed this graph from a presentation given by Steve Kopits. It shows that the cost of oil and gas extraction suddenly started on an upward trend, about the year 1999. Instead of costs rising at 0.9% per year, costs suddenly started to rise by an average of 10.9% per year.
When costs were rising by only 0.9% per year, it was relatively easy for oil producers to offset the cost increases by efficiency gains. Once costs started rising much more quickly, it was a sign that we had in some sense “run out” of new fields of easy-to-extract oil and gas. Instead, oil companies were forced to start accessing fields with much more expensive-to-produce oil and gas, if they wanted to replace depleting fields with new fields. There would soon be a mismatch between wages (which generally don’t rise very much) and the cost of goods made with oil, such as food grown using oil products.
Did the invisible hand sit idly by and let business as usual continue, despite this big rise in the cost of extraction of oil from new fields? I would argue that it did not. It was clear to business people around the world that there was a large amount of coal in China and India that had been bypassed because these countries had not yet become industrialized. This coal would provide a much cheaper source of energy than the oil, especially if the cost of oil appeared likely to rise. Furthermore, wages in these countries were lower as well.
The economy took the opportunity to re-optimize. Part of this re-optimization can be seen in Figure 1, shown earlier in this post. It shows that world coal supply has grown rapidly since 2000, while oil supply has grown quite slowly.
Figure 3, below, shows a different kind of shift: a shift in the way oil supplies were distributed, after 2000. We see that China, Saudi Arabia, and India are all examples of countries with big increases in oil consumption. At the same time, many of the developed countries found their oil consumption shrinking, rather than growing.
A person might wonder why Saudi Arabia’s use of oil would grow rapidly after the year 2000. The answer is simple: Saudi Arabia’s oil costs are its costs as a producer. Saudi Arabia has a lot of very old wells from which oil extraction is inexpensive–perhaps $15 per barrel. When oil prices are high and the cost of production is low, the government of an oil-exporting nation collects a huge amount of taxes. Saudi Arabia was in such a situation. As a result, it could afford to use oil for many purposes, including electricity production and increased building of highways. It was not an oil importer, so the high world oil prices did not affect the country negatively.
China’s rapid rise in oil production could take place because, even with added oil consumption, its overall cost of producing goods would remain low because of the large share of coal in its energy mix and its low wages. The huge share of coal in China’s energy mix can be seen in Figure 4, below. Figure 4 also shows the extremely rapid growth in China’s energy consumption that took place once China joined the World Trade Organization in late 2001.
India was in a similar situation to China, because it could also build its economy on cheap coal and cheap labor.
When the economy re-optimizes itself, job patterns are affected as well. Figure 5 shows the trend in labor force participation rate in the US:
Was it simply a coincidence that the US labor force participation rate started falling about the year 2000? I don’t think so. The shift in energy consumption to countries such as China and India, as oil costs rose, could be expected to reduce job availability in the US. I know several people who were laid off from the company I worked for, as their jobs (in computer technical support) were shifted overseas. These folks were not alone in seeing their jobs shipped overseas.
The World Economy Is Like a Car that Cannot Make Sharp Turns
The world economy cannot make very sharp turns, because there is a very long lead-time in making any change. New factories need to be built. For these factories to be used sufficiently to make economic sense, they need to be used over a long period.
At the same time, the products we desire to make more energy efficient, for example, automobiles, homes, and electricity generating plants, aren’t replaced very often. Because of the short life-time of incandescent light bulbs, it is possible to force a fairly rapid shift to more efficient types. But it is much more difficult to encourage a rapid change in high-cost items, which are typically used for many years. If a car owner has a big loan outstanding, the owner doesn’t want to hear that his car no longer has any value. How could he afford a new car, or pay back his loan?
A major limit on making any change is the amount of resources of a given type, available in a given year. These amounts tend to change relatively slowly, from year to year. (See Figure 1.) If more lithium, copper, oil, or any other type of resource is needed, new mines are needed. There needs to be an indication to producers that the price of these commodities will stay high enough, for a long enough period, to make this investment worthwhile. Low prices are a problem for many commodities today. In fact, production of many commodities may very well fall in the near future, because of continued low prices. This would collapse the economy.
The World Economy Can’t Go Very Far Backward, Without Collapsing
The 2007-2009 recession is an example of an attempt of the economy to shrink backward. (See Figure 1.) It didn’t go very far backward, and even the small amount of shrinkage that did occur was a huge problem. Many people lost their jobs, or were forced to take pay cuts. One of the big problems in going backward is the large amount of debt outstanding. This debt becomes impossible to repay, when the economy tries to shrink. Asset prices tend to fall as well.
Furthermore, while previous approaches, such as using horses instead of cars, may be appealing, they are extremely difficult to implement in practice. There are far fewer horses now, and there would not be places to “park” the horses in cities. Cleaning up after horses would be a problem, without businesses specializing in handling this problem.
What World Leaders Can Do to (Sort of) Fix the Economy
There are basically two things that governments can do, to try to make the economy (or car) go faster:
Both of these actions work like turbocharging a car. They have the possibility of making the economy run faster, but they have the downside of extra cost. In the case of debt, the cost is the interest that needs to be paid; also the risk of “blow-up” if the economy slows. There is a limit on how low interest rates can go, as well. Ultimately, part of the output of the economy must go to debt holders, leaving less for workers.
In the case of complexity, the problem is that there gets to be increasing wage disparity, when some employees have wages based on special training, while others do not. Also, with capital goods, some individuals are owners of capital goods, while others are not. The arrangement creates wealth disparity, besides wage disparity.
In theory, both debt and increased complexity can help the economy grow faster. However, as I noted at the beginning, it is the wages of the non-elite workers that are especially important in allowing the economy to continue to move forward. The greater the proportion of the revenue that goes to high paid employees and to bond holders, the less that is available to non-elite workers. Also, there are diminishing returns to adding debt and complexity. At some point, the cost of each of these types of turbo-charging exceeds the benefit of the process.
Why the Economy Works Like a Self-Driving Car
The reason why the economy acts like a self-driving car is because the economy is, in physics terms, a dissipative structure. It grows and changes “on its own,” using energy sources available to it. The result is exactly the same effect that Adam Smith was observing. What makes the economy behave in this way is the fact that flows of energy are available to the economy. This happens because an economy is an open system, meaning its borders are permeable to energy flows.
When there is an abundance of energy available for use (from the sun, or from burning fossil fuels, or even from food), a variety of dissipative structures self-organize. One example is hurricanes, which self-organize over warm oceans. Another example is plants and animals, which self-organize and grow from small beginnings, if they have adequate food energy, plus other necessities of life. Another example is ecosystems, consisting of a number of different kinds of plants and animals, which interact together for the common good. Even stars, including our sun, are dissipative structures.
The economy is yet another type of a dissipative structure. This is why Adam Smith noticed the effect of the invisible hand of the economy. The energy that sustains the economy comes from a variety of sources. Humans have been able to obtain energy by burning biomass for over one million years. Other long-term energy sources include solar energy that provides heat and light for gardens, and wind energy that powers sail boats. More recently, other types of energy have been added, including fossil fuels energy.
When energy supplies are very cheap and easy to obtain, it is easy to ramp up their use. With growing supplies of energy, it is possible to keep adding more and better tools for people to work with. I use the term “tools” broadly. Besides machines to enable greater production, I include things like roads and advanced education, which also are helpful in making workers more effective. The use of growing energy supplies allows growing use of tools, and this growing use of tools increasingly leverages human labor. This is why we see growing productivity; we can expect to see falling human productivity if energy supplies should start to decline. Falling productivity will tend to push the economy toward collapse.
One problem for economies is diminishing returns of resource extraction. Diminishing returns cause the economy to become less and less efficient. Once energy extraction starts to have a significant problem with diminishing returns (such as in Figure 2), it is like losing energy resources into a sinkhole. More work is necessary, without greater output in terms of goods and services. Indirectly, economic growth must suffer. This seems to be the problem that the economy has been encountering in recent years. From the invisible hand’s point of view, $100 per barrel oil is very different from $20 per barrel oil.
One characteristic of dissipative structures is that they keep re-optimizing for the overall benefit of the dissipative structure. We saw in Figures 3 and 4 how fuel use and jobs rebalance around the world. Another example of rebalancing is the way the economy uses every part of a barrel of oil. If, for example, our only goal were to maximize the number of miles driven for automobiles, it would make sense to operate cars using diesel fuel, rather than gasoline. In fact, the energy mix available to the economy includes quite a bit of gasoline and natural gas liquids. If we need to use what is available, it makes sense to use gasoline in private passenger cars, and save diesel for commercial use.
Another characteristic of dissipative structures is that they are not permanent. They grow for a while, and then collapse. Later, new similar dissipative structures may develop and indirectly replace the ones that have collapsed. In this way, the overall system is able to evolve in a way that adapts to changing conditions.
What Are the Likely Events that Would Cause the Economy to Collapse?
I modeled the system as being like a self-driving car. The thing that keeps the system operating is the continued growth of inflation-adjusted wages of non-elite workers. This analogy was chosen because in ecosystems in general, the energy return on the labor of an animal is very important. The collapse of a population of fish, or of some other animal, tends to happen when the return on the labor of that animal falls too low.
In the case of the fish, the return on the labor of the fish falls too low when nearby supplies of food disappear, and the fish must swim too far to obtain new supplies of food. The return on human labor would seem to be the inflation-adjusted wages of non-elite workers. We know that wages for many workers have been falling in recent years, because of competition from globalization, and because of replacement of human labor by advanced machines, such as computers and robots.
Besides the problem of falling wages of non-elite workers, earlier in this post I mentioned a number of other issues that make the wages of these workers go less far. These include growing government spending, and the growing costs of education and healthcare. I also mentioned the problem of rising debt, and the increased concentration of wealth, as we try to add complexity to solve problems. All of these issues make it hard for “demand”–which might also be called “affordability”–to be sufficiently great to allow commodity prices to rise to the level producers need for profitability.
Prices Play a Very Important Role in the Economy
The pricing system is the communication system of the economy, as a dissipative structure. One use of energy is to create “information.” Prices are a high level form of information.
One big area where prices come up is with respect to the whole portfolio of products needed on a regular basis, which I mentioned earlier (water, food, energy products, and mineral products). In order for the system to continue working, the prices need to be both:
Now, in 2017, prices are “sort of” affordable for consumers, but they are not high enough for producers. Oil companies will go out of business if these low prices persist.
Back in 2007 and 2008, we had the reverse problem. Prices were high enough for producers, but too high for consumers (especially non-elite workers). This is a big part of what pushed the economy into recession.
We noticed back in Figure 1 that quantities of energy products/goods tend to move up and down together. A similar phenomenon holds true for prices: commodity prices tend to rise and fall together (Figure 7). The reason this happens is because when the world economy is moving swiftly forward (higher wages, more building activity, more debt), demand tends to be high for many different types of materials at the same time. When the economy slows, prices of all of these commodities tend to fall at the same time. Inflation tends to fall as well.
If prices cannot rise high enough for producers, it is likely a sign that wages of non-elite workers are already too low. The affordability loop mentioned earlier is not being closed, so prices cannot stay up at a high enough level to maintain production.
Most Modelers Overlook the Fact that the Economy Is an Open System
Most energy models are based on one of two views of the world:
(1) fossil fuel energy supply will eventually run short, so we must use it as sparingly as possible; or
(2) we want to reduce the use of fossil fuels as quickly as possible, because of climate change.
Because of these issues, we want to leverage the fossil fuel energy we have, to as great an extent as possible, with energy that we can somehow capture from renewable sources, such as the solar energy or wind. With this view of the situation, our major objective is to create “renewables” that use fossil fuel energy as efficiently as possible. The hope is that these renewables, together with the actions of governments, will allow the economy to gradually shrink back to a level that is somehow more sustainable.
Implicit is this model is the view that the economy, and the world in general, is a closed system. Our current government and business leaders are in charge; they can make the changes they would prefer, without the invisible hand causing an unforeseen problem. Very few have realized that the economy cannot really shrink back very much; past history, as well as the nature of dissipative structures, shows that economies tend to collapse. The only economies that have at least temporarily avoided that fate have shifted toward less complexity–for example, eliminating huge government programs, such as armies–rather than yielding to the temptation to add ever more complexity, such as wind turbines and solar panels.
The real situation is that we have a here-and-now problem of too low wages for non-elite workers. Commodity prices are also too low. Intermittent renewables such as wind and solar are thought to be solutions, but it is well-known that intermittent renewables cause too-low prices for other types of electricity generation, when added to the electric grid. Thus, they are likely part of the low-price problem, not part of the solution. Temporary solutions, if there are any, are likely in the direction of cutting back on government expenditures and reducing regulation of banks. In fact, with the election of Trump and the passage of Brexit, the economy seems to again be re-optimizing.
We also know that dissipative structures do not shrink back well, at all. They tend to collapse, instead. For example, you, as a human being, are a dissipative structure. If your food intake were cut back to, say, 500 calories per day, how well would you do? If you could not get along on a very low calorie diet, how would you expect the economy to shrink back to a renewables-only level? Renewables that can be used in a shrunken economy are scarce; we don’t have a huge number of trees to cut down. We cannot maintain the electric grid without fossil fuels.
The assumption that the economy is a closed system is pretty much standard when modeling our current energy situation. This occurs because, until recently, we did not understand that the self-organizing properties of inanimate systems were as important as they are. Also, modeling of the economy as a closed system, rather than an open system, makes modeling much easier. The problem is that closed system modeling doesn’t really tell the right story.
For a discussion of some of the issues associated with this mis-modeling, see the recent academic paper, Is the increased use of biofuels the road to sustainability? Consequences of the methodological approach.
Long overdue new rule: Don't drive with a dog in your lap! Who knew?
This bill doesn't go nearly far enough, but it's a dog-gone good start. With luck it will be amended to add
1) Cats, ferrets, parrots, iguanas or all the other household pets that people with bad judgment will transport in their lap rather than in a proper carrier while driving;
2) Escalating penalties for repeated offenses, including suspension or even loss of license for people who refuse to get the message.
If people driving around with dogs or other pets outside of carriers were only a danger to themselves, that would be one thing.
But distracted drivers put people in other cars, bicyclists, pedestrians and the animals themselves at risk -- all because some drivers have such poor judgment that they forget that piloting a couple thousand pounds of metal at roadway speeds is operating a lethal weapon that requires full attention and no distractions.
Kudos to Senator Hansell.
79th OREGON LEGISLATIVE ASSEMBLY--2017 Regular Session
It's Christmas in the Capital for small-aircraft pilots, as the Governor proposes to abolish state licensing of pilots, a program that is forecast (not "forecasted," Legislative Revenue Office) to raise $200,000 each biennium and costs about $3,000 a year to collect -- with the net funds going the search and rescue operation for missing pilots.
The net result is that cities and towns across Oregon will not be reimbursed for fuel costs for search and rescue operations, which means that ordinary taxpayers will be picking up a tab that pilots formerly helped pay. Because apparently Oregon just has too darn much money, and pilots shouldn't be expected to pay for programs that are entirely for their benefit.
HB2731 early candidate for most important bill of 2017
When states with majority of electoral votes join the compact, America will finally put an end to the slavery legacy that lets losers like Trump seize the White House with minority of votes
79th OREGON LEGISLATIVE ASSEMBLY--2017 Regular Session
House Bill 2731
Sponsored by Representative CLEM
SUMMARY The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject to consideration by the Legislative Assembly. It is an editor's brief statement of the essential features of the measure as introduced.
Enacts Interstate Compact for Agreement Among the States to Elect the President by National Popular Vote.
A BILL FOR AN ACT Relating to the Agreement Among the States to Elect the President by National Popular Vote.
Be It Enacted by the People of the State of Oregon:
SECTION 1. The Agreement Among the States to Elect the President by National Popular Vote is hereby enacted into law and entered into on behalf of this state with all other states legally joining in the compact in a form substantially as follows:
Any State of the United States and the District of Columbia may become a member of this agreement by enacting this agreement.
RIGHT OF THE PEOPLE IN MEMBER STATES
TO VOTE FOR PRESIDENT AND VICE PRESIDENT
Each member state shall conduct a statewide popular election for President and Vice President of the United States.
MANNER OF APPOINTING PRESIDENTIAL ELECTORS
IN MEMBER STATES
Prior to the time set by law for the meeting and voting by the presidential electors, the chief election official of each member state shall determine the number of votes for each presidential slate in each State of the United States and in the District of Columbia in which votes have been cast in a statewide popular election and shall add such votes together to produce a "national popular vote total" for each presidential slate.
The chief election official of each member state shall designate the presidential slate with the largest national popular vote total as the "national popular vote winner."
The presidential elector certifying official of each member state shall certify the appointment in that official's own state of the elector slate nominated in that state in association with the national popular vote winner. At least six days before the day fixed by law for the meeting and voting by the presidential electors, each member state shall make a final determination of the number of popular votes cast in the state for each presidential slate and shall communicate an official statement of such determination within 24 hours to the chief election official of each other member state.
The chief election official of each member state shall treat as conclusive an official statement containing the number of popular votes in a state for each presidential slate made by the day established by federal law for making a state's final determination conclusive as to the counting of electoral votes by Congress.
In event of a tie for the national popular vote winner, the presidential elector certifying official of each member state shall certify the appointment of the elector slate nominated in association with the presidential slate receiving the largest number of popular votes within that official's own state.
If, for any reason, the number of presidential electors nominated in a member state in association with the national popular vote winner is less than or greater than that state's number of electoral votes, the presidential candidate on the presidential slate that has been designated as the national popular vote winner shall have the power to nominate the presi- dential electors for that state and that state's presidential elector certifying official shall certify the appointment of such nominees.
The chief election official of each member state shall immediately release to the public all vote counts or statements of votes as they are determined or obtained.
This Article shall govern the appointment of presidential electors in each member state in any year in which this agreement is, on July 20, in effect in states cumulatively possessing a majority of the electoral votes.
This agreement shall take effect when states cumulatively possessing a majority of the electoral votes have enacted this agreement in substantially the same form and the enactments by such states have taken effect in each state.
Any member state may withdraw from this agreement, except that a withdrawal occurring six months or less before the end of a President's term shall not become effective until a President or Vice President shall have been qualified to serve the next term.
The chief executive of each member state shall promptly notify the chief executive of all other states of when this agreement has been enacted and has taken effect in that official's state, when the state has withdrawn from this agreement, and when this agreement takes effect generally. This agreement shall terminate if the electoral college is abolished. If any provision of this agreement is held invalid, the remaining provisions shall not be affected.
For purposes of this agreement,
"Chief executive" shall mean the Governor of a State of the United States or the Mayor of the District of Columbia;
"Elector slate" shall mean a slate of candidates who have been nominated in a state for the position of presidential elector in association with a presidential slate;
"Chief election official" shall mean the state official or body that is authorized to certify the total number of popular votes for each presidential slate;
"Presidential elector" shall mean an elector for President and Vice President of the United States;
"Presidential elector certifying official" shall mean the state official or body that is authorized to certify the appointment of the state's presidential electors;
"Presidential slate" shall mean a slate of two persons, the first of whom has been nominated as a candidate for President of the United States and the second of whom has been nominated as a candidate for Vice President of the United States, or any legal successors to such persons, regardless of whether both names appear on the ballot presented to the voter in a particular state;
"State" shall mean a State of the United States and the District of Columbia; and
"Statewide popular election" shall mean a general election in which votes are cast for presidential slates by individual voters and counted on a statewide basis.
Oregon ignored again, as six states hog 2/3 of presidential campaign events
Two-thirds (273 of 399) of the general-election campaign events in the 2016 presidential race were in just 6 states: Florida, North Carolina, Pennsylvania, Ohio, Virginia, and Michigan.
94% of the 2016 events (375 of the 399) were in 12 states (the 11 states identified earlier in the year as "battleground" states by Politico and The Hill plus Arizona). This fact validates the statement by former presidential candidate and Governor Scott Walker of Wisconsin on September 2, 2015, that “The nation as a whole is not going to elect the next president. Twelve states are.” In addition to the 12 states that received 10 or more campaign events,
14 additional states received scattered attention (1, 2, or 3 events). Eleven of these states (Georgia, Missouri, California, Washington, Texas, Mississippi, Minnesota, Indiana, Utah, New Mexico, and Connecticut) received a total of 22 Republican visits, but no Democratic visits.
Two of these states (Maine and Nebraska) were visited because those states award some of their electoral votes by congressional district. One of these states (Illinois) received a Democratic campaign event at a large park located across the river from Davenport, Iowa (the prominent media market and population center in the area and the likely motivation for the event in Illinois).
The map above and chart below show all the post-convention campaign events by the major- party presidential and vice-presidential nominees (Donald Trump, Mike Pence, Hillary Clinton, and Tim Kaine).
The count of Republican campaign events started on Friday July 22, 2016 (the day after the end of the party's convention), and the count of Democratic campaign events started on Friday July 29 (the day after the end of the party's convention). The count ended on Monday November 7, 2016 (the day before Election Day).
“Campaign events” are defined here as public events in which a candidate is soliciting the state’s voters (e.g., rallies, speeches, fairs, town hall meetings). This count of "campaign events" does not include visits to a state for the sole purpose of conducting a private fund-raising event, participating in a presidential debate or media interview in a studio, giving a speech to an organization’s national convention, attending a non-campaign event (e.g., the Al Smith Dinner in New York City), visiting the campaign's own offices in a state, or attending a private meeting.
Text, map and table from nationalpopularvote.com; data compiled by Fairvote (Fairvote.org).
A perennial problem in democratic governance: how do you compensate judges fairly.
The Founders knew that letting judicial pay be subject to the whims of the overtly political branches was a bad idea, which is why the Constitution forbids mucking with judges' pay.
Oregon is at or near the bottom in terms of paying judges. That is why the new bill, SB11, to raise judicial pay is needed--but also why it might turn into a piñata and absorb a lot of whacks from voters.
It's clear that Oregon judges lag behind the obvious comparison cases, judges in other states, but it is equally hard to argue that Oregon judges are underpaid in any absolute sense, given the state's generally smaller salaries compared nationwide.
Besides, while our judicial salaries lag those in other states, Oregon lags behind other states on countless other measures of well-being. The state's economy is in contraction because the natural resource based economy is just a fraction of its former size but no equally strong wealth-creating sector of the economy has filled the gap. Our bizarre, Rube Goldberg tax system is as stable and well-considered as a 3 a.m. White House tweet.
So taxpayer fury, fanned into a white heat crescendo by corporate anti-tax crusaders, is likely to be in abundant supply during this year's legislative session, thanks to the enormous current state revenue shortfall, approaching $2 billion, with more predicted for future sessions. This fury has a way of bursting any bounds and incinerating proposals for things that, objectively, make no difference at all to the actual tax rates beyond the sixth decimal place but that are unlucky enough to have strong symbolic potency.
And there is no more obvious symbol likely to serve as tinder and kindling for anti-tax organizing than a proposal that gives judges, including on the Oregon Tax Court, a raise while Oregon is shuttering schools and ending health coverage for the poor.
Ultimately, the solution to public pay setting is to create "set and forget" public employee pay tables that put the pay for each public job classification at a certain multiple of the state minimum wage.
Thus, for examples, instead of saying that an appellate court judge in Oregon makes $150,000, the pay for the job would be legislatively "set and forget" at the annual equivalent of 7.25 times the state hourly minimum wage. The minimum wage is indexed to inflation, so we no longer need to keep revisiting and revising pay salaries to keep up. We would take a similar approach to the salaries of trial judges, state agencies, and the Legislature itself.
Once the tables are established, the job of the Legislature would no longer include having to adjust salaries by recurrent votes that are subject to relentless demagoguery. As inflation pushes up the minimum wage, the more generous salaries available through public employment rise proportionally, but not-disproportionately. And a recurrent source of problems for public employers is resolved.
SB 11 STAFF MEASURE SUMMARY
A Dam Mess - by Chuck Marohn
Over the coming days -- and perhaps longer if things get really bad -- you're going to see plenty of stuff about the Oroville Dam in Northern California. In the ongoing natural disaster that seems to be California, drought has turned to flood and a now full reservoir is topping decades-old spillways.
While designed for the most stressful situation, they have never been tested like this. Poor maintenance of the spillways has allowed an erosion problem to expand, threatening to undermine the structure and release destructive amounts of water downstream. Local residents were repeatedly assured by public officials that there was no cause for alarm before being told to flee. It's a mess.
If Strong Towns were a propaganda machine, this would be a good time to go full blast with the hysteria. We could do a fundraiser around the existential threat posed by dams and try to make people afraid to ever go near a river. With your $5 a month pledge, we'll hold people accountable and ensure those joints are properly grouted every decade or two so that nothing like this ever happens in America again. Flash to pictures of racially-balanced families hugging each other at a FEMA camp.
Thankfully, we're not a cheap propaganda machine, yet this is a moment we should not let pass. There are some important lessons here that we need to learn, and they aren't the ones you're likely to hear.
“There is no reason to think that more money would have done anything to change the mindset that caused this problem.”
Here's what the consensus narrative is likely to be: The state of California, along with the federal government, did not properly fund the maintenance of this facility. They failed to do the proper inspections and to hold themselves accountable. If we spent more money on infrastructure (instead of being a nation of cheapskates), this kind of thing would not happen. All of that is wrong.
The type of maintenance that was needed on this structure was not costly. The trees in the spillway that are the erosion culprit could have been removed by hand decades ago when they were small. They could have been removed by chain saw and stump grinder in the last month. Not expensive. Likewise, the grouting that had been recommended was in the low six figures; chump change for any agency that wanted to prioritize basic maintenance. The reports were there recommending these actions—people in a position to know, care and take action were perfectly aware of it— but they didn't induce action. There is no reason to think that more money would have done anything to change the mindset that caused this problem.
There is actually a different set of causes here, and it has two parts.
We don't put our best minds on maintenance
Say you are running a company and you have three projects requiring equally technical skill-sets. Project #1 is really high profile. If it goes well, it will be amazing for everyone. If it doesn't, it will really make you look bad, but the company will still be okay. Project #2 is routine but still in the public eye. If it goes well, there won't be a lot of accolades but if it goes poorly, it will really damage the company's credibility. Project #3 is mundane to the extreme. If all goes well, nobody will even be aware it was done but if it should go wrong, it will destroy the company along with all pensions, equity and shareholder value.
Project #1: High upside, some downside.
Project #2: Limited upside, limited downside.
Project #3: No upside, potentially fatal downside.
Which project do you assign to your best project manager? Which of the three do you give to your worst?
Let me ask another way: Which project does your best project manager want to work on? What project does your least influential project manager get stuck with?
It's pretty obvious that Project #1 is going to attract high performers and Project #2 is going to invite those who aspire to climb the company ladder. In a three-person competition, the mundane task goes to the lowest performer. That's okay in a private company where management takes calculated risks each day, but what if we're in the public sector? And what if failure on the mundane project means hundreds of thousands of people displaced, hundreds of millions of dollars of emergency repairs, billions in property damage, the loss of water storage in a vital reservoir in a drought-prone state and, potentially, even the loss of human life?
None of this is to suggest that there aren't really smart people working on maintenance (I've worked with a lot of them and I know they're smart) but more of an observation that these people toil in the trenches in obscurity with little appreciation—let alone acclaim—for their efforts. Until something goes wrong.
“At the city level, we need to get these people out of the obscure back rooms and make them part of our day-to-day conversations.”
This is a systematic problem. In my engineering days, I worked with one wastewater system operator—a guy who maintained sewage pumps most days—who, year after year, received high marks from the state oversight organization (MPCA) and numerous "Operator of the Year" awards. Problem is, he completely faked the data he submitted—he wasn't actually doing the work— something the MPCA could have figured out with five minutes on a spreadsheet. These are critical systems, the failure of which is not only costly but can have serious environmental impacts. Our oversight is out-of-sight, out-of-mind, something we are hearing now about the Oroville Dam as well.
Can we find a way to elevate the people who do these tasks day in and day out, whose seriousness over the long term threats of failure are not dulled by their infrequent occurrence? I'm not sure, but at the city level, we need to get these people out of the obscure back rooms and make them part of our day-to-day conversations. We need to have them at the table so their voices are not passed through the filter of people with other ambitions and priorities.
Asset Management Begins at Project Selection
I was once working on sewage treatment alternatives for a small town and was faced with two options. One approach would have solved my land acquisition problem at a really nice price, but it involved a complicated mechanical system (lots of things that can break). The second approach forced me to deal with a difficult farmer who I would need to buy some land from but ended up with a simple and effective system (few moving parts). In my youth and inexperience, I pushed for the mechanical system. The more senior engineers insisted on the simple model. They were right; the city was far better off with a system they only needed to touch a few times a year that would run perfectly fine for decades without much thought.
This realization comes from the guy who, a couple weeks ago, recommended the opposite approach for Flint; one that got to lower costs by constructing a system requiring ongoing, intensive maintenance. Here's the difference: The wastewater system I worked on was for the entire community—one system everyone depended on. Break it and it goes bad in a big way (see: Flint today). The Flint water system I proposed is actually many small, independent water systems. Mess up one and it effects a small group in a place where multiple nearby experts running similar systems are there with advice and spare parts.
In the United States we're obsessed with building new things. We sometimes—begrudgingly— even stop and consider the maintenance implications when we build something new. When we do, however, it's a non-serious shout-out to people of the future who we assume will be so much better off due to our wise investment today. We really don't worry about burdening them.
The best asset management program starts with a better evaluation of whether something should be built in the first place. The data we recently presented on Lafayette, Louisiana—as a representation of the condition of most North American cities—was not presented to suggest that we couldn't maintain all that infrastructure, just that we won't. The citizens of Lafayette are not going to spend 20% of their income fixing their local infrastructure; it's just not a transaction that makes any sense, regardless of the consequences. They have built a whole lot of stuff that is not useful enough to bother maintaining.
“When we’re undertaking a project, we need to stop and consider whether what we’re building will create enough wealth and value for the community that they are going to want to rebuild it again in the future.”
And they've built so much stuff -- and continue to obsess over building more -- that they are neglecting many of their critical systems. Undoubtedly, so is your city.
That makes this a systematic failing, not an individual one. When we're undertaking a project, we need to stop and consider whether what we're building will create enough wealth and value for the community that they are going to want to rebuild it again in the future. And for cities, where these obligations last forever, that answer has to be so obvious as to not really be debatable.
And where we can't do that, then we need to plan for things to be thrown away or abandoned when we're done with them. Keep it forever or use it and discard; these should be two conscious choices with nothing in between. And if that's disturbing to you, just know that most of the places we've built actually fall into the "throw away" category.
Responding to Oroville in your city
Every local government body that does infrastructure has systems that fall into one of three categories.
Every city should have a list of the Critical infrastructure components. The odds are, if you have 1A systems—critical with lots of maintenance required—you're already paying attention. You have likely assigned some of your best people to them and given those positions some degree of prestige. Your staff is probably trying to find ways to add some backups and make those 1A systems into 2A systems. That's great management.
It's the 1B systems that are going to sneak up on you. This is the seawall in New Orleans, the spillway in Oroville. We need them to work -- they're critical -- but we can go decades, or even lifetimes, without suffering any consequence for their neglect. For these systems, we need to be very intentional about making them front and center and not allowing them to become an afterthought. This is where management—top administration and elected officials—need to shower their attention to overcome the natural tendency to have these systems fade into the background.
How has your city identified its critical infrastructure? How are these systems being maintained? How is your leadership actively working to make sure maintenance of these low-maintenance systems doesn't fade into the background?
Originally published and republished with kind permission at StrongTowns.org. Strong Towns is a national membership organization and an OregonPEN Best Investment nonprofit. The mission of Strong Towns is to support a model of development that allows America's cities, towns and neighborhoods to become financially strong and resilient. For the United States to be a prosperous country, it must have strong cities, towns and neighborhoods. Enduring prosperity for our communities cannot be artificially created from the outside but must be built from within, incrementally over time.
By Josh Hoxie
Candidate Donald Trump promised to renegotiate free trade agreements that hurt American workers. In his first week in office, he made good on that promise by withdrawing from the Trans-Pacific Partnership (TPP), a trade pact negotiated by the Obama administration.
Yet in the same week, he unleashed a torrent of policies just as bad, if not worse, for workers than the trade deal itself.
Trump was right about one thing: The TPP was a bad deal. But while he convinced his supporters that trade deals are rigged against them, he never did say who does the rigging: big business.
If we don’t get that right, American workers are still going to get hurt.
Trump supporters and progressives agree on very few issues, but opposition to free trade agreements is one of them. Both Trump and Bernie Sanders railed against the TPP during the presidential campaign, along with NAFTA and other past trade agreements they blamed for hollowing out the American manufacturing sector.
This bipartisan opposition stands in sharp contrast to the Clinton, Bush, and Obama administrations’ warm embrace of free trade. It comes, however, from two very different ideological positions.
Trump thinks the central fight on trade is between different countries. China, he says, is “stealing” our jobs. They’re “winning,” and we’re “losing.”
This jingoistic bluster resonated in former industrial centers ravaged by bad trade deals — places like Pennsylvania, Ohio, Michigan, and Wisconsin. (Never mind that most of the products with the Trump logo on it aren’t made in the United States.)
In Trump’s world, bad trade deals help foreigners steal American jobs. Yet he never acknowledges the multi-national corporations who drive those deals. They’re the ones whose stock prices go up when factories in the Midwest shut down and American workers are replaced by people in China, Mexico, or Bangladesh earning a fraction of the pay.
The problem with the TPP — the proposed pact between the U.S. and a dozen Pacific Rim countries — wasn’t that it gave more power to Japan or to Australia (or to China, which wasn’t part of the deal). The problem was that it gave more power to multi-national corporations to write the rules of trade.
Unlike Main Street businesses in your town, these corporations aren’t beholden to nation states. Their CEOs don’t care about promoting American values or contributing to civil society. If they did, they wouldn’t hide trillions of dollars’ worth of wealth in offshore tax shelters.
Trump may have spiked the TPP, but he’s still letting big businesses like these write rules that are unequivocally bad for American workers.
Consider Andy Puzder, the former fast food CEO Trump picked to lead the Department of Labor [whose nomination was since withdrawn]. Puzder proudly opposes raising the federal minimum wage, which at $7.25 an hour is currently lower than the cost of living in every major city in the country.
Or consider Trump’s recent executive order to roll back regulations on the reckless Wall Street behavior that caused the 2008 financial crisis. Or his plan to drive up the national debt by cutting taxes for corporations and the top 1 percent. The list goes on.
In opposing the TPP, Trump blocked a bad deal that could’ve had serious negative consequences for American workers. But with his appointments and policy preferences, he’s still going to let big business write the rules — on everything from their taxes to your wages.
That’s in stark contrast to the needs of working families, many of whom helped elect him. Talk about a bad deal.
Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. Distributed by and reprinted with permission of OtherWords.org.
Why are my Highly Educated Friends so Ignorant about Trade? - by Isabel Marlens
Trump is a catastrophe, but so was the TPP.
Since Donald Trump was elected President of the United States, I’ve found myself talking for the first time with a lot of my 20-something friends about trade agreements.
My friends didn’t vote for Donald Trump. Most are from “liberal” parts of the US. They went to good schools for 12 years, worked hard, got good grades. Many went on to top colleges and universities, places like Stanford, Yale, NYU, UCLA.
And yet most of them know almost nothing about one of the most important issues facing the world today.
Why are so many young people – even those with the “best” educations – almost completely ignorant about a huge ongoing threat to human rights, democracy and the climate? Well, I guess it’s not surprising. For years now, elite universities and neoliberal think tanks have been publishing papers which claim that increased international trade leads to poverty reduction, peace, and the spread of democracy. Politicians and CEOs – most of them graduates of these same universities – now constitute the Davos global elite, quietly pulling the strings on trade while no one is watching.
The result is that many young people are completely confused on the topic. How can the TPP be bad if Obama was for it and Trump is against it? Isn’t Trump’s loud anti-trade stance just another point against him – inextricably tied to his atrocious xenophobia and chilling position on immigration?
This widespread ignorance about trade among young voters is deeply disturbing – not least because trade agreements, and their role in hollowing out the American middle-classes, arguably made Trump’s election possible. (At the same time, Trump, a billionaire who has benefited enormously from free trade, is only likely to make their situation worse.)
But what’s most disturbing is that the ignorance of my friends has been intentionally created: trade agreements are confusing and secret by design. They are sometimes called “vampire agreements” – they grow fangs as long as they remain in darkness, but wither quickly in the light of day. Studies have shown that the more people know about trade agreements, the more likely they are to oppose them.
So as we prepare to face whatever happens next, let’s get each other informed.
Trump moves fast. During his first week in office, he officially nixed the TPP, and has announced his plan to renegotiate NAFTA — as well as to negotiate new bilateral trade deals. We will have to be vigilant. So for now, here are ten reasons that we should be glad the TPP is dead — the same ten things we should continue to watch out for — and resist — in the days ahead.
1. Secrecy. Trade agreements are drafted in secret by specially appointed “trade officials” (experts on trade and corporate law, many of whom originally worked in private corporate law firms). Although more than 400 representatives of special interests and corporations in the US alone have a seat at the table, citizens and their elected officials do not. Because the provisions of these agreements can override both democratically derived national laws and international agreements (like climate agreements), this secrecy dangerously undermines democracy. (Actually, all told, it kind of makes democracy not a thing.) Can we expect Trump to be more open and inclusive? Unlikely.
2. Investor State Dispute Settlement. Most trade agreements include a little thing called Investor State Dispute Settlement (ISDS) clauses. These give foreign corporations the right to sue any government whose laws or regulations –– such as those protecting the environment, food safety, workers’ rights or local businesses –– threaten future corporate profits. For example, the TransCanada corporation is currently using NAFTA to sue the United States for $15 billion for blocking the Keystone XL Pipeline. The arbiters who sit on these ISDS panels are corporate lawyers who can continue on the corporate payroll while the lawsuits are underway, creating a clear conflict of interest. Guess who the arbitration committees usually settle in favor of? Hint: it’s not the little guy. For example, Metalclad, a US corporation, won $16.2 million in damages from a Mexican town that refused to let the company dump its toxic waste there.
3. Regulatory chill. There is no system of precedents for ISDS suits, so countries cannot know how a tribunal will decide based on past decisions. Nothing is transparent and there is no system of appeals. Moreover, because small and developing countries have little money to pay for lawsuits or settlements, they are less likely to enact regulations to protect their environment and their people, creating a global climate of “regulatory chill.”
4. Climate. On the other hand, trade agreements are making certain that this is the only kind of chill around. The TPP in particular was touted as somehow being “good for the climate.” This could not be more wrong. It might be enough to say that in over 5,000 pages the phrase ‘climate change’ was never mentioned, but it’s also worth pointing out that the TPP:
5. Labor in ‘rich’ countries. The loss of working class jobs in countries like the US is perhaps the most well-known negative outcome of trade agreements. Indeed, global GDP has steadily risen since 1980, but labor’s share of national income in most industrialized countries has steadily declined. The reason? Trade agreements have rigged it so that it is simply impossible for companies to “compete” if they manufacture their goods in countries with decent pay or adequate labor protections. This leaves millions of people in industrialized countries jobless and struggling to survive – forced to shop at Walmart, where artificially low prices are made possible by the very rigged, exploitative system which left them without a reasonable living wage in the first place.
6. Labor in ‘poor’ countries. Does this mean that working class people in non- industrialized countries are doing great? NO! In fact, it’s exactly the opposite. The ways that bigger, richer countries use trade agreements to bully and exploit smaller, poor ones are fairly endless. But in short, the same corporations that once did their best to exploit workers in countries that now have labor protections are currently making hay in countries without them.
The TPP was famously supposed to have built-in protections for labor – “the best ever” – but they turned out to be about as strict as its built-in protections for the climate. For example, child and forced labor – slavery and child slavery – are misdemeanors. And because of the agreement’s strange legal structure, even these are practically unenforceable.
7. Regulatory harmonization. Sounds pretty, right? There’s just one problem; the landscape of harmonized regulations proposed in trade agreements doesn’t exactly create a regulatory standard of justice and sustainability around the world. Instead it promotes a global race to the bottom. For example, governments in the EU operate on something called the precautionary principle: this means that new chemicals and GMO foods cannot be sold until they are proven to be safe. In the US, they can be sold unless they have been proven to be harmful – which means that the US has approved over 400 chemicals, as well as numerous GMOs, that are illegal in Europe. In order to “ease trade,” the pending Transatlantic Trade and Investment Partnership (TTIP), between the U.S. and the European Union, would make them legal on both sides of the Atlantic, and economists say the rest of the world would have no choice but to follow suit or be left behind.
Pharmaceutical patents are another area in which regulatory harmonization is a threat. In the US, patent protection periods are exceptionally long, so pharmaceutical companies can charge more for brand-name products for a longer period of time. Harmonization would force poorer countries to adopt these long patent-protection periods, which means more people will die for lack of affordable medicines.
8. Privatization and outsourcing. We usually think that trade agreements are about goods shipped back and forth across the ocean, but in fact they also regulate services – including essential services, like water, power, waste management, public transportation, health care and education. For some time now, trade agreements have been “liberalizing” these sectors, which means systematically taking them from the hands of governments and passing them into the hands of private corporations (including foreign corporations.) As usual, this is bad news for people in poor countries, as well as for the poor in ‘rich’ countries, who can’t afford to pay for high-quality private health care, education, water, etc. Oh, and one other thing: under pending trade agreement CETA, once a service is privatized it must remain privatized forever.
9. Countries handcuffed. To top it off, trade agreements include various ‘handcuff’ clauses that make them nearly impossible to get out of once they are signed. Under CETA, for example, countries are still subject to the ISDS system for twenty years after they withdraw, leaving plenty of time for a new pro-trade administration to come in and reverse the decision to pull out. The TPP had no expiration date, and would have been virtually impossible to repeal.
10. Good for a few rich corporations. So if workers and environments are only harmed in this borderless landscape of financial opportunity, who benefits? A few multinational corporations and global banks, of course! So do the corporate lawyers who specialize in ISDS cases, and actually sit around just looking for new environmental and labor protections to challenge. In fact, they now have started a tidy side business in soliciting investors who gamble on the outcomes.
So now you know. What can you do?
The huge transnational corporations that benefit from trade agreements are also like vampires; they suck profits out of the world, concentrating wealth in fewer and fewer hands. Stop feeding them. Support your local economy in every way you can (see resources below). Funnel your money, your time, your talent, your resources – your lifeblood – into your community instead of into corporate coffers.
But most of all – since they’re not teaching us this in school, we’re going to have to teach each other. Spread the word – make sure all your friends understand the truth about trade agreements. Even if it seems like the vampires are going back underground, we’d be naïve to think they’re actually dead. As Trump negotiates bilateral trade agreements between countries, we will have to watch closely for all the same features we saw in the TPP – and be ready to resist. So shine a light on them all!
Check out these resources to learn more about ways to help people, the planet and local communities thrive:
Local Futures BALLE Institute for Local Self-Reliance
Totally Locally Bilaterals.org Transnational Institute
First published as "Why are my Highly Educated Friends so Ignorant about Trade?" and reprinted with kind permission from Local Futures: Economics of Happiness.
Read it and Cheer: Our Children's Trust sues to demand US act to preserve chance of a livable future
From the Amended Complaint in Juliana v United States
STATEMENT OF FACTS
I. THE FEDERAL GOVERNMENT HAS KNOWN FOR DECADES THAT CARBON DIOXIDE POLLUTION WAS CAUSING CATASTROPHIC CLIMATE CHANGE AND THAT MASSIVE EMISSION REDUCTIONS AND A NATION-WIDE TRANSITION AWAY FROM FOSSIL FUELS WAS NEEDED TO PROTECT PLAINTIFFS’ CONSTITUTIONAL RIGHTS.
131. As early as 1899, scientists understood that CO2 concentrations in the atmosphere cause heat retention on Earth and that a doubling or tripling of the CO2 content in 1899 would significantly elevate Earth’s surface temperature. Scientists also understood that CO2 was the determinative factor for global heating. By the turn of the 20th Century, it was widely accepted in the scientific community that increasing the atmospheric concentration of CO2 could cause global climate change.
132. By 1965, the Executive Branch reported that anthropogenic pollutants, including CO2, impair our nation’s economy and its quality of life. In the 1965 Report of President Lyndon Johnson’s Scientific Advisors, “Restoring the Quality of Our Environment,” the White House confirmed that anthropogenic pollutants, including CO2, threaten “the health, longevity, livelihood, recreation, cleanliness and happiness of citizens who have no direct stake in their production, but cannot escape their influence.”
133. For fifty years, the Executive Branch has known that “pollutants have altered on a global scale the CO2 content of the air” through “the burning of coal, oil and natural gas.” The Executive Branch predicted that CO2 “will modify the heat balance of the atmosphere to such an extent that marked changes in climate, not controllable th[r]ough local or even national efforts, could occur.” The Executive Branch warned that “carbon dioxide [gases] are accumulating in such large quantities that they may eventually produce marked climatic change.”
134. Fifty years ago, the Executive Branch described the marked climatic changes from CO2 pollution as including the melting of the Antarctic icecap, rising sea levels, warming oceans, acidifying waters, and additional releasing of CO2 and methane due to these events. It recommended reducing the heating of the Earth because of the extraordinary economic and human importance of our climate system.
135. Fifty years ago, the White House recommended that a tax system be implemented to tax polluters, including air pollution, “in proportion to their contribution to pollution” to incentivize pollution reduction.
136. In 1969, Patrick Moynihan, then-Adviser to President Nixon, wrote a letter to White House counsel John Ehrlichman stating that CO2 pollution resulting from burning fossil fuels was a problem perhaps on the scale of “apocalyptic change,” threatening the loss of cities like New York and Washington D.C. from sea level rise. The 1969 Moynihan Letter urged the Federal Government to immediately address this threat.
137. In 1978, Congress passed the National Climate Program Act “to establish a national climate program that will assist the Nation and the world to understand and respond to natural and man-induced climate processes and their implications.” 15 U.S.C. § 2901(3).
138. On June 23, 1988, Plaintiff-Guardian Dr. James Hansen, then Director of NASA’s Institute for Space Studies and a leading climate scientist in the Federal Government, testified before Congress that carbon pollution in the atmosphere was causing global warming and that impacts were already being observed.
139. Around the time of Dr. Hansen’s testimony, Congress directed its own offices and EPA to separately prepare reports on how to stabilize the global climate system and transition our country away from the use of fossil fuels.
140. In response, in December 1990, EPA submitted a report to Congress on “Policy Options for Stabilizing Global Climate.” The EPA’s 1990 Report concluded: “responses to the greenhouse problem that are undertaken now will be felt for decades in the future, and lack of action now will similarly bequeath climate change to future generations.”
141. The EPA’s 1990 Report called for a 50% reduction in total U.S. CO2 emissions below 1990 levels by 2025. EPA explained that such reductions were the only pathway to achieve Congress’ goal of stopping global warming and stabilizing the climate system. The EPA’s 1990 Report also called for stabilizing atmospheric CO2 concentrations at 350 ppm, the current level of that time, a response to the congressional objective that total global warming not exceed 1.5° C above the preindustrial level. In its 1990 Report, EPA confirmed the Executive Branch’s findings from 1965 that CO2 was a “dangerous” pollutant.
142. In 1991, promptly following EPA’s 1990 Report, the Congressional Office of Technology Assessment (“OTA”) delivered to Congress its own report, “Changing By Degrees: Steps to Reduce Greenhouse Gases.” Finding the United States was the single largest contributor to carbon pollution, the OTA’s 1991 Report developed “an energy conservation, energy-supply, and forest-management package that can achieve a 20- to 35-percent emissions reduction” through a mix of regulatory and market-based federal policies, in order to prevent global warming and climate change. OTA reported that, if its “package” was implemented, the Federal Government could lower CO2 emissions 35% from 1987 levels by 2015 and possibly
save the Federal Government $20 billion per year. OTA determined that the 35% necessary reduction in CO2 emissions was only the beginning and further efforts in the 21st century would be required to stabilize our nation’s climate system.
143. The OTA’s 1991 Report stated that major reductions of CO2 would require significant new initiatives by the Federal Government and must be sustained over decades, even before all the scientific certainties are resolved: “[I]t is clear that the decision to limit emissions cannot await the time when the full impacts are evident. The lag time between emission of the gases and their full impact is on the order of decades to centuries; so too is the time needed to reverse any effects.” The OTA’s 1991 Report informed Congress that the level of emission reductions needed would require the country to wean itself from fossil fuels. OTA also urged that, while global warming was a problem on a global scale, U.S. leadership was critical to solving the problem and would seriously impact what happened around the globe.
144. Concluding that actions would be required across the federal government, both the EPA’s 1990 Report and the OTA’s 1991 Report concluded that an essential component of reducing CO2 emissions was implementing a rising carbon tax.
145. On October 15, 1992, following receipt of the EPA and OTA Reports, the Senate ratified the United Nations Framework Convention on Climate Change (“UNFCCC”). The UNFCCC was executed to “protect the climate system for the benefit of present and future generations of humankind.” The UNFCCC evidences an “overwhelming weight” of support for protection of the atmosphere under the norms and principles of intergenerational equity.
UNFCCC, Art. 3. The minimal objective of the UNFCCC is the “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.” UNFCCC, Art. 2.
146. The recommendations in the EPA’s 1990 Report (“Policy Options for Stabilizing Global Climate”) and the OTA’s 1991 Report (“Changing By Degrees: Steps to Reduce Greenhouse Gases”) were never implemented. U.S. fossil fuel production, consumption, and combustion all continued to accelerate at dangerous speeds for decades.
147. On December 7, 2009, nearly 17 years after the United States ratified the UNFCCC, the then-Administrator of EPA, Lisa Jackson, issued EPA’s formal endangerment finding under the Clean Air Act. The finding stated that current and projected atmospheric concentrations of greenhouse gases including, in particular, CO2, threatened the public health and welfare of current and future generations. EPA issued its endangerment determination only after being compelled to do so by the U.S. Supreme Court in Massachusetts v. EPA, 549 U.S.
148. On January 2, 2011, EPA commenced partial regulation of greenhouse gases under the Clean Air Act from mobile and stationary sources of air pollution.
149. More than two decades have passed since the EPA’s 1990 Report and the OTA’s 1991 Report were issued to Congress. Little has been accomplished in the way of phasing out emissions even though, as DOE admits in its strategic plan, “our responsibility to future generations is to eliminate most of our carbon emissions and transition to a sustainable energy future.”
150. During the last decade, Defendants have repeatedly stated that allowing “business as usual” CO2 emissions will imperil future generations with dangerous and unacceptable economic, social, and environmental risks. As Defendants have acknowledged, the use of fossil fuels is a major source of these emissions, placing our nation on an increasingly costly, insecure, and environmentally dangerous path.
II. IN SPITE OF KNOWING OF THE SEVERE DANGERS POSED BY CARBON POLLUTION, DEFENDANTS CREATED AND ENHANCED THE DANGERS THROUGH FOSSIL FUEL EXTRACTION, PRODUCTION, CONSUMPTION, TRANSPORTATION, AND EXPORTATION
A. Despite the Known Danger, Defendants Caused Climate Instability and Allowed U.S. Fossil Fuel Extraction, Production, Consumption, Transportation, and Exportation and Associated Emissions, to Dangerously Increase
151. Between 1751 and 2014, the United States has been responsible for emitting 25.5% of the world’s cumulative CO2 emissions to the atmosphere from within its borders. Those emissions do not account for the embedded emissions in imported goods and materials that are consumed in the United States. Defendants enabled and permitted those cumulative emissions.
152. In the last fifty years, total U.S. production and consumption of fossil fuels drastically increased.
153. Acting with deliberate indifference, Defendants have not implemented, or complied with, the EPA’s 1990 Report and the OTA’s 1991 Report to reduce carbon pollution from fossil fuels, stop global warming, and protect the climate system for future generations. Had Defendants followed the EPA’s 1990 Report and the OTA’s 1991 Report, CO2 emissions today would be reduced by 35% from 1987 levels. Instead, since 1991, Defendants have knowingly allowed at least an additional 130,466 million metric tons of CO2 emissions from fossil fuel combustion.
154. Accordingly, instead of pursuing their own plans to slash emissions and reduce the risk of dangerous climate change, Defendants knowingly acted to exacerbate that risk and impose harm on the nation and on Plaintiffs.
155. Total Fossil fuel production in the U.S. climbed to 65.244 Quadrillion Btu in 2014, up substantially from such consumption in 1965.
156. Total Fossil fuel energy consumption in the U.S. climbed to 80.366 Quadrillion Btu in 2014, up substantially from such consumption in 1965.
157. Fossil fuel emissions from energy consumption in the U.S. climbed to 5.4 billion metric tons of CO2 in 2014, up substantially from such emissions in 1965.
158. In 2011, fossil fuel combustion in the U.S. accounted for 94% of CO2 emissions.
159. The above emissions figures are from U.S. Government sources and, regrettably, underreport the amount of emissions that Defendants’ actions have substantially caused. EPA uses a sector-based emission inventory, upon which the other Defendants also rely. A sector- based emission inventory accounts only for in-boundary emissions, and not those attributed to embedded emissions – emissions that account for the consumption of goods imported to the U.S. Defendants have not provided a national consumption-based inventory for CO2 emissions, which would include all embedded CO2 emissions for goods produced outside of the U.S. and consumed within the U.S.
160. In 2012, the U.S. was the largest producer of natural gas, producing a total that year of 24,058 billion cubic feet (Bcf). Also in 2012, the U.S. was second in “Total Primary Coal Production,” with 1,016,458 thousand short tons; second in “Total Primary Energy Production,” producing 79.212 Quadrillion Btu; and second in “Total Primary Energy Consumption,” consuming 95.058 Quadrillion Btu.
161. In 2014, according to the United States Energy Information Administration (“EIA”), the U.S. was the largest producer of total petroleum and other liquids with 13,973 thousand barrels produced per day.
162. The U.S. is by far the dominant producer of both shale gas and tight oil in the world. Also, the U.S. is one of four countries in the world that is producing commercial volumes of either natural gas from shale formations (shale gas) or crude oil from shale formations (tight oil).
163. The aggregate actions by Defendants in allowing fossil fuel production, consumption, and emissions to increase in the U.S. since 1965 ignored science driven considerations of climate system protection. These aggregate actions were taken with deliberate indifference to the need for a national carbon budget or a national plan that includes an analysis of the cumulative impacts of Defendants’ actions upon the climate system and with respect to the fundamental rights of the present and future generations.
B. Defendants Have Allowed Excessive Fossil Fuel Production on Federal Public Lands.
164. In 2013, 25% of all fossil fuels extracted in the U.S. originated on federal public lands.
165. In 2014, Defendant United States, through the President, DOI through BLM, DOD through Army Corps of Engineers, and EPA, authorized and oversaw the sale of 421 million tons of coal from federally-leased lands.
166. Since January 1990, DOI through BLM has leased 107 coal tracts, and associated coal production and revenues have grown. In 2015, the BLM reported that approximately 40% of all coal produced in the United States comes from federal lands. The United States has more coal deposits available than any other fossil fuel resource within its borders and, as of 2015, has
28% of the world’s coal reserves.
167. In 1985, there were 18,849 recorded federal producing oil and gas leases issued by DOI through BLM. By 2014 there were 23,657 recorded federal producing oil and gas leases issued by DOI through BLM.
168. As of June 2014, DOI’s BLM has authorized approximately 47,000 oil and gas leases on public lands, and approximately 95,000 oil and gas wells, with an additional 3,000 wells drilled annually by the oil and gas industry. The BLM oversees approximately 700 million subsurface acres of mineral estate. There are currently 36 million acres of federal land under lease for potential fossil fuel development in 33 states, pursuant to DOI’s BLM authorization.
169. From 2009-2011, the President and DOI through BLM processed more applications for permits to drill oil and gas, despite receiving far fewer applications, than the prior administration from 2006-2008.
170. Since 1985, DOI through BLM has issued between 1,486 to 6,617 permits annually to drill on federal lands. BLM has approved approximately 99% of all received applications for permits to drill, without taking into consideration that such permits would endanger Plaintiffs or increase Plaintiffs’ susceptibility to harm.
C. Defendants Subsidize the Fossil Fuel Industry
171. In addition to leasing federal public lands for fossil fuel exploitation, the United States subsidizes, funds, and subsidizes fossil fuel production and consumption.
172. The United States subsidizes the fossil fuel industry by undervaluing royalty rates for federal public leasing, as well as through royalty relief resulting in the loss of billions of dollars of foregone revenue. U.S. royalty rates are consistently less than state royalty rates. For example, Texas’s royalty rate for leasing is double the federal percentage.
173. Through eleven federal fossil fuel production tax provisions, the United States incurs approximately $4.7 billion in annual revenue costs. Through a fossil fuel consumption subsidy, the United States annually forgoes approximately $3.4 billion in revenue.
174. The United States provides approximately $5.1 billion per year in tax provision subsidies to support fossil-fuel exploration.
175. Two tax code provisions for the benefit of the fossil fuel enterprise were introduced in the early 1900s. These provisions are still in place today, resulting in substantial
revenue losses. The “intangible drilling costs” provision was introduced in 1916, 26 U.S.C. § 263(c); in 1926 the “percentage depletion allowance” provision was introduced, 26 U.S.C. § 613.
176. According to the International Monetary Fund (“IMF”), the United States is the world’s top subsidizer of fossil fuels, in absolute terms, in the amount of $502 billion per year, which includes the IMF’s accounting of negative externalities.
177. The United States has supported fossil fuel development through overseas public financing, primarily through the Export-Import Bank of the United States, an agency of the Office of the President. For example, through the Export-Import Bank of the United States, the Office of the President provided $14.8 billion in commitments for 78 transactions or projects in the petroleum sector, including 49 transactions in Latin American, 14 in Africa, six in Russia/FSU, five in the Middle East, and four in Asia. In fiscal year 2010, the Export-Import Bank of the United States provided approximately $3 billion in financing for the Papua New Guinea LNG Project or Papua New Guinea Liquefied Natural Gas Project and $18 million for the Sangatta Surface Coal Mine in Indonesia. The Export-Import Bank of the United States also supported numerous coal and gas power plants.
178. The United States supports fossil fuel development by allowing the fossil fuel industry to avoid the true social cost of CO2 emissions from fossil fuels. Based on EPA’s social cost of carbon estimates, CO2 emissions from fossil fuels have the potential to cause trillions of dollars in damages.
D. Defendants Recklessly Allow Interstate and International Transport of Fossil Fuels
179. Despite knowledge of the harm to Plaintiffs caused by the CO2 emissions from fossil fuels, Defendants recklessly allow all interstate transport of fossil fuels. Despite knowledge of the harm to Plaintiffs caused by the CO2 emissions from fossil fuels, Defendants recklessly authorize and/or permit the exportation and importation of fossil fuels and/or the facilities allowing the exports and imports of fossil fuels.
180. The Office of the President exercises permitting authority over the construction and operation of “pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, [and] petroleum products.” President Obama has failed to dismantle the U.S. fossil fuel edifice, adding an additional 100,000 miles to the 2.5 million miles of oil and gas pipelines within the nation.
181. A presidential exemption or federal license is required for all exports of crude oil to all destinations. In 2014, DOE oversaw the importation of 2,677,911 thousand barrels of crude oil, and Commerce through BIS authorized the exportation of 126,152 thousand barrels of crude oil, both increases from 2013.
182. No natural gas can be exported or imported without DOE authorization through FERC. FERC permits all LNG export terminals, including Jordan Cove LNG Terminal. Since 1995, the U.S. has imported 71,730 Bcf of natural gas and exported 14,623 Bcf. In 2014, through DOE’s authorization, 51,824 thousand barrels of natural gas plant liquids and liquefied refinery gases were imported and 257,948 thousand barrels of natural gas plant liquids and liquefied refinery gases were exported.
183. Although in 1975 Congress authorized the Office of the President to restrict coal exports under the Energy Policy and Conservation Act of 1975, 42 U.S.C. § 6212(a), the President has not exercised this authority to impose any significant export restrictions on coal. In fact, since 1990, the United States has promoted expanding coal exports. Coastal facilities
through which coal may be exported are subject to federal approvals. In the Pacific Northwest alone, three new marine coal terminal projects are under various stages of federal permitting and review.
184. In 2011, the U.S. exported 107 million short tons of coal. In 2012, U.S. coal exports totaled 125 million short tons, the highest level of coal exports in over twenty years. Most recently, in 2014 the EIA reported that the U.S. imported 11 million short tons of coal and exported 97 million short tons of coal.
E. Defendants Recklessly Allow CO2 Pollution From Combustion of Fossil Fuels
185. Either directly or through the control of the Federal Government, Defendants authorize the combustion of all fossil fuels in the U.S., including coal, oil, and gas. Such combustion occurs primarily in the energy and refineries sector, the transportation sector, and the manufacturing sector.
186. In 2012, petroleum accounted for 36.5% of the total primary energy consumption in the U.S., the single largest source of energy consumption. All U.S. petroleum refineries are permitted and regulated by EPA.
187. In 2013, fossil fuel combustion from various industrial processes accounted for approximately 15% of total CO2 emissions in the U.S. The EPA regulates these industrial processes.
188. The DOE establishes efficiency standards in buildings and appliances. These standards affect levels of energy consumption and combustion.
189. Since 1975, through the Corporate Average Fuel Economy (“CAFE”) program, the United States has required manufacturers of vehicles sold in the U.S. to comply with fuel economy standards set by DOT. By controlling the fuel economy standards, Defendants have exercised control over CO2 emissions in the transportation sector.
190. From 1996-2014, through tax breaks, the United States subsidized the purchase, and thus increased demand for, vehicles weighing more than 6,000 pounds (“SUVs”). SUVs are less fuel-efficient and emit greater quantities of CO2 per mile than lighter-weight vehicles, other factors held equal.
191. In 2012, U.S. CO2 equivalent emissions from transportation were 1,837 million metric tons. In 2012, CO2 equivalent emissions from transportation of all vehicles in the U.S.,
including aviation, passenger cars, SUVs, heavy-duty trucks, freight rail, ships, and boats, were responsible for 28% of total U.S. greenhouse gas emissions.
III. THE JORDAN COVE LNG EXPORTS
192. Enacted in 1992, Section 201 of the Energy Policy Act mandates the authorization of natural gas imports from, or exports to, a nation with which the United States has a free trade agreement, without modification or delay, to any person applying for such authorization.
Accordingly, under the Energy Policy Act, such natural gas imports and exports are automatically deemed consistent with the public interest. 15 U.S.C. § 717b(c).
193. Pursuant to Section 201 of the Energy Policy Act, on December 7, 2011, DOE, through the Office of Fossil Energy, issued DOE/FE Order No. 3041, granting long-term multi- contract authorization to Jordan Cove Energy Project, L.P. to export liquefied natural gas from Jordan Cove LNG Terminal in Coos Bay, Oregon, to free trade agreement nations. The DOE/FE Order authorizes the export of up to 13,140 Bcf of natural gas over 30 years. That quantity of natural gas would result in approximately 716.2 million metric tons of CO2 emissions, more than all of the CO2 emitted in 2012 by our nation’s largest emitter, Texas.
194. Jordan Cove will be operational in the first quarter of 2018, according to the Vice President of the Jordan Cove Energy Project, LLC, seven years after receiving its export authorization from DOE.
195. Pursuant to its authorization, the Jordan Cove LNG L.P. has given notice to DOE that, by the end of 2015, even before it has all final approvals from other agencies, it will enter
into “binding long-term liquefaction tolling service agreements” for the full liquefaction capacity of the export terminal.
196. The sources of natural gas for Jordan Cove LNG’s exports authorized by DOE include suppliers operating in the Rocky Mountain region of the U.S., western Wyoming, northwestern Colorado, northern Utah, northern Nevada, and northern California.
197. In a letter of support for Jordan Cove LNG Terminal exports, Governor John Hickenlooper of Colorado wrote to DOE and FERC: “Jordan Cove is of specific interest to Colorado . . . The project terminal is the only LNG facility on the west coast that would directly link Colorado to new energy markets via the Ruby Pipeline which originates in northwest Colorado and carries natural gas from that region to states further west of Colorado.”
198. Jordan Cove LNG will liquefy this natural gas for export at its proposed LNG export terminal in Coos Bay, Oregon. Jordan Cove plans to build a new power plant to provide the additional electricity needed to liquefy the natural gas for export. The proposed 420-MW South Dunes Power Plant would be the second-largest single source of greenhouse gas emissions in Oregon and would be the largest single source of CO2 emissions in Oregon in 2020 if it were built. The Jordan Cove South Dunes Power Plant would emit 51.6 million tons of CO2 over 30 years, or 1.72 million tons of CO2 per year.
199. According to the EIA, liquefying natural gas requires the energy equivalent of 10% of the gas being exported.
200. The CO2 emissions resulting from the Jordan Cove LNG Terminal exports and the South Dunes Power Plant emissions will harm Youth Plaintiffs who live in and around Oregon, as well as Future Generation Plaintiffs, by further endangering the climate system.
201. Youth Plaintiffs who live in Colorado are also adversely impacted by the opening up of an international market for the export of natural gas being extracted through hydraulic fracturing in the State of Colorado, and in the Rocky Mountain region of the U.S. generally, and then shipped by pipeline to Oregon for liquefaction and export abroad, ultimately to be burned, thereby causing additional CO2 emissions. The Youth Plaintiffs from Colorado and Oregon are harmed by the fossil fuel exploitation in and running through their states, which will be connected by the Pacific Connector Natural Gas Pipeline and 3,900 mile gas transmission system crossing the states of Washington, Oregon, Idaho, Wyoming, Utah, and Colorado.
IV. CURRENT SCIENCE ON GLOBAL CLIMATE CHANGE AND OCEAN ACIDIFICATION
202. There is a scientific consensus that climate change endangers humanity and nature. Present climate change is a consequence of anthropogenic GHGs, primarily CO2, derived from the combustion of fossil fuels. The fossil fuel emissions have led to an energy imbalance and consequent dangerous disruption of the climate system upon which our nation and Plaintiffs depend.
203. Atmospheric CO2 levels greater than 350 ppm cause this energy imbalance. That energy imbalance is now approximately 0.6 Watts/m2 averaged over the entire planet, equivalent to exploding more than 400,000 Hiroshima atomic bombs per day, 365 days per year, throughout our planet.
204. The 2014 National Climate Assessment acknowledged that “[t]he cumulative weight of the scientific evidence . . . confirms that climate change is affecting the American people now, and that choices we make will affect our future and that of future generations.”
205. Greenhouse gases in the atmosphere act like a blanket over the Earth, trapping energy received from the sun. More GHG emissions in the atmosphere means that more energy is retained on Earth, with less being radiated back into space.
206. A substantial portion of every ton of CO2 emitted by humans persists in the atmosphere for as long as a millennium or more. Therefore, the impacts associated with past and current CO2 emissions will be borne by our children and future generations. Our nation will continue to warm in response to concentrations of CO2 from past emissions, as well as future emissions.
207. The current level of atmospheric CO2 concentration caused by human-made climate change has already taken our country into the danger zone.
208. In 2013, the atmospheric CO2 concentration exceeded 400 ppm for the first time in recorded history. The pre-industrial concentration was 280 ppm. Emissions must be rapidly and systematically reduced to well below the natural rate of draw-down into Earth’s forests, soils, and crust in order to restore energy balance and avoid crossing tipping points that set in motion disastrous impacts to human civilization and nature.
209. March 2015 was the first month that the monthly global average concentration of CO2 was 400 ppm for an entire month, reaching levels that have not been seen for about three million years. CO2 concentrations have risen more than 120 ppm since pre-industrial times, with half of that rise occurring since 1980.
210. Earth has now warmed about 0.9°C above pre-industrial temperatures. That temperature is equivalent to the maximum temperatures of the Holocene era, the period of climate stability over the last 10,000 years that enabled human civilization to develop. Warming is expected to hit 1°C in 2015-16.
211. Civilization and the water sources, crops, foods, wildlife, marine life, and coastlines on which people depend have developed within a very narrow set of climatic conditions. It will be nearly impossible for Plaintiff to adapt to all of the current climate change impacts in the quick time-frame in which they will occur. The survival and well-being of Plaintiffs is significantly threatened by climate destabilization.
212. Cessation of Defendants’ actions in permitting, authorizing, or otherwise subsidizing new fossil fuel projects, along with cessation of government actions that limit carbon sequestration in soils and forests, could reduce the earth’s energy imbalance, the severity of our disruption of the climate system, and the severity and pace of ocean acidification, within the lifetimes of Youth Plaintiffs.
V. EXISTING IMPACTS OF CLIMATE CHANGE ACROSS THE NATION
213. Climate change already damaging human and natural systems, causing loss of life and pressing species to extinction. Unless arrested by government action informed by science, climate change will impose increasingly severe impacts on our nation and others, potentially to the point of collapse.
214. Recent scientific reports, for example, warn of the disintegration of both the West Antarctic ice sheet and the East Antarctic ice sheet, causing multi-meter sea-level rise. Such will devastate coastal regions, including much of the eastern seaboard. Millions of Americans and trillions of dollars in property damage will result. The risk of this devastation approaches certainty, unless fossil fuel emissions are rapidly phased out. The recent studies more fully than prior studies account for the potential for non-linear ice sheet melting, which could raise the sea level by 10 feet (or more) by mid-century.
215. If carbon pollution is not quickly abated, there is near scientific certainty that humanity will suffer sea level rise of several meters, submerging much of the eastern seaboard of the U.S., including Florida, as well as other low lying areas of Europe, the Far-East, and the Indian sub-continent.
216. Well-documented and observable impacts from the changes in Earth’s climate system highlight that the current level of atmospheric CO2 concentration has already taken our nation into a danger zone. Increased CO2 emissions are already resulting not only in the warming of land surfaces, but also in the warming of oceans, increasing atmospheric moisture levels, rising global sea levels, and changing rainfall and atmospheric air circulation patterns that affect water and heat distribution.
217. One key observable change is the rapid increase in recorded surface temperatures. As a result of increased atmospheric CO2 from human activities, our nation has been warming as scientists predicted as early as 1965. The increased concentrations of greenhouse gases in our
atmosphere have raised global surface temperature by approximately 0.9° Celsius. In the last thirty years, Earth has been warming at a rate three times faster than that over the previous one hundred years. 2014 was the hottest on record, according to the National Aeronautics and Space
218. As expected, our country’s sea levels have also risen from glacial and ice cap melting, as well as from the thermal expansion of the ocean itself. Based on measurements taken from 1993 to 2010, sea levels have been rising at an average rate of 3.2 millimeters per year.
Though sea levels rose about 170.18 millimeters (0.2 meters) over the last century, within the last decade, the rate of sea-level rise has nearly doubled. Rising seas have caused and will cause flooding in coastal and low-lying areas. The combination of rising sea levels and more severe storms creates conditions conducive to severe storm surges during high tides. In coastal communities this can overwhelm levees and sea walls, as witnessed during Hurricane Katrina, Hurricane Sandy, and other major storms.
219. Today, rising sea levels are submerging low-lying lands, eroding beaches, converting wetlands to open water, exacerbating coastal flooding, and increasing the salinity of estuaries and freshwater aquifers. Between 1996 and 2011, twenty square miles of land were
inundated by rising sea levels along the Atlantic coast. Coastal states, such as Maryland and Louisiana, are experiencing wetland loss due to rising sea levels. Scientists have predicted that wetlands in the mid-Atlantic region of the U.S. cannot withstand a seven-millimeter per year rise in sea levels.
220. Similarly, climate change is already causing, and will continue to result in, more frequent, extreme, and costly weather events, such as floods and hurricanes. The annual number of major tropical storms and hurricanes has increased over the past 100 years in North America, coinciding with increasing temperatures in the Atlantic sea surface. Across the U.S., nine of the top ten years for extreme one-day precipitation events have occurred since 1990.
221. Changes in our country’s water cycle as a result of climate change also increase the potential for, and severity of, droughts. Even in arid regions, increased precipitation is likely to cause flash flooding, and will be followed by drought. These changes are already occurring. Droughts in parts of the Midwestern, Southeastern, and Southwestern U.S. have increased in frequency and severity within the last fifty years, coinciding with rising temperatures. Most of the recent heat waves can be attributed to human-caused climate disruption.
222. In higher altitude and latitude regions, including in mountainous areas, more precipitation is falling as rain rather than snow. With early snow melt occurring because of climate change, the reduction in snowpack can aggravate water supply problems. The snow cover extent of North America in June 2015 was 0.75 million square miles, the second lowest
ever recorded behind June 2012, with 0.68 million square miles. The average area of North America covered by snow decreased by about 3,500 square miles per year between 1972 and 2013.
223. Arctic sea ice is declining precipitously and is expected to disappear completely in the coming decades. In 2013, Arctic sea ice extent for September was 700,000 square miles
below the 1981-2010 average for the same period. In 2014, the Arctic sea ice extent for September was 463,000 square miles below average. In 2015, the maximum extent of the Arctic sea ice was the lowest in the satellite record. With less sea ice, less solar radiation is reflected back to space, a positive feedback loop serving to amplify regional and global warming.
224. Similarly, there has been an increase in permafrost temperatures and melting in Alaska. Substantial methane releases from thawing permafrost have already been observed in Alaska. Because much of the Alaskan permafrost overlays old peat bogs that sequester methane, permafrost melting ill release methane that will further increase global warming to even more dangerous levels. CO2 and methane released from thawing permafrost could contribute as much as 0.4°F to 0.6°F of warming by 2100.
225. Mountain glaciers are receding nationwide because of warming temperatures. In 2010, Glacier National Park in Montana had only twenty-five glaciers larger than twenty-five acres, as opposed to 150 such glaciers in 1850. In the Brooks Range of northern Alaska, all of the glaciers are in retreat and in southeastern Alaska, 98% are in retreat.
226. The melting of mountain glaciers is particularly serious in areas that rely on snow melt for irrigation and drinking water supply. In effect, a large snow pack or glacier acts as a supplemental reservoir or water tower, holding a great deal of water in the form of ice and snow through the winter and spring and releasing it in the summer when rainfall is lower or absent. The water systems of the western U.S., particularly in California and Oregon, heavily rely on this natural water storage. Yet as temperatures warm, not only will these areas lose this supplemental form of water storage, but severe flooding is also likely to increase as rainfall accelerates the melting of glaciers and snow packs.
227. Changes in water supply and water quality will also impact agriculture in the U.S. Increased heat and associated issues such as pests, crop diseases, and weather extremes, will all impact crop and livestock production and quality. For example, anthropogenic climate change in the U.S. has produced warmer summers, enabling the mountain pine beetle to produce two generations of beetles in a single summer season, where it had previously only been able to produce one. In Alaska, the spruce beetle is maturing in one year when it had previously taken two years. The expansion of the forest beetle population has killed millions of hectares of trees across the U.S. and resulted in millions of dollars lost from decreased tourism revenues.
228. Agriculture is extremely susceptible to climate change, threatening food security. Higher temperatures generally reduce yields of desirable crops while promoting pest and weed proliferation. Climate change is predicted to decrease crop yields, increase crop prices, decrease nationwide calorie availability, and increase malnutrition.
229. Increased wildfires, shifting precipitation patterns, higher temperatures, and drought conditions also threaten forest industries and private property. In the U.S., 72,000 wildfires have been recorded, on average, each year since 1983. Nine of the ten years with the
largest acreage burned have occurred in the fourteen years since 2000.
230. Increased CO2 emissions are having a severe negative impact on the health of our oceans. The oceans absorb approximately 25-30% of global CO2 emissions, resulting in a 30% increase in surface ocean acidity.
231. Ocean acidification has been rising at a geologically unprecedented rate. Currently, acidity is rising at least 100 times faster than at any other period during the last 100,000 years, threatening marine life, including human food sources. Organisms at risk include: corals, oysters, clams, scallops, mussels, abalone, crabs, geoducks, barnacles, sea urchins, sand dollars, sea stars, sea cucumbers, many common single-celled organisms and protists that act as prey, and various forms of seaweed. The loss of some of these species can cause entire food webs to collapse.
232. By 2100, the surface waters of the ocean could be nearly 150% more acidic, resulting in a pH that the oceans have not experienced for more than 20 million years. In recent years, ocean acidification has already contributed to oyster reproductive failures impacting the Pacific Northwest’s shellfish industry, including oyster harvests in Coos Bay, Oregon. In addition, warmer water in regional estuaries, such as Puget Sound, may contribute to a higher incidence of harmful blooms of algae linked to paralytic shellfish poisoning and may result in adverse economic impacts from beach closures affecting recreational harvesting of shellfish, such as razor clams.
233. The rise in ocean acidity places coral reefs at considerable risk. Given that coral reefs are among the most biologically diverse and economically important ecosystems, the impact of their loss cannot be overstated. Coral reefs provide shelter to a quarter of all marine species.
234. For major U.S. coral reefs, projections show extensive bleaching and dramatic loss of shallow coral cover occurring by 2050, and near complete loss by 2100. In Hawai‘i, coral
cover is projected to decline from 38% (current coral cover) to approximately 5% by 2050, with further declines thereafter. In Florida and Puerto Rico, where present-day temperatures are already close to bleaching thresholds, coral is projected to disappear even faster. Given the severity of these impacts, it is inevitable that these effects would be felt across our country, and by future generations.
235. Climate change and ocean acidification are threatening the survival and wellbeing of plants, fish, wildlife, and biodiversity. As many as one in six species are threatened with extinction due to climate change. Many more species that do not face extinction will face changes in abundance, distributions, and species interactions that cause adverse impacts for ecosystems and humans.
236. Salmon have historically been associated with human society and been a major contributor to the economy. Due to physical changes to freshwater ecosystems resulting from climate change, salmon populations have declined significantly across the country. The optimum water temperature for salmonids is 55° to 64° Fahrenheit; massive fish kills have occurred at or above 71° Fahrenheit. As of 2015, four salmon species in eighteen locations are on NOAA’s Endangered and Threatened Marine Species list; in five locales they are extinct. Scientists from the Salmon 2100 Project, housed in an EPA research laboratory in Oregon, have predicted that, despite current recovery efforts, salmon runs are not likely to sustain themselves through 2100 and other recovery strategies must be adopted to combat climatic shifts.
237. Fossil fuel extraction and combustion, and the resulting climate change, is already contributing to an increase in allergies, asthma, cancer, cardiovascular disease, stroke, heat- related morbidity and mortality, food-borne diseases, injuries, toxic exposures, mental health and stress disorders, and neurological diseases and disorders. Climate change threatens the basic requirements for maintaining health like clean air, pure water, sufficient food, and adequate shelter. It also increases occurrence of infectious diseases.
238. In the U.S., 8,000 Americans have died from heat-related illnesses over the last three decades. There are now twice as many Lyme disease cases than were reported in 1991. In
the past three decades, the percentage of Americans with asthma has more than doubled, and climate change is putting those Americans at greater risk of requiring hospitalization. Longer growing seasons allow for ragweed to produce pollen for a longer period, resulting in aggravated and prolonged allergies for millions of Americans.
239. Climate change also harms our national security, adding tension even in stable regions of the world. The DOD acknowledged the severity of climate change and its connections to national security when, in its 2014 Quadrennial Defense Review, climate change was classified as a “threat multiplier”: “Pentagon leaders have identified three main ways that climate change will affect security; accelerating instability in parts of the world wracked by drought, famine, and climate-related migrations; threatening U.S. military bases in arid Western states or on vulnerable coastlines; and increasing the need for U.S. forces to respond to major humanitarian disasters.”
240. By 2025, 40% of the world’s population will be living in countries experiencing significant water shortages, while sea-level rise could cause displacement of tens, or even hundreds, of millions of people. As a result, the U.S. will experience an additional need to accept immigrant and refugee populations as droughts increase and food production declines in other countries. Increased extreme weather events (such as hurricanes) will also present an increased strain on foreign aid provided by the U.S. and materially increased deployment of our country’s military forces.
241. Our nation is already observing significant impacts from the relatively small amount of warming that has occurred. These impacts constitute harbingers of far more dangerous changes to come. If unabated, continued GHG emissions, especially CO2, will initiate dynamic climate change and effects that spin out of control for Plaintiffs and future generations as the planet’s energy imbalance triggers amplifying feedbacks and the climate system and biological system pass critical tipping points. Such changes would be irreversible on any time scale relevant to Plaintiffs and threaten their survival.
VI. FUTURE NATIONAL CLIMATE IMPACTS EXPECTED BY 2050 AND 2100
242. By 2050, Youth Plaintiffs will range in age from 43 to 55.
243. By 2100, global mean sea level rise is projected to be at 56 inches, if sea level rise occurs linearly. Based on that global projection, it is predicted that the U.S. will experience a 56-65 inch sea level rise on the East Coast, up to a 76-87 inch sea level rise in areas surrounding the Gulf of Mexico, and a 47-65 inch sea level rise along the West Coast. Sea level rise could be even more catastrophic depending upon the rate of disintegration of the Antarctic ice sheets. Sea level rise will result in increased erosion and the loss of land. In Washington and Oregon, more than 140,000 acres of coastal lands lie within 40 inches in elevation of high tide. Among the most vulnerable parts of the coast is the heavily populated south Puget Sound region, which includes Olympia, Tacoma, and Seattle, Washington.
244. New scientific evidence demonstrates that a non-linear process could trigger much greater sea level rise in a time frame of 50 to 200 years.
245. Global temperature increases are projected to increase by 9° Fahrenheit by 2100. In the U.S., the largest temperature increases are expected in the Mountain West and Northern regions consisting of 14° and 12° Fahrenheit, respectively.
246. In an EPA-funded study, “Ensemble Projections of Wildfire Activity and Carbonaceous Aerosol Concentrations Over the Western United States in the Mid-21st Century,” scientists estimated that, by 2050, wildfire activity is expected to double in the Southwest,
Pacific Northwest, Rocky Mountains Forest, and the Eastern Rockies/Great Plains regions. In the western U.S., increases in temperature are projected to cause an increase of 54% in annual mean area burned by 2050 relative to the present day. Changes in area burned are ecosystem
dependent, with the forests of the Pacific Northwest and Rocky Mountains experiencing the greatest increases of 78% and 175%, respectively. Increased area burned results in near doubling of wildfire carbonaceous aerosol emissions by midcentury. The increase in wildfires and the associated emissions will have harmful impacts on health. Polar bears are just one of the species listed as endangered due to the impacts of a changing climate on their habitat. If emissions continue to rise at current rates throughout the 21st century, polar bears will likely be extirpated from much of their present-day range, including Alaska’s North Slope Borough. Sea ice, which polar bears depend upon to access their prey, is projected to disappear by 2100. Experts project there will be massive species extinction this century.
247. Human-induced warming, if business continues as usual, is projected to raise average temperatures by about 6° to 11° Fahrenheit in this century. Heat waves would then increase in frequency, severity, and duration. For example, by the end of this century, if Defendants do not dramatically reduce emissions, the number of heat-wave days in Los Angeles is projected to double, and the number of heat-wave days in Chicago to quadruple, resulting in many more deaths.
248. While potential climate change impacts on water resources vary between regions, the western states will be particularly impacted by drought, reduced precipitation, increased evaporation, and increased water loss from plants.
249. Warmer temperatures particularly impact the Pacific Northwest because reduced snowpack and earlier snowmelt alter the timing and amount of water supplies. By 2050,
snowmelt is projected to shift three to four weeks earlier than the 20th century average. Since earlier snowmelt will result in warmer and shallower rivers and streams in summer and fall, diseases and parasites that tend to flourish in warmer water threaten to eliminate up to 40% of remaining Northwest salmon populations by 2050.
250. By 2050, biologists conservatively expect decreases in salmon populations will lead to 11% to 14% less annual carcass biomass available to bald eagles, our country’s national bird.
251. Defendants, through the Department of Homeland Security, have acknowledged mass human migrations are a potential impact of climate change, and have developed a mass migration plan. Estimates put the number of climate-induced migrants worldwide at 200 million by 2050.
252. Climate change projections estimate an increase in monetary damages associated with inland flooding across most of the contiguous U.S. Approximately 190,000 of our nation’s bridges are vulnerable to increased inland flooding caused by climate change, with adaptation costs estimated at $170 billion for the period from 2010 to 2050. In the Northwest, a region
including Washington and parts of Oregon and Idaho, 56% of inland bridges are identified as vulnerable in the second half of the 21st Century.
253. In 2100 alone, adaptation costs associated with the 50-year, 24-hour storm moniker in 50 U.S. cities are estimated to range from $1.1 to $12 billion. Further, climate change is projected to result in $5.0 trillion in damage to coastal properties in the contiguous
U.S. through 2100.
254. Due to extreme temperature increases and unsuitable working conditions, our nation’s labor force may experience a drastic decline in labor hours and lost wages. In 2100, a
projected 1.8 billion labor hours will be lost along with approximately $170 billion in lost wages.
255. By 2050, climate change is expected to add thousands of additional premature deaths per year nationally from combined ozone and particle health effects. Higher surface temperatures, especially in urban areas, promote the formation of ground–level ozone, which has adverse impacts on human health by irritating the respiratory system, reducing lung function, aggravating asthma, and inflaming and damaging cells that line the airways. Climate change is expected to increase the frequency of high ozone pollution events by 50% to 100% by 2050.
VII. RESTORING THE ENERGY BALANCE AND PROTECTING AGAINST A DANGEROUS DESTABILIZED CLIMATE SYSTEM IS POSSIBLE BASED ON BEST AVAILABLE SCIENCE
256. An urgent and critical undertaking is required to protect the climate system and cause a cessation of Defendants' infringement of Plaintiffs' constitutional rights. Defendants must act rapidly and effectively to phase out CO2 emissions so as to restore Earth’s energy balance. Absent such immediate action, the Federal Government must cease permitting and authorizing fossil fuel projects so as not to exacerbate the climate crisis and further infringe on Plaintiffs’ constitutional rights.
257. Global atmospheric CO2 concentrations must be reduced to below 350 ppm by the end of the century in order to limit the period of CO2 overshoot and stabilize our climate system.
258. To reduce global atmospheric CO2 concentrations to 350 ppm by the end of this century would require a near-term peak in CO2 emissions and a global reduction in CO2 emissions of at least 6% per year, alongside approximately 100 gigatons of carbon drawdown this century from global reforestation and improved agriculture. If emissions had peaked and reductions had begun in 2005, only a 3.5% per year global reduction would have been necessary
to reach 350 ppm by 2100. If significant annual emission reductions are delayed until 2020, a 15% per year reduction rate will be required to reach 350 ppm by 2100. If such reductions are delayed beyond 2020, it might not be possible to return to 350 ppm until 2500 Or beyond.
259. Reducing the global atmospheric CO2 concentration to 350 ppm by the end of the century is also necessary in order to protect oceans and marine life. As a result of CO2 emissions, of which approximately 25% are absorbed by the oceans, humans, marine organisms, and ecosystems are already harmed and will increasingly be harmed by ocean acidification. To prevent the further impairment or depletion of the oceans and oceanic resources, it is imperative that Defendants take immediate measures to return atmospheric CO2 concentrations to below 350 ppm by the end of this century.
260. Targets that aim to limit atmospheric CO2 concentrations at or below 450 ppm are insufficient to avoid severe, irreversible damage as a result of ocean acidification and ocean warming. For example, the weight of recent evidence establishes that, at a prolonged 450 ppm level, coral reefs will become extremely rare, if not extinct, and at least half of coral-associated wildlife will become either rare or extinct. As a result, coral reef ecosystems will likely be reduced to crumbling frameworks with few calcareous corals remaining.
261. Current actions by Defendants will not yield atmospheric CO2 levels of 350 ppm by the end of the century, are not based on any scientific standard, and are not adequate to prevent and remedy the degradation, diminution, or depletion of our country’s public trust resources.
262. The actions and omissions of Defendants make it extremely difficult for Plaintiffs to protect their vital natural systems and a livable world. Defendants must act immediately to restore energy balance and implement a plan to put the nation on a trajectory that, if adhered to by other major emitters, will reduce the atmospheric CO2 concentrations to no more than 350 ppm by 2100.
VIII. THE FEDERAL GOVERNMENT’S ADMISSIONS OF ITS PUBLIC TRUSTEE OBLIGATIONS
263. Defendants are trustees of national public natural resources. The national public natural resources include the air (atmosphere), seas, shores of the sea, water, and wildlife.
264. In 1968, Congress declared that the Federal Government has “continuing responsibility” to “use all practicable means” so as to “fulfill the responsibilities of each generation as trustee of the environment for succeeding generations.” 42 U.S.C. § 4331(b)(1).
265. Congress also declared that the Federal Government is among the “trustees for natural resources” and directed Defendants to act as trustees, on behalf of the public beneficiaries, of all natural resources under their management and control. 42 U.S.C. § 9607 (f)(1); see also 33 U.S.C. § 2706 (Oil Pollution Act).
266. Pursuant to Congressional direction, the President designated the following federal agencies to act on behalf of the public as trustees for natural resources: the USDA, Commerce, DOD, DOE, and DOI. In this context, the term natural resources “means land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled (referred to as ‘managed or controlled’) by the United States (including the resources of the exclusive economic zone).” 40 C.F.R. § 300.600(a); see 42 U.S.C. § 9607 (f)(2)(A).
267. According to the National Research Council, “fisheries within federal waters are held in public trust for the people of the United States.”
268. According to the U.S. Commission on Ocean Policy, “the U.S. government holds ocean and coastal resources in the public trust – a special responsibility that necessitates balancing different uses of those resources for the continued benefit of all Americans.”
269. According to NOAA, it “has an obligation to conserve, protect, and manage living marine resources in a way that ensures their continuation as functioning components of marine ecosystems, affords economic opportunities, and enhances the quality of life for the American public.” Further, NOAA affirmed that air is a natural resource under the public trust doctrine, and that the Federal Government shares jurisdiction with states over such public trust resources.
270. NOAA admits that one principle of the public trust doctrine is: “The public has fundamental rights and interests in natural resources such as the sea, the shore, and the air.”
271. The DOI admits that the public trust doctrine “now encompasses all natural resources,” and that natural resources include “land, fish, wildlife, biota, air, water, ground water, drinking water supplies and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the U.S.” The DOI admits that the “Department of the Interior, Department of Commerce (delegated to NOAA), Department of Energy, Department of Agriculture, Department of Defense, and any other Federal Land Managing Agency” are “Federal Trustees.”
272. The State Department admitted “an obligation to current and future generations to take action” on climate change.
273. The United States has taken the position before federal courts that the Federal Government is a trustee over important national natural resources, including wildlife, and has both rights and obligations under the public trust doctrine.
274. By way of example, in a 2010 complaint filed against British Petroleum, the United States alleged: “Natural resources under the trusteeship of the United States and other sovereigns have been injured, destroyed, or lost as a result of discharged oil and associated removal efforts. The discharged oil is harmful to natural resources exposed to the oil, including aquatic organisms, birds, wildlife, vegetation, and habitats.”
275. Since 1965, Defendants have known they each have mandatory duties to abate CO2 pollution from fossil fuels in order to stop global climate change: “The pervasive nature of pollution, its disregard of political boundaries including state lines, the national character of the technical, economic and political problems involved, and the recognized Federal responsibilities for administering vast public lands which can be changed by pollution, for carrying out large enterprises which can produce pollutants, for preserving and improving the nation’s natural resources, all make it mandatory that the Federal Government assume leadership and exert its influence in pollution abatement on a national scale.”
276. Defendants have exerted their influence, control, custodianship, and sovereignty over the polluted atmosphere and the exploitation of fossil fuels, but they have not abated the harm. Because Defendants have put Plaintiffs in danger and increased Plaintiffs’ susceptibility to harm, Defendants are responsible for taking action to protect Plaintiffs. In fact, Defendants have exacerbated the harm to our atmosphere in violation of Plaintiffs’ constitutional rights.
For more information about Our Children's Trust suit to require the United States to act on the climate disruption threat posed by fossil fuel emissions, see Our Children's Trust website here.
In contrast to the philosophy behind Our Children's Trust suit to force federal action on climate disruption is this idea, that the Trump fossil-fuel-funded administration means that all useful action on climate will now be local action by, at most, regions within the US.
Climate Change Is Now a Local Issue
It’s not often that the physical world changes overnight.
On January 20, though, it did.
On that day — when Donald Trump was inaugurated — our national efforts to combat the causes of global warming were shelved, leaving Americans on their own to protect themselves from its effects.
Trump’s plan for his first 100 days calls for backing away from the Paris climate accord, scrapping the EPA’s Clean Power Plan, and installing a climate denier as the agency’s head. Among the first orders he issued were calls to complete the controversial Keystone XL and Dakota Access pipelines.
Congress likewise seems ready to do nothing to slow flooding along our coasts, drought in America’s breadbasket, or the spread of asthma and insect-borne diseases all over, among the many other threats across a warming America.
But there may be one positive result from Washington’s inaction: Now we won’t be paralyzed by the hope that federal regulations will fix everything. We can instead turn our attention to defending against the rising costs and disruptions of warming right here in our own neighborhoods.Warming is global, but its effects are very localized. Each community faces different threats and costs, but with one thing in common: We’ll need to rely on local governments, community organizations, businesses, and families.
Take flooding as an example.
Around the country, nearly 300 electric generation plants — including more than 100 nuclear plants — plus 12 major airports are so close to sea level they need to be moved or protected. It’s going to be up to state and local governments to fortify them.
Elsewhere, New Yorkers are contemplating how to relocate or protect 104 public schools, 85 houses of worship, and 16 hospitals that are within 6 feet of today’s sea level. In Rhode Island, Newporters are mulling how to safeguard the 968 historic structures that lie in the floodplain — and the tourist revenues those structures attract.
Then there’s extreme weather. Many towns must figure out how to finance projects to control sewer overflows and water pollution caused by increasingly severe downpours. Riverside and coastal communities should be planning seawalls and other barriers.
New zoning regulations can reduce watershed loss and repetitive storm damage. Meanwhile, cities may want to expand heat-wave emergency plans, or try to cool themselves by planting trees and mandating reflective or “green” roofs.
At the neighborhood level, communities are expanding local food sources in case reduced rainfall cuts into the nation’s supply of groceries. Families should meanwhile be preparing for increased cooling needs, worsening allergies, and water shortages. Not least, property owners need to contemplate declining property values, particularly for flood- and drought-threatened homes and businesses, while municipalities need to deal with the resulting erosion of their tax base.
As we turn our attention to these effects of warming, we need to encourage inventors and entrepreneurs. Home cooling, water purification and reuse technology, hydroponics, and flood control are only a few of the candidates for innovation.
In one sense, of course, nothing changed on Inauguration Day. Even if Washington dramatically increased programs to slow warming, the atmosphere we’ve created has guaranteed rising temperatures, increased flooding and droughts, and other changes over the next 20 years or more.
What has changed is that Washington’s refusal to tackle the causes of warming can galvanize us to think more clearly about how to protect ourselves against its effects.
Now that we know the cavalry isn’t coming to stop climate change, it’s high time we start getting serious about how to adapt our own communities and homes.
David W. Stookey is the author of Climate-Proof Your Personal Finances and president of the Savvy Families institute. Distributed by OtherWords.org under Creative Commons Attribution-No Derivative 3.0 License.
As OregonPEN approaches its second anniversary, with Issue #51 of its second year, we are taking steps toward building up for the big leap into being a much stronger force for bettering Oregon with new thinking about new ways to do something that has been done the old way for a long time.
So it's timely for OregonPEN to share this brilliant older post about new ways of seeing and doing from an OregonPEN inspiration, Chuck Marohn. This lengthy essay was linked in last week's OregonPEN, but it's so full of insight that it merits its own republication.
Chuck was someone willing to actually see what was in front of his nose as a civil engineer and urban planner -- and to name what he was seeing (and doing) as insanity, and to point out that it didn't have to continue, and that we could be smarter.
Oregon is chock-full of cities and towns -- many larger, and many more even smaller than Marohn's hometown of Brainerd, Minnesota, that urgently need the message that this imaginary Brainerd mayor gives to her staff.
As a public interest newspaper dedicated to making Oregon better, OregonPEN is proud to help spread the Strong Towns message and to remind readers that Strong Towns is a membership organization.
Best of Strong Towns Blog:
From the Mayor's Office
There is no simple approach to building a Strong Town. There are no one or two universal ideas that, if implemented, will change the trajectory of America's cities, towns and neighborhoods. This is hard work. For a city to get there, current priorities need to be realigned and everyone -- from the mayor, the city engineer, the maintenance worker and everyone in between -- needs to be working to get more value out of our existing investments.
As a finale to the series we've been running that began with a simple comparison of the tax base from two nearby blocks -- one developed in the traditional pattern and one in the suburban --
I am going to share what I would advise a city's mayor to say in response.
This is written as an address from the mayor to the staff.
I don't need to tell you that we are going through difficult times. You've all had your budgets cut in each of the last four years. Many of the things we used to do as a city, we are no longer able to. The trajectory we are on gives us little confidence that things will be different anytime soon. If we're going to tell ourselves that it's halftime in America, then we need to have the courage to make some dramatic, mid-game course corrections.
I've read the report from Strong Towns that showed how the 26-year tax increment subsidy we gave to relocate Taco John's resulted in a tax base, even before we deduct the subsidy payments, that is 41% less than the old run down block up the street. It surprised me, as I'm sure it surprised you, and caused me to do a lot of soul searching. And, quite frankly, it made me angry.
I'm sick of being told that our failure is some type of statistical anomaly. That decline in our core neighborhoods is normal. That we are destined to be a second tier city that fortune somehow passed by.
The thing I'm upset about is not how the report exposed our incorrect assumptions about growth and prosperity -- I'm actually grateful for that. The thing I'm upset about is what we've been doing to our own town, our own residents, our own families for these many years. We've done this to ourselves.
It ends today.
As of this moment, we're all going to be working with the same core goals with respect to the NE Brainerd neighborhood. In the next ten years, we are collectively going to work to accomplish the following hard, measurable goals:
It ends today, and here is how we're going to do it.
Last week I contacted Mn/DOT and our representatives at the Minnesota Legislature to demand changes to the highway the runs through this neighborhood. It is the most destructive infrastructure we have for our overall tax base. I've laid out a proposal that would have our city be a laboratory for an experiment in shared space design. I've also formally offered to guarantee control of access rights and elimination of access points on the periphery of town -- something we've long fought against in the pursuit of strip highway development -- so highway speeds can be increased outside of town in compensation for slower speeds within. I'm optimistic this dialog will bear fruit as Mn/DOT is more desperate to reduce their long-term obligations than even we are.
As for our staff, here is what I expect of each of you.
I know this is going to be tough because you have the greatest course correction of them all. Listen closely. I'm not joking on any of this.
Tomorrow morning you are going to get all the paint you need and you are going to stripe every street in NE Brainerd. These streets are bizarrely wide; completely out of proportion for a neighborhood such as this. I want to see on-street parking areas defined, narrow (10 feet or less) driving lanes identified and the remainder of the space dedicated to bike lanes.
Yes, bike lanes. I want them everywhere and I want no ambiguity over what they are. I realize people are going to look at you funny as I'm sure very few residents in this area even own bikes anymore. Nonetheless, this is going to cost very little and it needs to be done. It is neighborhood triage. The first step of creating value is providing people with options. Today they have one. Tomorrow they will have one more.
Stripe these streets. They are too wide and communicate car domination. Paint is cheap. Striping for bike lanes will add immediate value where little exists today.
Next, I want to see a list of all the projects we have planned for this neighborhood for the next ten years. In each and every one, we are going to do three things. First, we're going to reduce costs dramatically by narrowing the pavement width. Our streets will be better looking and cheaper too.
Second, we're going to redirect the savings into building quality sidewalks. Remember what I said about creating value by giving people options? Now they will have three (four after I get to the transit coordinator).
Your task is going to involve an equally dramatic shift in priorities and approach. I hope you are up to the challenge because right now, not only is the Planning and Zoning Department not creating value for this city, you are simply a bureaucratic obstacle to be overcome by anyone wanting to do something positive. I don't want to lose you -- I want you to be part of the team -- but the approach needs to change 180 degrees.
Let's start with a mental exercise. I want you to envision what a healthy, successful NE Brainerd would look like. What would be there? I know this is difficult because you and your predecessors have been focused on battling the symptoms of decline: a high percentage of rentals, poorly maintained properties, petty violations for trash and lawn maintenance, building code violations. What would success look like?
Let me help. Success would be a mix of housing options. There would be some rental, some owner-occupied. There would be a mix of types too. Some single-family and some multi-family. I'd also expect that a successful neighborhood would have both high earners and families on the low end of the wage spectrum. One should also expect to see a smattering of neighborhood commercial uses. All of these components would be intermingled and and designed to be completely compatible with each other.
Look at what our city code says. It calls for predominantly one use: single family. We have other "pods" of uses -- essentially arbitrary lines where we separate different types of housing from each other -- where multi family is allowed. These are next to our commercial areas because, ostensibly, poor people live in multi-family and they won't object as loudly to the terrible looking way we do commercial development.
Take a look at what our use-based code has gotten us in this neighborhood.
A lot of low value uses, like garages. Notice how this one is adjacent to the alley yet the cars access from the street, making this space not only look run down by design but also degrading the street, parking and pedestrian spaces.
Use-based zoning doesn't care how the property interacts with the public realm. As a result, you get garages and cars framing the public space, even when an alley is readily available.
We also have apartments being built. This is considered positive new growth, although it adds to the hostile feel of this "neighborhood". Many more of this type of building and we might as well just gate each property, put up watch towers and call in the national guard. This is a very anti-neighborhood design.
The use-based code only worries about how the building is being used -- apartment -- and whether it meets the setback, coverage and parking requirements. There is no concern about how this design detracts from the public realm and lowers the value all the neighboring properties.
Our current code also creates artificial buffers around properties, leaving unnecessary gaps throughout the neighborhood. I realize that many people believe we are "built out", but that is a ludicrous notion. We copied an ordinance from somewhere else, but we never stopped to measure our own neighborhoods and determine how it would mess them up. For us to reach our goals, the free market needs to be set loose to fill in gaps like these with productive structures.
When suburban development codes are applied to urban areas it creates artificial buffering -- gaps -- in the urban framework. Not only does this artificially limit what property owners can do productively with their property, but in doing so it severely limits the tax base along with other measures that would improve the productivity of the place (like an additional utility connection on the same pipe).
Then we have the way that commercial properties interact with the neighborhood. We've designed them to be all on the edge and to be accessed only by automobile. Since the defining feature our ordinance demands is parking, we get buildings that have huge parking lots and, thus, face the parking. Here is what our residents get to look at from their homes. Not exactly creating much value for them.
Can we expect our neighborhoods to thrive when we allow them to be treated like this? Why do we allow these commercial properties to not only not provide any access to the people living right across the street (they must drive like everyone else), but we allow them to point their unadorned rear, complete with dumpsters, right at them. To create a neighborhood with value, we need to show it respect.
In fact, we routinely sacrifice the quality of life for our residents, along with their property values, on the alter of new growth. That is a tradeoff that has not served us well and one I am no longer willing to make. Any new development needs to add to the overall value of what is existing, not detract from it.
Today I am going to propose an ordinance that will repeal our entire zoning code. Six months from today, it will cease to govern this city. I would rather have no code than the one we have now, but I do believe that a mixed-use, form-based code with a streamlined approval process would have great benefit for this neighborhood. You have six months to have it in place.
Here are the parameters I expect from a new code.
Our obsession with rental properties is over. We do not have a problem with rental properties, or better put, rental properties are not the problem. They are the symptom. The problem is neighborhoods that lack value and reasons for people to invest in their future. Your job is no longer to fight over rental properties. It is no longer to administer red tape or checklists, to ensure that each use is in its proper place, that there is enough parking for each Black Friday rush of vehicles.
Your job, plain and simple, is to improve the value of the public realm. If you make our public spaces -- the space between structures spanning across the street -- more valuable, our neighborhood will grow and prosper and we will meet our goals.
Economic Development Director
You've just heard me address the City Engineer and City Planner and redirect their efforts 180 degrees. I have the same challenge for you because we need a completely different approach.
Providing a 26-year Tax Increment Financing subsidy to move a fast food business four blocks up the street is an embarrassment. That type of project is not worthy of our efforts. But I understand why you do these things; you have to show results or you are criticized. Your job has always been a "what-have-you-done-for-me-lately" affair.
I want to redirect your efforts from economic hunting -- the idea of finding that business from outside the community and luring it to come here -- to economic gardening. I want to grow jobs locally, not import them. My inspiration is Littleton, Colorado, where the economic gardening approach has helped them create thousands of jobs without any tax subsidy. And these are not fragile jobs -- ones that are threatened once the subsidy goes away -- but jobs that will be deeply rooted in the community and, thus, have tremendous staying power.
I don't want to bring in another business that adds fifty new jobs. I want you to focus on creating one new job in fifty different businesses. This is much more than just business retention and expansion. Read their stuff. I'll even budget for you to go to their conference and training sessions.
The downside of this approach is that there will be no more ribbon cuttings. No more grand openings. No more big events where you and I can stand there with a hardhat and shovel while we celebrate a "successful" transaction where we gave away millions to bring some new jobs to town. Those things play well politically for both of us because they provide the illusion that we are actually doing something and making progress. I actually want to do something. I actually want to make progress.
So from this day forward, so long as you swear off the "hunting" approach and go about "gardening", you are getting a long, long leash from the city. When you garden, things don't grow overnight. We're going to measure your success over time with the same metrics I brought up earlier. The goal is to increase jobs in this neighborhood by 150% in ten years. I want to see actions, but I won't demand results for at least five years.
And by the way, we'll still be bringing jobs and new businesses in from outside the community. The only difference will be that we won't be paying them to come -- they will want to be here. If we are successful -- and we will be -- they will be paying us to come here.
To switch gears slightly, I also have a pet project that will benefit this neighborhood that I want you to put in motion. On the old railroad site, we have some old buildings that are currently zoned Industrial that are envisioned to be used for office or manufacturing sites. I don't think that is a viable use, and apparently the market doesn't either because very little has happened. I want to re-purpose this site as Central Minnesota's entertainment district.
A future entertainment district? Kill two birds with one stone by providing a unique entertainment experience within walking distance of the neighborhood while turning over the businesses in downtown that are crowding out substantial reinvestment.
Consider this: there is a general consensus that a major drag -- maybe the primary burden -- on our commercial downtown is the existence of a number of low-class drinking establishments. We're the center of a tourist mecca yet we are the lowest of the low in terms of entertainment options. When I look at the railroad site, I see a place that has the potential to be one part Bourbon Street, one part Downtown Disney. A row of clubs, each with entertainment where you can walk back and forth between them any time of year.
We strategically phase out liquor licenses in the downtown (or require 50% food service for renewal there) and phase them in at our new "entertainment district". Now Brainerd is a regional entertainment destination, as it should be. And with that amenity within walking distance of our neighborhood (and an easy transit stop to others), it will make living in Brainerd more valuable.
Parks and Recreation Director
I would love to have your job because you're going to have a ton of fun in your new role. Let's quit chasing grants -- you spend too much time on that right now -- and we don't need any more auto-based parks, so stop trying to build or expand them. What we need to do, to create value, is to embed recreation into the fabric of the neighborhood.
I want you to brainstorm and come up with ten ideas by next week. We'll chat about them and see what we can do to make them happen. Here are a handful to get you started.
Let me give you one other project to work on. I said that there is not a public park anywhere near this neighborhood, and that is true, but it doesn't have to be. Running along the west side is an area that -- by lucky chance -- creates a potential greenway that runs the entire length of the town. At each end is a park with ball fields and hockey rinks and in the middle is the former Franklin school athletic grounds. Right now we're hardly using this space and, where we do, we use it to store salt and sand or stockpile snow.
With a little bit of effort and imagination, this unused space can be transformed into an amazing recreational amenity that will serve not just this neighborhood but the entire city. Now I'm not pretending this will be simple and/or that there are not things to be worked out, but as a medium-term project, this is a low-cost, high-return endeavor. I want you to look into it and get things going.
Housing Rehabilitation Agency Director
Why is it that everyone believes you simply deal with housing for poor people? We have a city of nothing but housing for poor people -- that's part of our fundamental problem. The approach of the HRA -- whether it is investing in new growth on the periphery of town or doing work to create more "affordable" housing within town -- is completely missing the mark.
Now to be fair, you are not just worried about "affordable" but are also tasked with the quality of the housing stock. A tar paper shack may be affordable, but it is not a very high quality place to be. Unfortunately the tools and guidance we've given you creates a huge incentive for you to simply buy the cheapest house on the block, tear it down, and build something that adds little value in return. That's not progress; that's institutionalizing decline.
These units may be "affordable", but they detract from the overall value of the neighborhood while not holding their own value over time. Add to that the fact that this is not a great place to live and investments like this are preventing this neighborhood from making progress.
What I want you to do from now on is simple. On each block, I want you to identify the house one cheaper than the median value. I want you to find a private sector partner to help you buy it, tear it down and redevelop it. When you do this, I want the project to retain at least one "affordable" unit; whether that is an accessory apartment, a granny flat or a room for rent over the garage, it does not matter.
Now what will this accomplish? By focusing away from the cheapest house on the block, you're probably going to do fewer projects -- although I wouldn't count on that if you lever your funds right -- but each project is going to matter more. When we improve the value of the neighborhood by taking the medium value property and making it a high value property, we can then sit back and watch the market take care of transforming all those low value properties without us having to spend a dime.
In other words, you're no longer a bottom feeder. You are a catalyst for big change. And while bringing about big change, you're embedding affordable housing within each block in a way that will be socially-viable over the long-term. No more concentrations of poverty -- our neighborhoods will be fantastic places for people of all incomes to live side by side.
I want you to start an avalanche of redevelopment. You don't do that by throwing snowballs. You start an avalanche by poking the mound of snow strategically in the place that will start the pile moving. Your job is to find that spot and get the pile moving.
I appreciate what you are trying to do and the effort you put in. The limited mandate you have matches the tools we've provided you. Unfortunately, I can't put a lot more resources into your efforts, but I can change your mandate and focus your limited resources on an approach that would be far more productive.
Today you run Dial-a-Ride, which is essentially a very expensive taxi service. I realize this service fills a need -- and I'm not sure how to address that need as it relates to those outside of the city limits -- but we can meet that need within the city and do so much more if we change to a fixed route service.
I've sketched out a very rough 3-1/2 mile route that provides service within easy walking distance of the neighborhood we are focusing on. It connects that neighborhood with the downtown, the mall and grocery store, government offices, churches and parks. If we designed a similar system on the south side of town, we could also connect the clinic, many other parks, schools and pretty much the rest of the core neighborhoods.
I'll leave it to you to redeploy your units based on what destinations people most frequently use, but the bottom line is that we need the people of North Brainerd to have another option. They need to be able to walk up to three or four blocks and get on a bus that will get them to the key destinations in town (and note that doesn't include the WalMart, Target and new Costco in the neighboring town). If we can improve the convenience by putting these units on a GPS tracker that people can monitor from the phone, all the better.
Public Safety Coordinator
Your department has suffered immensely under the recent budget cuts. We have fewer police and fewer fire fighters than we did two years ago. We can all see where this is headed, and it is not good. Something needs to change dramatically.
I'll make you a promise right here and now: No more personnel cuts.
Now I need you to make me a promise: You'll work with me to change our approach.
We need to acknowledge that the way we provide public safety today is amazingly expensive. Each one of those cars costs more to buy, outfit and fuel than we pay for the officer inside it. And when it comes to fire protection, we ask our residents to pay twice. First, they pay millions for a fire protection system of underground pipes and towers and then they pay again for trucks and stations that, if we look at them objectively, are oriented more for service for surrounding communities than our own.
We need to start changing this equation. Serving the surrounding communities may be the good neighbor approach, and it may bring us some extra revenue year to year, but it is far from making financial sense. I want to focus on our town first. What is it going to take to do that well? Than any service we provide to others has to be at cost+ some incentive to make it worthwhile. We'll help them, but not subsidize their lifestyle.
And if that costs us some "clients" then so be it. If we are about building the biggest department, then our chiefs will be proud until budget shortfalls force us to lay everyone off. Our approach has to make financial sense.
There are three things I want to do that are going to incrementally start to change the cost equation, allowing us to put more money into people and effective public safety and less into gadgets, gear and infrastructure.
First, I want to start getting our staff out of their cars. As we retire vehicles, I don't want to replace them all. We still need a mobile police force, but I want to get some on bikes and some out walking. If I'm going to keep my promise, and you keep yours, our budget needs to start shifting from stuff to people.
Second, we're going to start downsizing our gear. Those big fire trucks are great for responding to that fire ten miles away, but unless that community ten miles away wants to pay for it, we're not going to replace it. I want a smaller, lighter and more nimble fleet of vehicles. We're a community of neighborhoods. We need to retool our approach to be at a neighborhood scale.
And that gets me to the third item: As you heard me tell then engineer earlier, we're abandoning the wide streets approach. You're going to have to work with me on this one. I know you believe that these wide streets allow you to get places more quickly. Maybe they do, but they cost a fortune, destroy the tax base that we need to sustain your department, and are themselves a huge safety hazard.
How many times a year do we need those Jaws of Life because two fast moving cars have collided? Too many, I know. We fix this hazardous street situation and you'll be able to put those extraction tools on the shelf for good. Imagine that!
We are going to have to think more strategically about where we place our stations, what vehicles we purchase, how we deploy our staff, etc... Public safety is more than big vehicles driving fast down wide streets. I'm trusting you to see that and to work to transition to an approach that would be more holistic and, ultimately, more effective.
Public Utilities Supervisor
I'm embarrassed every time we dig up a street that we just put down three years ago so we can replace an old water line. Deeply embarrassed. You have to be too. On projects so enormous, this type of coordination is the minimum acceptable amount.
“What I need from you is a full capital improvements plan for replacement of the entire system.”
What I need from you is a full capital improvements plan for replacement of the entire system. How old are our water and sewer lines, our towers, pumps and treatment facilities? When do they need to be replaced? How much is that going to cost? These seem like the most basic questions that any properly run utility should be able to ask.
Once we answer those questions, I want to know the rate structure we need to pay for everything. Will that double our present utility bills? Triple? Increase by ten times? We need to know because we need to have a very sober discussion with your customers about what we can realistically do.
And get your mind around this: ultimately we are going to abandon large parts of the current system. Abandon as in, when it goes bad, it is not going to be replaced. It is simply not going to be cost effective to do it. This analysis is going to help us identify those areas and start that transition today.
I had a very interesting conversation the other day with an old timer from the area. He was lamenting the condition of the town but, in doing so, passed along to me a great story. He said that, when he was young, early every morning the inmates from the local jail would be roused, handed brooms and brought out to sweep the streets. Every day. He said the downtown had music – “In the Good Old Summertime” was the standard back then, he said – and that by 8 AM the entire place was bustling with activity. It is a pleasant mental image.
Now I don’t know as we’re going to be able to use inmates from the local jail – although we should look into it -- but the idea of sweeping the streets as a routine matter of business is intriguing to me. It is an emphasis on making the place more pleasant for the people that actually live there. So much of our effort today is on making our places easy to drive through. If we’re going to change the value equation in this neighborhood, we have to change our maintenance priorities.
Here’s our new priority list for maintenance:
To make residents into maintenance assets, they need to be part of the troubleshooting framework as well as the solution process. I suggest you adopt the program See. Click. Fix. as a first step to engaging residents. From their phone, they will be able to identify problems in their neighborhoods, take a photo and submit an electronic trouble ticket.
“Your job is to make the public realm pleasant. I need you to have this degree of passion, commitment and the attention to small details.”
This may sound scary, but you need to embrace it. Don’t worry -- you’re not going to have hundreds of people whining about potholes in front of their house as much as you are going to be educating the public on the realistic cost – in terms of time and effort – to maintain our places. They’ll be able to see all of the requests, help you prioritize and, in the process, take ownership of their neighborhoods.
Then you need to tap into volunteers. We have hoards of people that want to take ownership in their neighborhood. We will create many more with this shift in focus. Let them water the plants, weed the gardens and paint the fences. Give them an opportunity to love their places and they will.
Your job is to make the public realm pleasant. I need you to have this degree of passion, commitment and the attention to small details.
School District Superintendent
Madam Superintendent, I invited you here because I wanted you to hear all of this and understand how critically important you are to the success of this neighborhood and the future well being of our city. We need you as part of this solution.
The school district has already walked away from four neighborhood schools in our city, decimating the value of those neighborhoods in the process. We need families here. We need professionals. With great schools these neighborhoods draw both. Without the schools, we are at a serious disadvantage. We can't afford to lose any more.
I would make the case to you that the school district really can't afford it either. I saw the financial evaluation your building people did to justify the new campus built four miles out of town. They compared the ongoing maintenance and repair of the existing neighborhood schools to the construction and maintenance of the new. This limited analysis completely overlooked the key cost factor you are now starting to struggle with: the cost of busing.
Nobody needs to be bused to the neighborhood schools. Literally nobody. If the cost of transportation had been factored in, the neighborhood schools would have looked much better. And stop to consider the volatility with energy fluctuations that the district has opened itself up to by committing to a long term debt on an enormous remote campus, one that requires every kid to be bused to. The district already has to take money out of the classrooms to subsidize busing. Is this really good policy?
I also want to ask you to change your current busing policy. You keep widening the radius of where kids are excluded from riding the bus. Why do you want to financially reward the parent that lives ten miles out of town on the hobby farm by picking their kid up at the door for no charge while the poor kid living in the poor neighborhood a mile from school has to walk in the middle of winter? We should be doing the opposite; provide great service to those kids that cost so little in town and then, if you want to provide service, charge those outside of town that are disproportionately expensive (by their own choice of where to live) for the service.
We're mobilizing the entire city around building neighborhoods of value. We're going to be drawing people, businesses and value from the outside back in. We desperately need you to be part of that move.
“We need you and your peers to get back involved in our places.”
I've asked you to be here for the same reason as the school district. We need you, and your colleagues in the other faiths, as part of our neighborhoods. You provide social stability and a degree of community cohesion that can't easily be replicated. Getting people together, having them share meals and help each other out -- this is what being part of a neighborhood is. We need you and your peers to get back involved in our places.
And we need you to stop destroying them. I realize that most of your flock drives to weekend services. I'm trying to change that by getting more people living in your neighborhood, but I need you to meet me halfway. Please stop buying up buildings and tearing them down for parking. If people have to walk two blocks to get to the service, it is a modest price to pay for what they get. And as you've heard, I promise to work to make that walk easier and more enjoyable.
And wouldn't it be great if a large percentage of your parishioners eventually lived in this neighborhood and walked by the church each day? How many more would stop for a moment's reflection? How many would volunteer to help out more often? How many more could you reach in their moment of need? How many would walk past the church and experience that gentle reminder to "love thy neighbor"?
I want to do a project together to redevelop those parking lots you've created into buildings for people. You have a lot of power to make this city great.
Council of Local Non-Profits
You've heard me challenge our staff. Now I'm going to challenge you. Let's leverage the talent and efforts of your organizations for a common purpose. Let's focus on improving this neighborhood, and the other neighborhoods of the city. Let me give you an example.
Our parents are afraid to let their kids walk to school. You have elderly people that take the Dial-a-Ride to the mall everyday simply to do a morning walk for exercise. Let's get them out here together in the morning. Let the elderly walk the kids to school. Imagine the wisdom and insights that would be mutually shared -- not to mention the admiration and affection -- by a seven year old and a seventy year old spending fifteen minutes each day on a walk through the neighborhood.
There are so many people wanting to do good things. I want to give them a platform right here in this neighborhood to do it.
I've saved you for last, and I really only have one, simple thing to request: Set us free.
I don't want more money. I don't want subsidies. I don't want grants and low interest loans. I don't want more programs or incentives or "enterprise zones". I don't want you to cap property tax rates -- or ever require that we have a property tax. I don't want you to solve our problems for us. I want you to set us free to innovate.
Hold us accountable -- I'm fine with that and, in fact, I demand it -- but reserve your paternal instincts for those places that don't meet up with expectations. Better yet, watch us succeed in this neighborhood and then tap into our knowledge and skills to assist those places still mired in stagnation and decline. That's a modern operating system for local government. If you want innovation, you have to let us innovate.
Thanks everyone. We have a lot of work to do, but we can turn this neighborhood around.
Get out there and make our town a strong town.
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