issue: Economy

The Electric-Car Future Creeps a Little Closer

Posted on by The Progressive Policy Institute

Electric carTwo interesting dispatches from the electric-car front. The first comes from Denmark, which just announced a $40,000 tax break on each electric car, with free parking in downtown Copenhagen.

The announcement by the Danish government is certainly a splashy prelude to the climate change conference it’s hosting this month. Denmark is putting forth a $100 million plan to push electric cars to the masses and — with the help of Silicon Valley start-up Better Place — build an infrastructure of charging poles and service stations that can change out batteries in minutes. Better Place is working with Dong Energy, the biggest utility in Denmark, to modernize Denmark’s grid to allow cars to be charged overnight via wind power, when winds are blowing and power demand is low.

For all of the promise of the Danish effort, some challenges remain. Other than Renault, no automakers have yet to agree to make cars that are compatible with Better Place’s recharging stations. And there are doubts about the infrastructure, with questions still remaining about the standards for batteries. To help get the project over the hump, Danish local and national governments will be the first in line to buy the new cars.

From one of the world’s most eco-conscious cities, we go to one of the world’s most car-choked – in Los Angeles, Mayor Antonio Villaraigosa just announced that the city plans to update 400 existing charging stations while adding another 100. Moreover, electric vehicle owners are set to receive tax rebates to construct home chargers and have access to high-occupancy vehicle lanes.

The city said it would streamline the regulatory processes for the charging stations, and suggested that it might revise standards and building codes to encourage more plug-in options. The city will also spend $6 million to purchase a fleet of electric vehicles.

Two takeaways from these reports: One is the idea that the electric-car future is predicated not so much on the automobile but on an infrastructure system that can support it. As Bernard Avishai wrote in Inc. magazine recently, the ecosystem that springs from the rise of the electric car, rather than the car itself, is what’s really going to revolutionize the economy.

The second is the very fact of these developments. There’s a concreteness to these advancements that gives one hope that when it comes to electric cars, we are no longer in the realm of fantasy. It may all still come to naught, but at the very least we are seeing encouraging signs of public commitment and private initiative coming together to help make innovative ideas into reality.

Photo credit: https://www.flickr.com/photos/27072829@N00/ / CC BY-NC 2.0

(h/t to Infrastructurist)

How the U.S. Lost the Leadership Role in Nuclear Energy

Posted on by The Progressive Policy Institute

Over the past decade, I have had the opportunity to travel to different countries and interact with many of the world’s top nuclear engineers and scientists. They all say the same thing: the U.S. needs to reclaim its leadership role in nuclear energy development activities.

The international nuclear science and engineering community looks to the U.S. for leadership and direction in nuclear technology research, new concept development, deployment of advanced technologies, construction of research and power reactors, and the safe operation, regulation, and oversight of nuclear facilities, and their regulation and oversight.

However, for the past two decades the U.S. has fallen behind the rest of the world in many areas. Although we maintain a leading position in some, including research productivity and reactor operation and regulation, we have lagged in others: the development of research facilities, new power reactor construction, used nuclear fuel recycling, and implementation of new technology. In recent years, we have lagged in a number of key nuclear technology areas and have failed to significantly upgrade our capabilities and facilities. The result is that other nations now have the world-class leadership position in key aspects of nuclear energy.

Here’s what we haven’t done:

  • We have not built a new power reactor in this country for more than 25 years.
  • We have not upgraded or grown our capabilities to analyze radioactive materials.
  • We have not commissioned a research or test reactor since 1992 or a new power reactor since the mid-1990s.
  • We no longer have the fast neutron irradiation facilities, which are necessary in the development and testing of advanced materials, reactor concepts, fuel cycles, and the destruction of radioactive waste materials.
  • We no longer have the capability to forge the large steel components needed for the next generation of nuclear power plants.

Meanwhile, other countries have stepped forward to advance nuclear technology. In China, 16 new plants will be in operation by 2020, which would quadruple its nuclear capacity in the next decade or so. Other developing countries are following this example — some 30 countries that do not currently operate commercial nuclear plants are actively considering the construction of nuclear power plants.

Yet even as the world proceeds apace on nuclear energy, America is essentially sitting out the game, unable to compete because our nuclear technological and operational capabilities have atrophied from decades of dormancy.

To retain a world leadership position — to compete in the burgeoning global market for nuclear energy and take the lead in nuclear energy security — the U.S. must consistently invest in building new plants and developing new concepts for future reactors; lead in fuel-cycle research; educate future generations of nuclear scientists and engineers; and consistently upgrade facilities for the study of materials, fuel cycles, radiation damage, large-scale component manufacturing, neutron data measurements, and critical facilities. We also need to maintain our capabilities and understanding of radioactive material handling and the protection of workers and the public.

Technological leadership today requires being an active and reliable participant in the international community that one desires to lead. The U.S. needs to reinvest, replenish, and grow its capabilities in order to maintain a leadership position. Otherwise we cede the leadership and court the danger of becoming a minor player — even an irrelevant one — in the global discussion on nuclear energy.

Read Andrew Klein’s new PPI Policy Memo, “Why Progressives Should Be More Open to Nuclear Energy.”

A Chart That Should Keep Progressives Up at Night

Posted on by The Progressive Policy Institute

In my last post, I noted that progressives need to turn their attention toward the medium- and long-term fiscal crisis the country faces. How massive is the challenge we face? The following chart, from Keith Hennessey, an ex-Bush policy advisor, says it all:

taxes-and-spending-long-term-trends 2

Obviously the first thing to jump out is the escalating divergence between federal spending and revenues in the decades ahead. And the spending projection in the chart is from 2007, so it doesn’t include the stimulus or spending on the financial crisis (or the projected cost of health care reform). That’s scary enough. But the scariest part may not be evident at first glance.

The red line shows federal taxes as a percent of GDP going back to 1945 and projected outward to 2080 by Hennessey based on its historic growth. The yellow line shows federal spending as a percent of GDP. The chart makes clear that the level of federal taxation has actually varied little since World War II (which says nothing about how marginal tax rates faced by different groups have changed). You can see the last build-up of deficits that occurred from the 1970s through the mid-1990s. You can also see the build-up of the Bush years.

Historic Shortfalls

The kind of budget shortfalls we are looking at in the future dwarfs anything we’ve ever seen. There are two ways to close the fiscal gap – cut spending or increase revenues. What Hennessey’s chart makes clear is that the level of taxation it would require to meet projected spending needs is far higher than anything the country has ever seen-slash-tolerated. Indeed, even closing half the gap through higher taxes would necessitate historically unprecedented taxation levels.

Progressives, in short, are going to be caught between a rock and a hard place: we will either have to find a way to convince the electorate to go along with massive tax hikes, with all of the electoral risk that entails, or we will have to come up with a plan to make equally massive cuts to entitlements that are likely to also be unpopular and that may do significant harm if not thought through carefully.

It’s true that the right will also be caught in this dilemma, but its situation is not quite as severe for two reasons. First, as the chart implies, their preferred path to fiscal sanity (spending cuts) starts off a much easier sell than tax hikes, given historical patterns. And second, the right has little programmatic interest in permanent spending hikes. The Reagan and Bush years showed that there is a constituency on the right for greater defense spending, but unless we really end up permanently at war with radical Islam, it can be expected that the Pentagon’s budget will rise and fall as global circumstances dictate. Progressive goals, on the other hand, such as greater federal education spending, expansion of child care assistance, more generous safety nets, and broader social insurance constitute costly and (ideally) permanent spending increases that will exacerbate the fiscal gap in the above chart.

The Upshot for Progressives

What does this mean for the progressive agenda? First, it is vital that we prioritize our goals, a process that is going to require us to drop many of them, as difficult as that may be. Second, we need to come to terms with what “higher taxes” is going to mean in practice. U.S. taxation is actually as progressive as in Europe because we have taken so many families off of the income tax rolls. The added boost to raising taxes on “the rich” is much smaller than the revenue that could be raised by broadening the tax base so that we were not so reliant on upper-income families to pay for the benefits of government that everyone enjoys.

Third, we need to look for ways to achieve progressive aims that do not cost the federal government so much. That could include certain types of regulation, but it could also include a shift toward progressive cost-sharing in social insurance programs. Rather than trying to raise taxes to give people the benefits they say they want, we could move toward a paradigm where people gradually incur increasing costs of these benefits privately, forcing them to directly confront the trade-offs and efficiency concerns that social insurance tends to hide. Those with limited incomes could receive federal assistance but would still be incentivized to use benefits efficiently. (I will suggest what such programs might look like in future pieces here.)

Some progressives may object to the idea of progressive cost-sharing because it shifts costs and risk onto individuals. But they are going to incur the costs one way or another, whether through higher taxes or greater out-of-pocket spending. And given the impracticality of paying for future benefits solely out of taxes, risk is also likely to be privatized either way — whether by a thoughtful policy framework or through massive cuts in existing programs.

But let there be no doubt — the long-term prospects for significantly expanded progressive government are dim, and in fact, a retrenchment in coming decades is inevitable. President Clinton was wrong — the Era of Big Government is not over. But it will be soon. As progressives we must lead the process of winding it down in a responsible and fair way.

The Dutch Try Something New: A Kilometer Tax

Posted on by The Progressive Policy Institute

The Netherlands has taken the plunge on a very good idea. The Dutch cabinet recently announced a new “pay-as-you-drive” tax plan.

The initiative, which is the first of its kind in the world and still awaits passage by Parliament, would introduce a three-cent tax for each kilometer driven in 2012, rising to 6.7 cents in 2018. But the tax won’t be uniform. It will be higher during rush hour and on cars that guzzle more gas. To somewhat balance out the new tax, the road tax will be eliminated and a new-car tax will be slashed.

Something like this has been proposed in the U.S. In February, Transportation Secretary Ray LaHood broached the idea: “We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled.” But that trial balloon was shot down by the White House before it was barely off the ground.

It’s a shame because it’s a concept worth taking seriously. The National Surface Infrastructure Financing Commission, also in February, released a report (PDF) endorsing a vehicle-miles-traveled (VMT) fee as the most viable approach to fund federal investment in our road infrastructure. Today, that investment is funded by gas taxes, but those haven’t been raised in years, and now generate about one-third of the funds necessary to keep the highway system from deteriorating further.

The tax would be adjusted based on factors like time of day, type of road, vehicle weight, and fuel economy. A GPS system would keep track of the information necessary to accurately charge taxes.

Aside from becoming a more stable source of infrastructure funding, the VMT fee would send market signals that could lead to quality-of-life improvements. Prices set higher during rush hour could prompt some people to make fewer trips, use more public transportation, do more telecommuting, and/or choose to travel at alternative times, easing traffic in the process. (A pilot VMT project in Oregon resulted in a 12-percent decrease in vehicle miles traveled.)

There are legitimate concerns about a VMT fee — privacy issues not the least among them (though those are addressed well here) — but the upside is too good for it to not be a part of the transportation policy conversation. Perhaps it will be once again if the Dutch experiment proves a success.

Facing the Hunger Problem

Posted on by The Progressive Policy Institute

Yesterday’s release of the USDA’s report on hunger in America was the latest dismal dispatch from the recession’s frontlines. According to the report (PDF), 14.6 percent of Americans experienced food insecurity in 2008, up from 11.1 percent in 2007. Translated in raw numbers, that’s 49 million individuals – nearly 17 million of them children – who had low or very low food security during the year. That 49 million number is greater than the combined total populations of New York, Illinois, Indiana, Missouri, and Kentucky.

The depressing numbers only underscore just how hard-hit Americans have been during the downturn. But they also make one thankful that among the administration’s first accomplishments was to increase the Supplemental Nutrition Assistance Program (SNAP) (formerly known as the Food Stamps Program) by nearly $20 billion as part of the American Recovery and Reinvestment Act, the economic stimulus plan passed earlier this year.

Aside from providing immediate and badly needed relief for struggling families, the expansion of the SNAP program also likely gave the economy a jolt. It’s a well-known fact that food stamps offer one of the best bangs for buck when it comes to stimulus. A 2008 study by Moodys Economy.com found that the multiplier effect of a dollar of SNAP stimulus was 1.73, the highest among the stimulus options studied.

Still, nutrition safety net programs are still far too small. The Food Stamps program reached only 66 percent of eligible people in 2007. And while it’s great that the administration has been vocal and active about the hunger problem, the time is ripe for the president to propose a far more specific plan with more money.

In particular, President Obama needs to continue to seize the moment and accelerate his work to meet his goal of ending child hunger by 2015. (Tom Freedman and I wrote in greater detail about some of our ideas here.) For that to happen, Congress should pass, and the president should sign, a serious Child Nutrition Reauthorization Bill. Such a bill should:

  • Make universal, in-classroom school breakfasts standard in public schools
  • Fund universal school lunches
  • Increase reimbursements to school districts that provide healthier foods
  • Make WIC an entitlement and fund nutritional improvements in the WIC package
  • Reduce paperwork and increase reimbursements for both government and non-profit agencies that sponsor after-school and summer meals for kids

The administration’s infusion of stimulus funds into the SNAP program no doubt brought relief to millions of Americans. In light of the USDA report, the administration should continue its efforts to bolster social services and embark on a serious job creation program to bring an end to hunger.

Does America Have a China Policy?

Posted on by The Progressive Policy Institute

President Obama’s visit to China has underscored the dramatically unbalanced nature of the Sino-American relationship. No, not the oft-lamented imbalance in trade between the two countries, but a strategic imbalance. Put simply, China has a U.S. strategy, but it’s not clear that the U.S. has a China strategy.

The Chinese know what they want, and for the most part, they are getting it. Foreign policy mavens take note: this is what 21st-century realpolitik looks like.

China wants the United States to keep its markets open. “I stressed to President Obama that under the current circumstances, our two countries need to oppose all kinds of trade protectionism even more strongly,” Chinese President Hu Jintao said yesterday in a joint news conference in Beijing’s Great Hall of the People. Though he was too polite to say so, he had in mind U.S. tariffs on Chinese steel and tires.

While President Obama swore fealty to free trade, he also called for “balanced growth,” which is diplo-speak for U.S. efforts to get China to spur domestic consumption and rely less on exports. The president also declared that the world cannot count on overleveraged U.S. consumers to be a perpetual engine of global growth.

Change in Trade Relationship Unlikely

That’s right in concept. But the U.S. trade deficit with China — even in the midst of recession and financial crisis — is expected to be $200 billion this year, about the same as last year. And U.S. injunctions to pump up domestic demand are no more likely to work with China than they did two decades ago with another export juggernaut, Japan. Beijing not surprisingly seems intent on sticking with the economic strategy that has produced annual growth rates of 10 percent – even as the U.S. wallows in 10 percent unemployment.

Worried about the value of the huge hoard of dollar assets they are sitting on, the Chinese admonished U.S. officials to keep the dollar’s value from sliding further. President Obama, determined to accentuate the positive, praised China’s previous pledges to “move toward a more market-oriented exchange rate over time.” But pegging the renminbi to the dollar is integral to China’s quasi-mercantile strategy. We should expect no more than cosmetic adjustments that will have scant effect on exchange rates and, therefore, will not give a major boost to U.S. exports to China.

So all and all the president’s visit was satisfactory from China’s point of view. Beijing got assurances that the administration would not shut out Chinese imports, or let the dollar get much weaker. It had to endure only mild U.S. nudges on boosting domestic consumption and letting its currency appreciate.

The Limits of Cooperation

For his part, President Obama stressed the need for Beijing to work with the U.S. to get North Korea and Iran to forswear nuclear weapons, and to reduce greenhouse gas emissions. China pays lip service to nuclear non-proliferation, but it has steadfastly declined to use its economic leverage to bring serious pressure to bear on North Korea. It also has blocked stiffer U.N. sanctions against Iran, even while upping its trade with Tehran. And China is adamant that it won’t sign a global warming pact with binding targets next month in Copenhagen.

The president seems not to have said much about democracy, which begs the question of whether the White House believes the absence of accountable governance in China in any way inhibits a close partnership with the U.S. Obama, however, did win Beijing’s acquiescence in a human rights dialogue set to start next year.

In sum, Beijing displayed a hard-boiled realism about hewing to an economic nationalism that has catapulted China from the Third World to the first tier of nations in just 30 years, but at a growing cost to global growth and financial stability. It also gained recognition as a key stakeholder in the world’s steering committee of great powers, without having to sacrifice anything of importance to the common cause of stemming the spread of nuclear weapons or slowing climate change.

What the U.S. got was the atmospherics of a cordial and cooperative Sino-American relationship, and little else.

President Obama is right, of course, that a U.S.-China collision is neither inevitable nor desirable. He may also be right that that none of the world’s toughest challenges can be met without Sino-American cooperation.

It is time, however, for frank acknowledgement of the limits of cooperation. We need to be clear about where U.S. and Chinese interests diverge, and about what, above all else, American really wants from China. Once the administration can answer that question, it will be able to pursue U.S. strategic interests with as much focus and determination as Beijing brings to the bargaining table.

Why Retrofitting Should Be Sexy

Posted on by The Progressive Policy Institute

You’ve doubtless seen ads recently offering you a $1,500 “stimulus federal tax credit” for 30 percent of the cost of putting in new windows. How the stimulus is related to windows might not be transparent to anyone less than wonky. But it’s an important facet of the Obama administration’s broader attempt to place retrofitting at the center of a new national energy policy.

The sexy side of environmentalism has never been about houses. We generally focus on cute animals (e.g. polar bears marooned on ice floes) or Hollywood disaster scenarios (e.g. The Day After Tomorrow). But the fact is that retrofitting houses to make them more efficient, through means that will create jobs, is the low-hanging fruit of the new environmental movement.

The new path was amply revealed in an exciting (if this is your sort of thing) report recently released by Vice President Biden’s Middle Class Task Force and the White House’s Council on Environmental Quality titled, “Recovery through Retrofit.” The report puts the stimulus expenditures (such as the $1,500 windows credit) in a broader strategy.

The potential gains are pretty staggering. As the authors note, existing techniques and technologies — that is, “business as usual” approaches — can yield an incredible 40 percent energy savings per home, a reduction of 160 million metric tons of greenhouse gases by 2020, and total savings of $21 billion in home energy bills annually.

The report does the smart thing in modern progressive policymaking, focusing on how to use government to create a market that will allow entrepreneurs and consumers to find their own solutions, rather than imposing top-down measures that end up being inflexible and oppressive.

Consistent with this market-based approach, the report isolates three “market barriers”:

  • Access to information for consumers who need to understand how to retrofit their homes — it can be challenging to figure out if an “energy audit” firm is legit.
  • Access to financing for homeowners facing high upfront costs for home energy audits and retrofits — installing solar panels on your roof, for example, can be several thousand dollars.
  • Access to skilled workers who can actually perform the weatherization and retrofits — making sure folks are trained to strip and install adequate insulation is not as simple as it sounds.

There’s a lot of good stuff in the report. On improving consumer information, it proposes applying the ENERGY STAR ® label, which has worked beautifully to help consumers purchase efficient appliances, to houses as well.

On access to financing, the authors suggest measures that would allow the cost of retrofits to be added into a homeowner’s property tax bill, with amortized payments lower than the average utility bill. The cost (and value) of retrofitting would attach to the property, not an individual, meaning it would become part of the value of the house.

Finally, on worker training, the report advocates establishing uniform national workforce and certification training standards for retrofit workers — familiar to anyone who’s had to be licensed for a craft.

This is just a brief outline. You can check out the 12-page report for yourself here. It’s not polar bears or a new ice age, but from windows to workers, it’s a promising blueprint for change.

Obama to China

Posted on by The Progressive Policy Institute

President Obama’s three-day swing through Shanghai and Beijing presents an interesting opportunity to make real headway on three critical trans-Pacific issues.

First is economics. Whether the issue is China’s near recession-proof economy, currency devaluation, or seemingly inexhaustible appetite for American debt, Obama has been walking a tightrope to frame financial competition as a healthy companion to cooperation. While it’s perhaps somewhat natural for Americans to “fear” Chinese economic hegemony, keep this in mind: China has to keep growing at a rate of close to 8 percent annually, or it won’t be able to integrate its approximately 20 million brand new job seekers each year. The potential instability could wreak havoc, so on some level (American debt notwithstanding) Chinese growth should be managed rather than ignored or fought.

Second is world leadership, specifically on climate change. I was listening to a BBC podcast this morning that highlighted China’s fascinating and divisive internal debate on its place in the world, with various cadres within the governing Communist party arguing for relative isolation over front-running. This is where Obama’s message can strike home: The world needs China as a global leader as other countries look to Washington and Beijing before making their move. The Indias, Brazils, and Russias of the world see little reason to agree to any wide-ranging worldwide carbon restrictions if China doesn’t play ball first.

Finally, many will paint the president’s visit as too soft on his Chinese hosts — Obama refused a visit in DC with the Dalai Lama and has been rather publicly muted (though not silent) on the issue of human rights (though he did address the issue at a town hall meeting with students). For the record, human rights must be a part of the conversation, both as a moral issue and bargaining chip (as base as that may sound). Obama has been rather careful to present them as one of many agenda items, one that doesn’t needlessly anger Beijing and derail important conversations on issues in which America needs a Chinese partner now.

Rising Tigers, Sleeping Giant

Posted on by The Progressive Policy Institute

A new report jointly produced by the Information Technology & Innovation Foundation and the Breakthrough Institute compares the U.S.’s competitiveness on the clean energy front with China, Japan, and South Korea. What they found confirms what others have written about of late: that the U.S. is now lagging in the innovation game it once ruled. According to the study, public investments in clean energy in those countries far outpace U.S. investments. If the gap persists, the U.S. will find itself importing the overwhelming majority of the clean energy technologies it deploys, from wind turbines and high-speed-rail materials to solar cells and nuclear-plant equipment. It’s a troubling survey that underscores how much ground the U.S. needs to make up to become a world leader in innovation and green energy.

America and the World: We’re #40!

Posted on by The Progressive Policy Institute

“Not long ago, America’s global leadership in technology innovation was taken as a given,” writes Stephen Ezell in the fall issue of Democracy: A Journal of Ideas. Those days are over. In the past decade, America’s competitors have caught up and, in many cases, passed the U.S. Ezell suggests one culprit: all but alone among the world’s top economies, the U.S. does not have a national innovation policy. Ezell makes the case for a comprehensive innovation strategy, seeing in the current economic crisis an opportunity to enshrine innovation as the engine of renewed economic growth.

Race to the Top Begins

Posted on by The Progressive Policy Institute

The Department of Education today released the final application for its Race to the Top Fund after a period of public comment and revisions. With the release, the department officially parts the curtain on an ambitious education initiative, one that may well prove to be the closest the Obama reform agenda comes to an unqualified success.

The seriousness with which the administration takes education policy can be seen in gestures substantive – Race to the Top – and symbolic, such as the decision to mark the anniversary of President Obama’s election with an education event in Wisconsin.

The department’s rules for Race to the Top offer states a guideline on how best to steer their education policy. At stake: a $4.35 billion pool of funds that the department will award to states based on their performance in more than 30 criteria. Of that $350 million goes to states to create common-standard assessments. The remaining $4 billion will be up for grabs.

The program’s assessment process involves scoring states in a detailed system that goes up to 500 points. The department’s thinking on reform can be gleaned from the breakdown of scores. Under the rubric of “Great Teachers and Leaders,” the department plans on awarding up to 138 points, 28% of the total, more than any category. That category breaks down into subcategories, with points awarded for measuring student growth, developing evaluation systems, and using evaluations to inform key decisions, among other measures. The message is clear: student improvement and teacher excellence are at the heart of reform.

The other category that receives a large share of the points — 25% — is dubbed “State Success Factors,” which enumerates the ways in which states can present to the department their comprehensive vision for reform. The section asks states to articulate its plans for reform, prove its capacity to carry it out, and enlist the support of school districts. Joanne Weiss, the director of the Race to the Top program, explained in an interview with Education Week that the category aimed to encourage states to really think through their reform strategy. “It became clear that a lot of states were treating [the criteria] as a checklist. There was no big picture,” Weiss said. “Now this is where they build their case.”

The key now is the judging process. The department will select 125 judges from 1,400 applicants to go through and grade the state applications. As the Eduwonk blog points out, “If they’re not strong and keenly attuned to change and reform then this initiative won’t succeed.” Here’s hoping that the department applies the same rigor to that process as it wants the states to apply to theirs.

Stuck in Dubai with the Kabul Blues

Posted on by The Progressive Policy Institute

I hope that’s the last time I get stuck in Dubai.

This past Sunday, I boarded a plane with ten other election monitors from Democracy International (including my PPI colleague Mike Signer) to head to Kabul and serve as monitors for the second round of Afghanistan’s presidential elections.

We never made it.

Before boarding the flight, we knew that Abdullah Abdullah — incumbent President Hamid Karzai’s main challenger — planned to boycott the election. We were under the impression that Abdullah’s boycott was unofficial, meaning that his name would still be on the ballot and that the election would proceed as a formality. But there was still reason to go — any election should be monitored for fraud, even when there’s only one active candidate.

Somewhere over Eastern Europe, however, we learned that Karzai had been declared the victor. Rather than risk further violence, expense, and logistical complications en route to a pre-determined outcome, the election’s cancellation was understandable, if disappointing.

However, that still left us several hours from Dubai, our transfer city. After being offered the unappetizing possibility of immediately jumping on a return flight to DC, our weary team came to grips with the situation.

“So what’s Dubai like?” I asked the group, not knowing much about my surroundings and anticipating that I had stumbled upon a short vacation in the Middle East. I forget who said it but, “It’s like Vegas but without the gambling and booze,” stuck out. And so it was.

Dubai is a city of contradictions piled on top of one another. It has glitz and glamour: towering skyscrapers, the world’s only seven-star hotel, an indoor ski slope, and a brand new metro system. Oil money, right? Nope. Dubai isn’t actually rich — petro-dollars only flow to Dubai’s “big brother” in the south, Abu Dhabi. Dubai adheres to a more Costner-ian vision: build it and they will come. And build it the sheiks did, all with highly leveraged debt.  The Emirate’s business plan is predicated on the success of the companies that invest in Dubai.

And this house of cards is starting to crumble as world’s financial sand shifts beneath its feet: real estate prices are dropping fast as international firms search for efficient investments.

The statistic that is most striking is tourism, down 60 percent this year. Why would it affect Dubai so harshly when other areas, though suffering, are muddling through? As far as I can tell, it’s because Dubai lacks an intellectual or cultural soul. In the race to construct the world’s largest X, they forgot to construct anything actually worthwhile, like a university, a museum, or cultural center. The sheiks seem to have recognized the deficit, but haven’t come up with an original idea — the planned museum is apparently a copy of the Louvre in Paris, and the new opera house mimics Sydney’s.

After two days, I understood why tourists had abandoned Dubai — I could spend a month marveling at Paris’ diverse cultural tapestry, but couldn’t muster a third day just to stick around for the indoor roller coaster at the Dubai Mall (the largest in the world, if you’re keeping score).

I was surprised to learn on my second morning that I had apparently observed an election during my diverted trip.  I opened my courtesy copy of Gulf News to find that Sheikh Khalifa Bin Zayed had been re-elected to a five-year term as president of the UAE. Mind you, I didn’t see any campaign posters about, but that may be due to the rather limited electorate: turns out you have to be a ruler of one of UAE’s seven Emirates to have a vote.

If he had one, I imagine Sheikh Khalifa’s platform on domestic issues would have raised some eyebrows. For example, despite legal adherence to a strict Islamic code, it’s easy to buy alcohol provided the establishment is foreign-owned (which is 85 percent of the city) and you’re willing to pay the 50-percent sin tax. But if you want to buy, say, a bottle of wine for your home, you can’t do that at any corner store; those places are a 45-minute drive into the desert and you need a personal alcohol license.  You can’t get one if you’re Muslim, of course, but no one checked my friend Mohammed for his as he sucked down a double vodka Redbull at the Calabar.

If you’re caught publicly intoxicated, then it’s curtains. I heard the story of a French girl who was rear-ended as she drove home a 9:00 a.m. on a Saturday morning after a night of carousing. Despite the fact that she was the victim, the police breathalyzed her and found her blood alcohol content to be a miniscule 0.009 BAC – but still in excess of the strict zero-tolerance law. Her punishment was six months in jail, followed by deportation.

But that’s Dubai — you can get away with anything unless you’re unlucky enough to be caught. It meshes nicely with Dubai’s motto: “What’s good for business is good for Dubai.” True enough.

The Electric Car Ecosystem

Posted on by The Progressive Policy Institute

The second coming of the electric car — particularly in the guise of the highly anticipated Chevy Volt — has certainly received a fair amount of publicity in recent months. No wonder: the electric car represents America’s best bet to rejuvenate its auto manufacturing industry.

But while it’s exciting enough to dream of factories humming again and assembly lines pumping out the next generation of autos, the promise of the electric car goes beyond its immediate boost to the American car industry. A fascinating article by Bernard Avishai in Inc. details what exactly the rise of the electric car could mean to our economy:

Actually, here is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and ’90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers — or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves.

A word that pops up frequently in Avishai’s piece is “ecosystem.” Not in the environmental-ecological sense — though that obviously matters, too — but rather in the sense that a new complex of entrepreneurs, innovators, and manufacturers will likely spring up in response to the mainstreaming of the electric car. Reforming the grid, constructing a new electric-car-recharging infrastructure, making the next generation of batteries, building hardware and software for the smart cars: these and other ancillary industries have already been jump-started by the promise of the carbon-free car.

Where does government fit in? The Obama administration has already shown its commitment. The American Recovery and Reinvestment Act included $500 million for producers of electric drive components, $400 million for grants promoting plug-in hybrids and electric vehicles, and $4 billion toward the development of the smart grid. Avishai points out that when Obama signed the stimulus package, he was introduced by the head of Namaste Solar, a company of 60 employees — a subtle nod toward the idea that the green economy will be driven by thousands of new, smart companies that spring up to compete in the clean tech ecosystem. The players in the nascent industry also believe that the government has a role in establishing standards early on to bring stability to a free-for-all environment and remove some uncertainty for start-ups to jump into the fray.

And this doesn’t even get to the other obvious benefit of our car transformation: the reduction of carbon emissions as millions of gasoline-powered cars are replaced by the new breed of automobile. It all seems like a vision out of science fiction. What’s thrilling is, as Avishai reports, it’s already happening.

More Election Day Thoughts

Posted on by The Progressive Policy Institute

After a second day of analysis and reflection, key implications of Tuesday’s elections seem clearer.

The election was a referendum, all right, but on the state of the U.S. economy, not President Obama. In exit polls, most voters (over 80 percent) said the economy was their top concern. Those who professed to be “very worried” backed the Republican candidates for governor in Virginia and New Jersey by wide margins. If high unemployment persists well into next year, as White House economists forecast, it will spell serious trouble for Congressional Democrats.

Republicans were more motivated to vote Tuesday. Democrats suffered a big drop-off of voting by the young and minorities compared to 2008. But the pivotal factor was the dramatic swing of independents, whom Obama won last year. This time, independents voted 2-1 for Republican candidates.

There was an ideological subtext to the independents’ defection. In addition to worries about jobs and the economy, many of them seem fixated on the nexus of “big government,” spending and debt. There’s no doubt that growing distrust of government is complicating President Obama’s ability to forge majorities in Congress for his big, and costly, initiatives, especially health reform.

Many progressives worry that the election results will send moderate Democrats running for the tall grass. Certainly, the outcome should concentrate the minds of Congressional negotiators who are struggling to get 60 votes in the Senate for health reform. Too much time has been wasted on the public option, which already has been watered down and which in any case isn’t worth jeopardizing prospects for an historic breakthrough on universal coverage.

The way for Democrats to hold their moderates in line is to 1) make sure the bill’s cost doesn’t balloon, and that it meets Obama’s demand to add “not one penny” to the federal deficit; and, 2) take tougher steps to reduce medical cost inflation.

The election also may fuel Congressional demands to put on hold President Obama’s other ambitious goals – regulatory reform, a carbon cap-and-trade scheme, immigration reform – so that lawmakers can concentrate instead on the economy. That may make sense, if they can find practical ways to relieve economic distress without aggravating public anxiety about government overreach and profligacy.

But one thing Tuesday didn’t produce was evidence of an electorate turning hard right. The only movement conservative running – Doug Hoffman – lost his race for Congress in upstate New York, flipping a traditionally Republican seat to the Democrats. Will the Palin-Beck wing nevertheless continue their crusade to drive moderates out of the Republican Party? We can only hope.

Cap-and-Trade: Neither a Job Killer Nor a Free Ride

Posted on by The Progressive Policy Institute

Cap-and-trade legislation in Congress has come under fire from both left and right. Some on the left claim that the distribution of free emissions allowances to industry amounts to a “free ride.” Meanwhile, many on the right slam the bill as a job and economy killer.

But a new study (PDF) by PointCarbon Research, a carbon market research firm, rebuts both sides’ claims. The study focuses on the impact that climate change legislation would have on the largest emitters in the power and oil industries, which represent about 40 percent of the covered emissions in the U.S.

Contrary to right-wing forecasts of widespread economic collapse, PointCarbon found that a cap-and-trade market would, in fact, yield winners and losers among industry players. “Some companies will actually be considerably better off with a U.S. cap-and-trade program than without,” the study found, noting that companies like Exelon (the largest American utility), FirstEnergy, NRG, and PG&E stand to gain the most. Firms with a diversified fleet of non-emitting (hydro, nuclear, and renewables) and low-emitting plants are more competitively positioned and will likely see benefits.

Meanwhile, firms that rely heavily on high-emissions plants (Southern Co., AEP, Duke) would see the biggest exposure. That finding debunks the idea that industry receiving free allowances would be getting a “free ride” under cap-and-trade. As the study points out, “in reality the bulk of free allowances destined for [the power] sector will not help large power companies exposed on the generation side.”

But even as some firms do see more of a negative impact on the bottom line, the study notes that as the carbon market matures, “companies will be able to mitigate their exposure through internal reductions and offset investments” – meaning that the incentive to innovate and modernize that a carbon price brings will eventually help these companies adjust to the new low-emissions economy.

The study raises a fundamental point: “[P]utting a cost on emissions means giving a value to reductions.” In other words, a price on carbon will mean a cost burden to some – but a revenue opportunity for others. Letting actors compete in this new market is the most efficient and effective way to address the looming climate crisis.  That is precisely what the Senate cap-and-trade legislation hopes to achieve.

At the White House, Clean Tech Gets a Push

Posted on by The Progressive Policy Institute

A room full of clean tech entrepreneurs likely would not have been found in the Bush White House. But on Wednesday, October 28, that’s just what you would have seen in a brand-new auditorium (so new that there was no sign for the entrance, and it felt sort of like walking into a warehouse) on the ground floor of the Eisenhower Executive Office Building. On the heels of its announcement of a $3.4 billion investment in building a smart grid — leveraged to achieve $4.7 billion in private investments, totaling over $8 billion — the Obama administration hosted an “Energy and Climate Stakeholders Meeting.” The presenters included White House Senior Advisor Valerie Jarrett, Secretary of Energy Steven Chu, and White House Climate Change Policy Director Carol Browner.

The meeting included an extraordinary, hour-long give-and-take with Chu, who admitted that he would rather be riding herd on DOE bureaucrats to try and get more money for programs to spur clean tech when “they have me doing meetings like this.” But it was said with a smile. He also told stories about crawling around in his attics — first in California, when he was a professor, and now in Chevy Chase — to find the weak spots in his insulation. The lesson? We need far stricter standards in retrofitting homes.

The level of enthusiasm among these administration A-listers was palpable. “We’re off and running!” Jarrett announced. Describing the attitude in Congress and the potential passage of carbon reduction legislation in the Senate, Browner said, “I’ve been in and out of D.C. for twenty years, and there’s sort of that tipping point that happens, where everyone who talks starts saying not ‘if’ but ‘when.'”

In describing $151 million in new grants at DOE’s elite ARPA-E unit for transformative energy research, Chu said, “We’re going to try and hit home runs, not just base hits,” citing, with geeky but endearing enthusiasm, a new program for all liquid metal batteries that can provide large-scale energy storage at 1/20th of the prior cost.

The room was rapt — which is perhaps what you’d expect from a hundred clean tech folks crowded into a spanking-new auditorium with a spanking-new administration. Change, indeed!

This item is cross-posted at The Huffington Post.