After decades of battles in the political system, and now in the courts, the fate of health care reform is likely to come down to the vote of one man: Justice Anthony Kennedy. As the swing vote on a Supreme Court closely divided between liberals and conservatives, he will almost certainly have the power to uphold or strike down the “individual mandate” that is a centerpiece of President Obama’s Affordable Care Act (ACA). Nobody seems able to predict what Kennedy will do, and even after years studying his jurisprudence, I am also unable to say with any certainty.

I can, however, explain the reason why Justice Kennedy’s ultimate view is so uncertain. The question of the individual mandate’s constitutionality is closely tied to two competing values that Kennedy believes in deeply: a judicial duty to enforce limits on the federal government, and acceptance of a practical post-New Deal conception of the federal power to regulate a national economy. His record contains repeated defenses of both commitments, and when confronted with cases that pit them against each other, he often tries to have it both ways. With the mandate, though, Kennedy will have to choose.

Early in his tenure, Kennedy served as a reliable vote to limit the scope of federal power. In the 1980s, while a judge on the Ninth Circuit, he gave speeches calling for a restoration of federalism as “an underlying essential, ethical, moral value.” On the Supreme Court, Kennedy has voted to limit the reach of federal power to preserve the sovereign immunity and “dignity” of the states, and joined majorities in U.S.v. Lopez (1995) and U.S. v. Morrison (2000) in striking down federal legislation as beyond Congress’s power to regulate commerce among the several states. Yet Kennedy’s concurring opinion in Lopez, which he described as a “necessary though limited holding,” evinced deep tension between his belief in federalism and his recognition of the need for expanded federal authority to regulate a growing economy.

In that case, Kennedy joined a 5-4 majority to invalidate the federal Gun Free School Zones Act, which made possession of a weapon with 1,000 feet of a school to be a federal crime. He conceded that Congress has a broad role in regulating a “single, national market.” His opinion explicitly mentioned the seminal New Deal decision in Wickard v. Filburn (1941)—which extended federal commerce power to cover local, noncommercial actions that are thought to have a “substantial effect” on interstate commerce—as well as later decisions upholding the 1964 Civil Rights Act’s prohibitions on discrimination in public accommodations as an exercise of the commerce power. At the same time, however, Kennedy stated that courts have “a duty to recognize meaningful limits on the commerce power of Congress.” He decided that the Gun Free School Zones Act was unconstitutional because it was not a regulation of commerce but a criminal law, “regulating an activity beyond the realm of commerce in the ordinary and usual sense of that term.” To uphold federal legislation, Kennedy said he would require “stronger connection or identification with commercial concerns that are central to the Commerce Clause.”

More recently, though, Kennedy has voted to uphold exercises of federal power under the Commerce and the Necessary and Proper clauses. He voted with four liberal justices and Antonin Scalia, in Gonzales v. Raich (2005), to affirm the application of the federal Controlled Substances Act to the intrastate, noncommercial medical use of marijuana even as allowed by state law. In 2007, Kennedy wrote the majority opinion to uphold the federal ban on partial-birth abortion as an exercise of Congress’s power under the Commerce Clause to regulate the field of medicine. And just last year, in U.S. v. Comstock, Kennedy voted to uphold congressional authority to keep federal prisoners who are guilty of sex crimes in civil confinement after the conclusion of their sentences, if they are found to have “serious difficulty in refraining from sexually violent conduct or child molestation.” In a separate concurrence, Kennedy introduced a standard that seems to show how he would analyze the Affordable Care Act’s individual mandate: “When the inquiry is whether a federal law has sufficient links to an enumerated power to be within the scope of federal power,” he wrote, “the analysis depends not on the number of links in the congressional-power chain but on the strength of the chain.” With this statement, Kennedy signaled his openness to arguments supporting federal power—including the mandate—if they are justified in terms of enumerated congressional powers such as the regulation of interstate commerce and the power to tax.  Even here, however, Kennedy issued a “caution.” He warned “that the Constitution does require the invalidation of congressional attempts to extend federal powers in some instances” and “federal authority must be subject to some limitations.” The justification for federal authority, he wrote, must be “based on some empirical demonstration.”

Kennedy tends to adopt positions that straddle both values, and it’s likely that he’d prefer to do so in the case of the individual mandate as well. The past Commerce Clause decision that would most closely resemble this approach is Rapanos v. U.S. (2006). In Rapanos, the Court divided 4-1-4 to limit the enforcement of the Clean Water Act to isolated wetlands. Kennedy joined the four conservative justices in overturning the broad discretion of by the Army Corps of Engineers to define “navigable waters.” “The extension of regulatory authority to ‘remote and insubstantial’ wetlands,” he wrote, transcends “the requirement that the word ‘navigable’ in ‘navigable waters’ be given some importance.” “Where ‘wetlands’ effects on water quality are speculative or insubstantial,” he explained, the Corps has no authority to regulate. His opinion required the Corps to justify its jurisdiction with a clear standard applied to each wetland on a case-by-case basis. But it bears noting that Kennedy refused to join Scalia’s plurality opinion in Rapanos and make it a majority. Instead he wrote a separate concurring opinion that—even when limiting the Corps’ claim—explicitly allowed for a broader scope of federal power. Kennedy admitted that “the end result” under his standard “may be the same as that suggested by the dissent, namely, that the Corps’ assertion of jurisdiction is valid.” He again cited Wickard favorably, and wrote “there is evidence in the record suggesting the possible existence of a significant nexus” and ecological interdependence with navigable waters. In Rapanos, as in Comstock, Kennedy admitted a broad practical conception of federal power—and yet he nevertheless required the federal government to justify its authority based not on mere speculation but on empirical demonstration.

 

All of this points to a strategy that might convince Justice Kennedy to uphold the individual mandate. To persuade him, supporters of the mandate have to address three of his larger concerns. One strategy—taken by Walter Dellinger and Charles Fried in recent Senate hearings—is to connect the mandate to previous post-New Deal Commerce Clause legislation and to illustrate a clear connection between the mandate and enumerated powers to tax and to regulate commerce. Given Kennedy’s attachment to Wickard, supporters of the legislation would do well to stress the relevance of health care to the extension of the broad congressional commerce power that was allowed by the Court in the process of upholding the Agricultural Adjustment Act and the Civil Rights Act.

Second, defenders should aim to prove how closely connected the individual mandate is to the workings of the larger economy. This will help to counter the distinction—pivotal in the Virginia and Florida decisions that struck down the mandate—between ordinary commercial activity, which the government has a right to regulate, and “individual activity” such as the decision not to purchase health insurance, which mandate opponents say the government cannot regulate.

Third—and most importantly—to address Kennedy’s commitment to restraining federal powers, mandate defenders will have to formulate a plausible theory of congressional commerce authority that remains subject to meaningful, judicially enforceable limits. This is a line of argument that, to date, mandate defenders have been less successful in articulating. They cannot simply ridicule mandate opponents’ contention that the law would open the door to legislation requiring people to eat their broccoli: They must provide realistic examples to demonstrate that principled limits on federal power to regulate commerce among the several states remain meaningful and are not merely words on parchment. Were Kennedy to vote to strike the mandate, it will most likely be because its defenders could not present a principled, enforceable stopping point to federal power under the Commerce Clause.

If these efforts prove unsuccessful, Kennedy’s record in federalism cases—including Bush v. Gore—illustrates that he would not hesitate to provide a fifth vote to overturn a law on a controversial or partisan issue. But, because of his commitment to both opposing values, he would be unlikely to strike the ACA in its entirety, as Judge Vinson did in Florida this January. In Morrison, for example, the Court struck as unconstitutional Congress’s effort to establish a remedy in civil court for those who were victims of a “crime of violence based on gender.” But the Court did not invalidate the entire Violence Against Women Act or the omnibus Violent Crime Control and Law Enforcement Act of 1994 of which it was a part, even though the text of the larger bills do not say a word about the severability of unconstitutional provisions. Given his practical conception of the federal commerce power, it is more probable that, like Judge Hudson in Virginia, Kennedy would strike the individual mandate but not the rest of the Affordable Care Act.

Were he to strike the individual mandate but leave the rest of the ACA intact, Kennedy’s opinion might include conciliatory language inviting Congress to pass new legislation that more explicitly ties the mandate to the enumerated powers to regulate interstate commerce and to tax and spend. This is what he did in Lopez, writing that “Congress can revise its law to demonstrate its commercial character.” Within months of the Court’s decision in Lopez,Congress overwhelmingly voted that criminal prosecution required any weapon possessed in a school zone to have traveled in or otherwise affected interstate commerce. After Rapanos, the Army Corps of Engineers issued several memos adopting a version of Kennedy’s “substantial nexus” standard.

But in the aftermath of a Supreme Court decision to strike the individual mandate, revision by Congress to meet constitutional concerns would not be so easy. In practice, however, a Supreme Court decision striking the mandate but inviting a political fix would be fatal to the ACA. The initial debate in Congress over the Affordable Care Act was contentious enough; after Republican gains in the 2010 midterm elections, any attempt to restore the mandate by passing it as new tax legislation seems politically impossible.

So Justice Kennedy cannot split the difference. Throughout his career on the bench, Kennedy has tried to reconcile a judicial duty to enforce limits on Congress’s commerce power with the practical need to allow federal regulation of a growing and unified national economy. Now, the inevitable Supreme Court case testing the constitutionality of the individual mandate will leave him no practical way to protect both of these commitments. Kennedy will be forced to choose one over the other.

Frank J. Colucci is an associate professor of political science at Purdue University-Calumet and author of Justice Kennedy's Jurisprudence: The Full and Necessary Meaning of Liberty.

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Finance Minister Pranab Mukherjee talking to reporters outside Parliament House in New Delhi on December 7, 2010. UNI PHOTO

The mid-year analysis of the Finance Ministry today projected the growth rate to cross nine per cent in the current fiscal itself, oiled by robust performance of agriculture and indstry and pegged the inflation rate at 8.6 per cent in October.

The report, tabled by Finance Minister Pranab Mukherjee in the Lok Sabha amid din created by the Opposition on the 2G spectrum allocation issue, speaks of the future course of reforms.

The deepening of reforms will entail the need for further fiscal consolidation and steps to deal with external capital flows. The high level of capital flows are posing adjustment challenges, the review says.

The review said the surge in capital flows has raised the question of domestic absorptive capacity which could lead to overheating of the economy.

However, the current account deficit of 2.9 per cent in 2009-10 and the capital flows at 4.1 per cent of the GDP have not been a matter of concern.

The analysis calls for improvement in infrastructure and core industries, universalisation of elementary education and issues concerning climate change as a part of deepening and strengthening of economic reforms to sustain high growth level.

The review exuded confidence about being able to revert to pre-global crisis growth levels. It estimates that the growth in 2010-11 will be 8.75 per cent with 0.35 per cent variation on either side. The range indicates the possibility of crossing the 9 per cent mark this fiscal itself.

The report, however, said that sustaining such high levels of growth for a number of years will require significant deepening of reform initiatives. Inflation, a major cause of concern for the Government since more than a year, had started coming down and was placed at 8.6 per cent in October this year against 11 per cent recorded in April 2009.

Commenting on the report, Mr Mukherjee told reporters here that he was hopeful that inflation will come down to six per cent by March 2011.

"Now we have shifted the goal post from 0.25 to 0.35 per cent," the Finance Minister said. One of the reasons for this, according to him, was the global uncertainties, particularly recovery of Euro. Euro has relevance both from the view points of FDI investments and also from external credits, particularly exports.

"A sizeable percentage of Indian exports are destined towards Europe. Therefore, the rapid recovery of Europe is important from India's standpoint," the Minister said.

The acceleration in growth during 2005-06 to 2007-08, when it reached nearly 10 per cent, was made possible by a coincidence of favourable factors, the review said. These included robust growth in industry, complemented by continuance of high growth in services and strong overall agricultural production with good monsoon on the supply side and a rapid rise in both savings and investment rate on the demand side. International conditions were also quite supportive.

The review said that, now with the effect from the 2008-09 global financial and economic crisis dissipating and recovery from last year's severe drought, the growth outlook for the current year is improving.

The analysis said that inflation had been trending up, but was beginning to come down.

The mid-year analysis is an outcome of the review of trends in receipts and expenditures in relation to the Budget at the end of the second quarter of the financial year 2010-11.

It is a statement explaining deviation in meeting the obligation of the Government under the Fiscal Responsibility and Budget Management Act 2003.

NNN

Earlier this week, Elena Kagan told senators on the Judiciary Committee that she did not know the meaning of the term “legal progressive.” Fortunately, in a New York Times Magazine article last week, Harvard law professor Noah Feldman provides Ms. Kagan and the senators a detailed articulation of a progressive vision of constitutional law and thus a précis of what may be at stake as the Senate considers the nomination of Ms. Kagan. In particular, Professor Feldman argues that the individual-rights agenda that has defined the constitutional Left is largely exhausted and that future constitutional battles will involve confrontation between the market and the state. He in effect urges the constitutional Left to recover its forgotten roots in the New Deal and the progressive movement. Without such a liberal resurgence, Feldman fears, a conservative Supreme Court could stand in the way of benevolent regulation of the market.

We certainly agree with Feldman that progressive constitutional thought is intellectually exhausted. Indeed, it has been intellectually exhausted for some time. Feldman is also probably right that the biggest legal battles in the future will be about market regulation. But we think he is mistaken about how those battles will and should unfold.

First, despite claims by various leftish professors of constitutional law, there is no well-articulated strand of pro-market constitutional activism on the Court right now. Indeed, the Court’s most “conservative” justices have repeatedly mocked the doctrine of “substantive due process,” which the Court once employed on occasion to protect economic liberties from undue state interference. We also think it is highly unlikely that the Court will constitutionalize debates over health-care reform, financial regulation, or programs designed to reduce carbon emissions.

To be sure, there is something about wearing black robes and sitting in that marble building that can give people a God complex. Maybe Chief Justice Roberts and his merry band will decide that they are going to save the republic from Sarbanes-Oxley and Barney Frank, but we doubt it. Even the Rehnquist Court’s much-ballyhooed federalism decisions repeatedly acknowledged that Congress can regulate commercial activity, no matter how local, so long as the overall category of regulated activity has a non-trivial impact on interstate commerce. Indeed, no regulation of commercial activity, local or otherwise, has fallen prey to judicial review at the Supreme Court for more than 70 years. Just five years ago, the Court even went so far as to sustain a congressional ban on the mere possession of marijuana intended for medicinal purposes valid under state law.

It’s hard to imagine the Roberts Court, with its bare 5-4 conservative majority, interfering with Congress’s efforts to regulate, say, multi-national investment banks or companies traded on the New York Stock Exchange. In addition, it is by no means clear there will be a great deal of dramatic legislation for the Court to consider. A political backlash against perceived overreaching by the national government is already brewing. While we don’t think that this response will devastate President Obama or his Democratic allies, it may well prevent Washington’s embarking on any additional ambitious regulatory projects in the foreseeable future.

Not only do we disagree with Feldman’s assessment of the current constitutional landscape, we also believe that his take on the history of progressive constitutionalism is off base -- mistaken in a way that should undermine anyone’s enthusiasm for the sort of progressive agenda he advocates. The irony is that, for all his calls for new thinking, Feldman’s take on the economic history of progressive constitutionalism is, like that of many other progressives, badly dated. To be precise, Feldman’s analysis rests on two incorrect claims about the relationship between constitutional law and economic regulation before and during the New Deal.

First, Feldman errs when he suggests that Lochner-era justices were supine agents of business interests and thus reflexively opposed regulation that furthered the interests of consumers and powerless workers. In point of fact, even during the height of the Lochner era, the Court, to the chagrin of some libertarians, upheld most state and federal regulation of economic activity. As a result, the main impediment to such regulation, even during this period, was less constitutional law than ordinary politics. Moreover, many of the regulations the Court did strike down were attempts by incumbent businesses and workers to shield themselves against competition from new market entrants, hardly the sort of legislation a pro-consumer and pro-worker progressive should endorse.

For example, in some such cases the Court struck down purportedly progressive labor laws that in fact severely disadvantaged racial minorities, sometimes by explicit design. It is also noteworthy that the most notorious case from this period -- Lochner v. New York -- invalidated a law that burdened a small immigrant-run business by placing Lochner and other entrepreneurs at a competitive disadvantage vis-a-vis larger firms barely affected by the law. It turns out that big business and big labor cope quite well with big regulation, which they often come to support as a means of protecting themselves from competition. Indeed, West Coast Hotels v. Parrish, a key decision in the progressive cannon, which effectively overruled Lochner in 1937, sustained as constitutional a minimum-wage law that did not apply to men, thereby pricing many women out of the labor market. The modern Court would properly ban such legislation as rank sex discrimination.

The second problem with Feldman’s narrative is his valorization of FDR and the “progressive constitutionalism” that affirmed the vast, post-1937 expansion of federal regulatory power. As Feldman tells the story, FDR’s 1932 election heralded the rejection of corporate fascism and socialism in favor of what he calls “liberalism” and “regulated capitalism.” Feldman also tells us that FDR had to wait patiently before appointing the progressive Supreme Court justices who would validate his efforts to preserve capitalism by reining it in.



The actual record is quite different, and FDR’s New Deal was anything but liberal. Indeed, the centerpiece of FDR’s economic recovery plan, the National Industrial Recovery Act, replaced Herbert Hoover’s relatively aggressive antitrust enforcement with a national policy of state-encouraged cartelization, complete with immunity from the antitrust laws, analogous to that in place in fascist Europe. More than 500 industries eagerly proposed “codes of fair competition” that harmed consumers by fixing prices while it disadvantaged small entrepreneurs, minorities, and others on the margins of economic life. The same was true of the Agricultural Adjustment Act and regulation of the coal industry. Progressive hero John Maynard Keynes even warned FDR that the NIRA would slow recovery by mandating inflexible wages and prices, and thus interfering with the process of macroeconomic adjustment. Indeed, FDR’s policy of “bold experimentation now, get permission later,” which Feldman holds up as an example of what we need today, created so much legal uncertainty that businesses held back on investment. Keynes made this point at the time, declaring in exasperation that FDR should either nationalize the utilities or leave them alone, but in any event should stop chasing them in a different direction every week.

Recent empirical work confirms the suspicion by Keynes and others that the NIRA and similar policies combined to slow recovery and destroy wealth. Thus, the “activist” Supreme Court did consumers and workers a great favor when, in Schechter Poultry, it unanimously struck down the NIRA, thereby helping clear the way for economic recovery. One can only imagine the additional economic misery that would have resulted had the Court validated the sort of all-encompassing regulatory authority that FDR and other progressives were seeking to wield.

The reader who did not know better might conclude from Feldman’s narrative that coercive interference in the free market inevitably protects helpless workers and consumers, enhancing public welfare. The actual historical record suggests otherwise. Feldman’s errors are not simply academic; the mistakes and falsehoods in his account point to the very substantial risks posed by the sort of Leviathan that progressives seek to empower by molding the Constitution in their own ideological image. If, as Feldman would have us believe, the modern conflict between conservative and progressive constitutional visions is a rerun of the debates during the Lochner and New Deal eras, then Americans would do well to learn and incorporate the real lessons of economic history instead of being misled by the self-serving liberal lore that pits heroic progressives protecting the poor and the weak against conservative judges protecting such abstractions as private property and the free market. Property rights, after all, are exercised by individuals who, via voluntary cooperation in free markets, create the very wealth that progressives are so anxious to redistribute.

Ultimately Feldman is mistaken about the relationship between government and the market. He sees the market as an external force that threatens to overwhelm democracy and create economic catastrophe if left to its own devices. For example, Feldman treats the financial crisis as a straightforward failure of unregulated capitalism. We believe this view is simplistic at best and in many ways just wrong. The primary cause of the financial crisis is the pervasive way in which government affirmatively acted to create perverse incentives through loose monetary policy (set by the Fed, not the market) and massive moral hazard problems created by implicit and explicit government guarantees of major financial institutions. It isn’t that we have a market that spontaneously created a huge problem independent of government policy, which taxpayers then had to clean up. Rather, misguided government policy created the crisis.

Hence, we ultimately agree with Feldman that there are huge dangers when concentrations of capital manipulate the political system. Feldman thinks that the problem is that the market is prone to titanic bouts of irrationality from which the state must protect us. He fears politically powerful businesses and an allied Supreme Court will prevent benign regulators from acting. We think that the politically powerful businesses have already in large measure captured the none-too-benign regulators and it is this pathology of government policy -- rather than the irrationality of the market -- that caused the financial crisis.

One final note: Feldman’s essay exemplifies a longstanding disconnect between many progressive scholars of constitutional law, on the one hand, and basic principles of political economy and economic history, on the other. Indeed, many of the progressive constitutional thinkers that Feldman is calling to the breach seem -- at some deep level -- uninterested in markets and how they function. Feldman views the financial crisis through the lens of constitutional law, as though legal doctrine were itself capable of interpreting and evaluating what are at bottom economic phenomena. Likewise, the understanding of the market that he presents is based on a historical narrative crafted by constitutional lawyers rather than economists. This is, we think, ultimately a very bad way of thinking about market regulation. We wonder what Elena Kagan thinks.

-- Mr. Meese and Mr. Oman are professors of law at the William & Mary Law School.

Thanks to agricultural subsidies the least healthy foods are also the cheapest to buy.

In 1936, in United States v. Butler, a 6–3 majority of the Supreme Court held unconstitutional the Agricultural Adjustment Act of 1933, a New Deal measure to support farmers devastated by the Depression. The dissent, by Justice Harlan F. Stone, said that the majority’s reasoning was

addressed to the mind accustomed to believe that it is the business of courts to sit in judgment on the wisdom of ...

The draft of the American Power Act is now out (see NRDC’s first read summary of the entire bill). The core global warming pollution limits in the bill, covering all major pollution sources, are a solid foundation for Senate legislation to put a final bill on President Obama’s desk this year. So how does this legislative proposal address the critical international investments that aid our international efforts to address global warming?

The bill includes most of the key tools to aid the world in addressing global warming but doesn’t provide the necessary funding to aid developing countries in deploying clean energy, reducing deforestation, and adapting to the impacts of climate change (as a coalition of 24 environmental, development, and religious groups highlighted). The bill contains broad authorizing language for a program to reduce deforestation, provides for only a small and belated effort to help the most vulnerable developing countries, and doesn’t have any program for clean energy exports. Failure to provide the president with the needed tools to promote international cooperation will prove penny-wise but pound-foolish (this is one of the carbon program problems that must be fixed).

It is critical that the U.S. become a strong component of international efforts to address global warming by passing a climate and energy bill this year. To aid in achieving strong international action and providing the U.S. with the necessary tools to support other countries in addressing this challenge such a bill needs several key components:

A. Firm limits on global warming pollution

At the core of the U.S. engagement in an international agreement is a firm limit on global warming pollution which steadily declines and drives clean energy investments both in the U.S. and elsewhere. The bill creates greenhouse gas reduction targets for the sectors that are covered by emission limits, commencing in 2013 (Sec. 703):

Overall reductions will potentially be larger because of the requirement that international offsets provide “extra reductions” to make overall progress every time offsets are used. Starting in 2018, a company using international offsets must obtain 1.25 tons of those offsets to cover a ton of its own emissions—the extra quarter ton increases the total carbon pollution reduction achieved. 

B. International carbon offset access rules (Sec. 751-763)

International offsets will be issued only to developing countries that are part of a multilateral or bilateral agreement with the U.S. An International Offsets Integrity Advisory Board will provide recommendations on the international rules and the EPA, in consultation with other U.S. government agencies, will implement a set of rules to assure that offset credits are earned only for real and permanent actions that would not happen anyway and won’t simply shift to other locations. These rules would also need to establish a process to “accept and respond to” comments from the public, providing an important “citizen” watchdog function to the proper implementation of the rules. At least every five years the program is to be reviewed to ensure the environmental integrity of the rules.

The program creates a framework where offsets generally can be produced only by countries that adopt policies to reduce emissions across an entire sector of the economy and only for countries that take some action on their own. These are important principles to retain as it helps ensure that we evolve from “offsets” to sectoral approaches for developing countries—i.e., that offsets are aiding in reducing global emissions not simply shifting reductions from the U.S. to other countries. There are transitions and some exceptions (which I’ll note), but that general framework applies to the majority of the four offset categories outlined in the bill. 

1. Sector-based program. The bill would have the EPA Administrator identify sectors of specific countries where emissions credits can be generated only when an entire sector of the economy in the country reduces its emissions—a sectoral approach. That means that a country can’t produce an offset (get credit) for building a windmill, while not simultaneously getting a debit for building a coal-fired power plant—the net emissions of the sector have to be reduced before an offset can be generated. There are a number of criteria that will be used to determine if a country and sector will be eligible for crediting only on a sectoral basis, which will lead to an offset program where key sectors in the largest emitting countries will only be able to generate offsets if their entire sector reduces emissions:

Credits for these sectors in the country shall be on the basis of an established performance level based upon certain criteria to ensure that the program produces real reductions. These performance levels shall be established at a level lower than the business-as-usual level, take into account nationally appropriate actions of the country, and be consistent with a declining limit to reduce global emissions.

2. Deforestation. Offset credits can be generated from national deforestation emissions reductions with a transition for “state/province” systems, as I’ll discuss in more detail below.

3. Offsets from an International System that meet the requirements outlined in the bill and as implemented in the U.S. rules. Offsets may be issued from an international body (e.g., the U.N. Framework Convention on Climate Change) if they meet the same requirements as established in the bill and designed by EPA. This will provide an important safeguard against less stringent rules and an incentive for the international community, working with the U.S. negotiators, to design strong provisions for international credits (but the onus is on the international rules to reform along the lines in the bill). Starting in 2016, this international system would have to apply sector-based rules in order to be eligible to access the U.S. market.

4. Supplemental/Other offset types. Sectors not covered by the sectoral regulation or the deforestation program may be available to generate credits, if the Administrator determines the offset category eligible and there are higher than expected program costs (the “price collar” is met for a period of time). These potential offset sources would be subject to strict rules before they can generate credits, and won’t necessarily be designed to require that the entire sector reduce emissions before they generate offsets. This would most likely apply to such sources as agriculture, forest replanting, and waste management.

C. Incentives for reductions in deforestation emissions

Deforestation accounts for around 15 percent of the world’s emissions and is generally considered a relatively lower cost emission reduction option. So including a targeted set of tools to combat the loss of the tropical forests is central in our efforts to address global warming. Unfortunately the draft bill contains only funding for one of the key incentive mechanisms to address deforestation emissions—carbon offsets for credible deforestation reductions—but fails to include a dedicated source of investment to ensure that countries develop robust systems, don’t shift emissions to other countries, and achieve early reductions in deforestation. We need both the set aside of dedicated resources and strong rules governing offsets to ensure that efforts to reduce deforestation are actually leading to global warming pollution cuts across the world and that the offsets generated aren’t “subprime” (a point recognized by major companies, farmers, ranchers, and environmental groups from across the spectrum, as I discussed here and here). 

1. Early investment in market readiness, early emissions reductions, and ensuring an environmentally sound system (Sec. 5004). The draft bill contains program language which could be mobilized towards early investments in designing a credible approach to reducing deforestation emissions, but provides no dedicated resources towards implementing such a program.

The program (if it were funded) is designed to achieve emissions reductions, prevent emissions leakage where deforestation shifts from participating to non participating countries, and prepare developing countries to participate in international offset systems for deforestation by building the necessary tools for a credible system. The program would support a variety of activities, including national and subnational emissions reduction activities, forest governance, illegal logging prevention, and enforcement.

Funds generated through this program may be distributed to an international fund to reduce deforestation emissions or through bilateral assistance. The program is guided by an interagency body (which oversees the adaptation investments as well) made up of the key U.S. government officials, in order to ensure that the program is focused, targeted, and effective (Sec. 5003).

2. Carbon credits for credible deforestation reductions. International offsets may be issued from efforts that reduce deforestation emissions. The discussion draft allows offsets to be generated for national level deforestation reductions and state/province level reductions for a transition period of five years. Importantly, countries that generate credits must have established a baseline that is based on real historical data on deforestation rates, declines to zero net emissions after 20 years, accounts for nationally appropriate mitigation commitments, and covers all significant sources of deforestation emissions (no playing around with definitions of forests to avoid covering emissions sources). 

Eligible countries also are required to have developed a “land use or forest sector strategic plan” that prepares the country for efforts to address deforestation and encourages a holistic government approach to the management of its lands. Countries that receive investments must have protections for indigenous and forest dependent peoples, ensure the preservation of biodiversity, and develop transparent and equitable sharing of benefits to relevant populations on-the-ground. The program can be extended to other sources of forestry emissions (e.g., degradation and peatland carbon loss, as appropriate). 

D. Incentives for clean energy export to developing countries that take on their own commitment

A large share of the investments that will drive future developing country energy production and use will be built in the very near future. We must aid these countries in deploying the state of the art technologies that will be spurred by the U.S. (and global) drive for clean energy. The draft bill doesn’t include either program language or dedicated funding to assist developing countries in deploying clean energy. It is important to fix this as the draft moves through the process as such a program will be an important component of efforts to assist developing countries in reducing their emissions. And such a program with funding would also benefit the U.S. as it would:

E. Nudging major emitting economies to reduce their emissions and improve transparency around their actions

The draft bill includes a “border adjustment” (Sec. 775-778) and a reporting provision for major emitting countries. The border adjustment requires that importers buy carbon allowances when bringing in commodities such as steel, aluminum, or cement from countries that fail to adopt their own carbon control programs. The border adjustment would take effect in 2025 to the extent carbon-related competitive gaps remain with other countries and are not covered by the allowance rebates (as my colleague has discussed). For example, the Canadian federal government has said it will follow what the United States does on climate change. What is clear is that the United States is expecting for trading partners like Canada to have equivalent systems in place for regulating greenhouse gas emissions. For Canada, that means that the tar sands oil industry would need to abide by a Canadian cap on greenhouse gas emissions at least equivalent to the cuts in the U.S. bill.

The other provision requires that an assessment is conducted every two years on the climate and energy policies of the five largest emitting countries that are emerging markets (Sec. 5007). The assessment is to be conducted by the State Department with the Interagency Board (Sec. 5003) made up of all the key agencies. This provision would provide the U.S. with a complementary assessment to what was agreed in the Copenhagen Accord on emissions reporting and transparency (as I’ve discussed).

F. Developing country adaptation and reducing national security threats (Section 5005)

The draft explicitly recognizes that the impacts of climate change are likely to “exacerbate competition and conflict over agricultural, vegetative, marine, and water resources;” and increase “displacement of people, poverty, and hunger within developing countries.”  To address this, the bill establishes the only dedicated source of international investments by setting aside 0.75 percent of allowances in 2019, rising to 3 percent in 2030. 

This investment will provide some needed resources to help reduce future national security threats expected to arise from the impacts of global warming (as the Defense Department Quadrennial Review finds) and help the most vulnerable populations adapt to global warming.  

The draft establishes an International Climate Change Adaptation and Global Security Program headed by the Secretary of State in consultation with USAID, Treasury, and the EPA. The program requires that local communities be engaged through the planning and decision making processes for adaptation programs and provides assistance to countries most vulnerable to climate change and the people most at risk in those countries (women, children, the impoverished, and indigenous groups). Assistance may come in a variety of forms:

Agricultural and fisheries production in developing countries is expected to decline as a result of climate change, and the draft bill allows for additional support for agricultural development and emergency responses to food insecurity, as well as investments in production techniques to “raise yields through low-input, sustainable, and biodiverse methods.”

Multilateral funds or institutions receiving funding have to meet certain program requirements. These programs have to be governed by a body that includes representatives from the most vulnerable developing countries, protects local communities and indigenous peoples in areas that receive funding, and provides an annual report on the support activities.

*******************

The core components to assist the U.S. in working with the world to address global warming are included in the discussion draft, unfortunately the bill does not provide dedicated funding to aid our international cooperation in the fight against climate change. It does provide the important possibility of creating international funding by giving the president the discretion to set aside up to five percent of allowances for international actions if there is a strong international agreement, but this is uncertain. Making this permanent would provide greater certainty to both the domestic and international community.

The lack of dedicated funding is unfortunate as providing a targeted investment in supporting developing countries was a pledge made by President Obama at the Copenhagen Climate Summit (as I discussed here and as my colleague discussed here) and proved critical in moving other countries towards international agreement. 

This is not charity, these are strategic investments which create opportunities for the export of clean energy technologies abroad, create U.S. jobs, build the necessary capacity to ensure the credibility of the deforestation offset system, protect farmers and ranchers here in the U.S., reduce the national security threats of undue impacts on countries, and assist in solving the global nature of the challenge (as I’ve discussed). Or as President Obama put it:

Providing this assistance is not only a humanitarian imperative—it’s an investment in our common security [emphasis added].

So let’s be sure that these critical investments are secured as the climate and energy bills move through the Senate and onto the president’s desk.

Related Links:

Solid at the core: the integrity of the emission limits in the American Power Act

Kerry-Lieberman climate bill: The details

Obama, vets, and military experts praise Kerry-Lieberman climate and energy bill

(This was first distributed yesterday afternoon to members of our Free Intelligence Newsletter. For more information on how you can get breaking news before it hits the headline please Click here)

Senators John Kerry (D-MA) and Joe Lieberman (I-CT) released their climate and clean-energy legislation yesterday. Sen. Kerry said the bill is essential for the United States to remain globally competitive and in control of its energy situation. "If we want to claim our share, we need to lead," he said.
 
The bill is expected to include provisions that create clean-energy jobs, reduce greenhouse gas emissions and shift away from imported oil following the Gulf of Mexico oil spill.  For your convenience, Below is the summary of the key points in the draft of the bill.

The American Power Act will transform our economy, set us on the path toward energy independence and improve the quality of the air we breathe. It will create millions of good jobs that cannot be shipped abroad and it will launch America into a position of leadership in the global clean energy economy.

Our approach sets an achievable national pollution reduction target and refunds the money raised right back to American consumers and American businesses. This is not a plan that enriches Wall Street speculators. And this is certainly not a plan to grow the government. It is a plan that creates jobs and sets us on a course toward energy independence and economic resurgence.

It is time for Democrats, Republicans and Independents to come together to pass legislation that will create American jobs and achieve energy security, while reducing carbon pollution by 17 percent in 2020 and by over 80 percent in 2050. Our plan is based on five simple principles:

First: Consumers will come out on top. The American Power Act sends two-thirds of all revenues not dedicated to reducing our nation’s deficit back to consumers from day one. The rest is spent ensuring a smooth transition for American businesses and investing in projects and technologies to reduce emissions and advance our energy security. In the later years of the program, every penny not spent to reduce the deficit will go directly back to consumers.

Second: We need energy made in America. Today we spend almost one billion dollars every day on foreign oil, much of which is sent to regimes that are hostile to our nation and our interests. That is money we should be investing here at home. The American Power Act invests in technology to harness domestic power supplies and reduce our dependence on foreign oil.

Third: America needs to regain its competitive edge and lead the global clean energy economy. America enjoys an abundance of home-grown energy sources: coal, natural gas, nuclear and renewables. Each will play a critical role in our clean energy future. By investing in innovation across all energy sources, we will create millions of jobs rebuilding our energy infrastructure as we reinvigorate our manufacturing base, which will be called upon to produce the clean energy technologies of tomorrow.

Fourth: We need a new approach to reducing emissions that recognizes the different needs of our different industries. The American Power Act includes separate, targeted mechanisms for the three major emitting sectors: power plants, heavy industry and transportation. Each approach is tailor-made to ensure a smooth transition into our collective clean energy future.

FREE Breaking Investment & Geopolitical Intelligence - Previously only available to Governments, Intelligence Agencies & selected Hedge Funds. Click here for more information on our Free Weekly Intelligence Report

Fifth: The system must be simple, stable and secure. We only address the largest sources of carbon pollution and we provide predictability to businesses and consumers through a hard price collar and the creation of a single, clear set of rules. Our carbon market structure eliminates the possibility of manipulation, which will mean a secure, well-functioning market system. 

Details on Key Provisions

Protecting Consumers

From day one, two-thirds of revenues not dedicated to reducing our deficit are rebated back to consumers through energy bill discounts and direct rebates. We also provide assistance to those Americans who may be disproportionately affected by potential increases in energy prices through tax cuts and an energy refund program.

After the initial transition period, revenues go into a Universal Refund that will increase until all revenues not spent to reduce the deficit are refunded directly to consumers.

Ensuring Regulatory Predictability

It ensures predictability for American businesses by articulating a single set of rules for achieving its goals. Rather than allowing a patchwork of conflicting state and federal regulations, it lays out one clear set of rules for reducing greenhouse gas emissions.

States will not be permitted to operate cap-and-trade programs for greenhouse gases. Those states that have already taken a leadership role in implementing emission reduction policies will receive compensation for the revenues lost as a result of the termination of their cap-and-trade programs.

Ensuring Price Predictability

We include a hard price collar which binds carbon prices and creates a predictable system for carbon prices to rise at a fixed rate over inflation.

Introductory floor and ceiling prices are set at $12 (increasing at 3 percent over inflation annually) and $25 (increasing at 5 percent over inflation annually), respectively.

To provide environmental integrity and ensure meaningful emissions reductions, we include a strategic reserve to complement the hard price collar and ensure the availability of price-certain allowances in the event of unusually high carbon prices.

Decreasing our Dependence on Foreign Oil

We provide over $7 billion annually to improve our transportation infrastructure and efficiency, including our highways and mass transit systems.

We also address our use of foreign oil in our trucks and heavy-duty fleet by providing significant tax incentives for conversion to clean natural gas vehicles.

We make important new investments in developing and manufacturing advanced vehicles, to ensure that America leads the world in advanced cars and batteries.

We embrace ongoing efforts to create strong federal standards for greenhouse gas emissions and efficiency improvements in our vehicle fleet.

Mindful of the accident in the Gulf, we institute important new protections for coastal states by allowing them to opt-out of drilling up to 75 miles from their shores. In addition, directly impacted states can veto drilling plans if they stand to suffer significant adverse impacts in the event of an accident. States that do pursue drilling will receive 37.5 percent of revenues to help protect their coastlines and coastal ecosystems.

Expanding America’s Manufacturing Base

Industrial sources will not enter the program until 2016. Prior to 2016, allowance value is dedicated to offset electricity and natural gas rate increases for industrial rate-payers and to improve energy efficiency in manufacturing – to keep power bills down in the future.

In 2016, energy-intensive and trade-exposed industries receive allowances to offset both their direct and indirect compliance costs. This assistance will be distributed in a way that rewards efficiency investments and makes our manufacturing facilities more competitive.

We also significantly increase incentives for clean technology manufacturing, by expanding the clean energy manufacturing tax credit by $5 billion, providing incentives for the production of advanced vehicles and component parts and funding investments in energy efficiency innovation. Alongside these priorities, we also support community economic adjustment assistance and worker training.

In order to protect the environmental goals of the bill, we phase in a WTO-consistent border adjustment mechanism. In the event that no global agreement on climate change is reached, the bill requires imports from countries that have not taken action to limit emissions to pay a comparable amount at the border to avoid carbon leakage and ensure we are able to achieve our environmental objectives.

Creating New Opportunities for American Farmers

Farmers are exempt from the carbon pollution compliance obligations in the bill.

We establish a new multi-billion dollar revenue stream for the agricultural sector through a domestic offset program that provides incentives for farmers to reduce emissions on their land. The program provides USDA with primary authority over domestic agriculture and forestry projects.

Additionally, the bill supports the Rural Energy for America Program, which has already reduced costs and created thousands of new clean energy jobs across rural America.

Investing in Clean Energy Research, Development and Deployment

The American Power Act funds critical investments in clean energy research and development, including renewable energy technology, advanced vehicle technologies and carbon capture and sequestration.

We also establish pilot projects to determine the regional feasibility of light- and heavy-duty plug-in electric vehicles.

Ensuring Coal’s Future

We empower the U.S. to lead the world in the deployment of clean coal technologies through annual incentives of $2 billion per year for researching and developing effective carbon capture and sequestration methods and devices.

We also provide significant incentives for the commercial deployment of 72 GW of carbon capture and sequestration.

Encouraging the Use of America’s Natural Gas

We create a level playing field for natural gas in the power sector by removing disincentives for natural gas generation at merchant plants.

We also help guide the state regulatory process by requiring public disclosure of chemicals used in the production of natural gas.

Increasing Nuclear Power Generation

We have included a broad package of financial incentives to increase nuclear power generation including regulatory risk insurance for 12 projects, accelerated depreciation for nuclear plants, a new investment tax credit to promote the construction of new generating facilities, $54 billion in loan guarantees and a manufacturing tax credit to spur the domestic production of nuclear parts.

We improve the efficiency of the licensing process.

We invest in the research and development of small, modular reactors and enhanced proliferation controls.

We designate an existing national laboratory as a nuclear waste reprocessing Center of Excellence.

Reducing Transportation Emissions

Emissions from the transportation sector will remain under the carbon pollution cap.

Producers and importers of refined products will not participate in the carbon market, but will purchase allowances at a fixed price from the allowance auction.

Blocking Market Manipulation

The bill only requires the largest sources of pollution to comply with reduction targets: those who produce more than 25,000 tons of carbon pollution annually. This means the program only focuses on 7,500 factories and power plants.

Participation in the auction and primary cash markets is restricted to entities with a compliance obligation and a limited number of ‘market makers’.

Participation in the secondary market will be open to all participants, but it will only exist on a cash-cleared basis. It will be highly regulated, exchange traded and transparent.

By. Michael Bagley

This is a short summary of what to expect from the highly anticipated Kerry-Lieberman energy bill, which is called The American Power Act. We obtained this document from Think Progress' The Wonk Room.

HuffPost Green will bring you further information on the bill and reactions from around the web as this story develops.

AMERICAN POWER ACT

**FOR STAFF USE ONLY**

**NOT FOR DISTRIBUTION OR PUBLICATION**

DRAFT SHORT SUMMARY

The American Power Act will transform our economy, set us on the path toward energy independence and improve the quality of the air we breathe. It will create millions of good jobs that cannot be shipped abroad and it will launch America into a position of leadership in the global clean energy economy.

Our approach sets an achievable national pollution reduction target and refunds the money raised right back to American consumers and American businesses. This is not a plan that enriches Wall Street speculators. And this is certainly not a plan to grow the government. It is a plan that creates jobs and sets us on a course toward energy independence and economic resurgence. It is time for Democrats, Republicans and Independents to come together to pass legislation that will create American jobs and achieve energy security, while reducing carbon pollution by 17 percent in 2020 and by over 80 percent in 2050. Our plan is based on five simple principles:

First: Consumers will come out on top. The American Power Act sends two-thirds of all revenues not dedicated to reducing our nation's deficit back to consumers from day one. The rest is spent ensuring a smooth transition--for American businesses and investing in projects and technologies to reduce emissions and advance our energy security. In the later years of the program, every penny not spent to reduce the deficit will go directly back to consumers.

Second: We need energy made in America. Today we spend almost one billion dollars every day on foreign oil, much of which is sent to regimes that are hostile to our nation and our interests. That is money we should be investing here at home. The American Power Act invests in technology to harness domestic power supplies and reduce our dependence on foreign oil.

Third: America needs to regain its competitive edge and lead the global clean energy economy. America enjoys an abundance of home-grown energy sources: coal, natural gas, nuclear and renewables. Each will play a critical role in our clean energy future. By investing in innovation across all energy sources, we will create millions of jobs rebuilding our energy infrastructure as we reinvigorate our manufacturing base, which will be called upon to produce the clean energy technologies of tomorrow.

Fourth: We need a new approach to reducing emissions that recognizes the different needs of our different industries. The American Power Act includes separate, targeted mechanisms for the three major emitting sectors: power plants, heavy industry and transportation. Each approach is tailor-made to ensure a smooth transition into our collective clean energy future.

Fifth: The system must be simple, stable and secure. We only address the largest sources of carbon pollution and we provide predictability to businesses and consumers through a hard price collar and the creation of a single, clear set of rules. Our carbon market structure eliminates the possibility of manipulation, which will mean a secure, well-functioning market system.

Details on Key Provisions

Protecting Consumers

* From day one, two-thirds of revenues not dedicated to reducing our deficit are rebated back to consumers through energy bill discounts and direct rebates. We also provide assistance to those Americans who may be disproportionately affected by potential increases in energy prices through tax cuts and an energy refund program.
* After the initial transition period, revenues go into a Universal Refund that will increase until all revenues not spent to reduce the deficit are refunded directly to consumers.

Ensuring Regulatory Predictability

* It ensures predictability for American businesses by articulating a single set of rules for achieving its goals. Rather than allowing a patchwork of conflicting state and federal regulations, it lays out one clear set of rules for reducing greenhouse gas emissions.
* States will not be permitted to operate cap-and-trade programs for greenhouse gases. Those states that have already taken a leadership role in implementing emission reduction policies will receive compensation for the revenues lost as a result of the termination of their cap-and-trade programs.

Ensuring Price Predictability

* We include a hard price collar which binds carbon prices and creates a predictable system for carbon prices to rise at a fixed rate over inflation.
* Introductory floor and ceiling prices are set at $12 (increasing at 3 percent over inflation annually) and $25 (increasing at 5 percent over inflation annually), respectively.
* To provide environmental integrity and ensure meaningful emissions reductions, we include a strategic reserve to complement the hard price collar and ensure the availability of price-certain allowances in the event of unusually high carbon prices.

Decreasing our Dependence on Foreign Oil

* We provide over $7 billion annually to improve our transportation infrastructure and efficiency, including our highways and mass transit systems. '
* We also address our use of foreign oil in our trucks and heavy-duty fleet by providing significant tax incentives for conversion to clean natural gas vehicles.
* We make important new investments in developing and manufacturing advanced vehicles, to ensure that America leads the world in advanced cars and batteries.
* We embrace ongoing efforts to create strong federal standards for greenhouse gas emissions and efficiency improvements in our vehicle fleet.
* Mindful of the accident in the Gulf we institute important new protections for coastal states by allowing them to opt-out of drilling up to 75 miles from their shores. In addition, directly impacted states can veto drilling plans if they stand to suffer significant adverse impacts in the event of an accident. States that do pursue drilling will receive 37.5 percent of revenues to help protect their coastlines and coastal ecosystems.

Expanding America's Manufacturing Base

* Industrial sources will not enter the program until 2016. Prior to 2016, allowance value is dedicated to offset electricity and natural gas rate increases for industrial rate-payers and to improve energy efficiency in manufacturing -- to keep power bills down in the future.
* In 2016, energy-intensive and trade-exposed industries receive allowances to offset both their direct and indirect compliance costs. This assistance will be distributed in a way that rewards efficiency investments and makes our manufacturing facilities more competitive.
* We also significantly increase incentives for clean technology manufacturing, by expanding the clean energy manufacturing tax credit by $5 billion, providing incentives for the production of advanced vehicles and component parts and funding investments in energy efficiency innovation. Alongside these priorities, we also support community economic adjustment assistance and worker training.
* In order to protect the environmental goals of the bill, we phase in a WTO-consistent border adjustment mechanism. In the event that no global agreement on climate change is reached, the bill requires imports from countries that have not taken action to limit emissions to pay a comparable amount at the border to avoid carbon leakage and ensure we are able to achieve our environmental objectives.

Creating New Opportunities for American Farmers

* We establish a new multi-billion dollar revenue stream for the agricultural sector through a domestic offset program that provides incentives for farmers to reduce emissions on their land. The program provides USDA with primary authority over domestic agriculture and forestry projects.
* Additionally, the bill supports the Rural Energy for America Program, which has already reduced costs and created thousands of new clean energy jobs across rural America.

Investing in Clean Energy Research, Development and Deployment

* The American Power Act funds critical investments in clean energy research and development, including renewable energy technology, advanced vehicle technologies and carbon capture and sequestration.
* We also establish pilot projects to determine the regional feasibility of light- and heavy-duty plug-in electric vehicles.

Ensuring Coal's Future

* We empower the U.S. to lead the world in the deployment of clean coal technologies through annual incentives of $2 billion per year for researching and developing effective carbon capture and sequestration methods and devices.
* We also provide significant incentives for the commercial deployment of 72 GW of carbon capture and sequestration.

Encouraging the Use of America's Natural Gas

* We create a level playing field for natural gas in the power sector by removing disincentives for natural gas generation at merchant plants.
* We also help guide the state regulatory process by requiring public disclosure of chemicals used in the production of natural gas.

Increasing Nuclear Power Generation

* We have included a broad package of financial incentives to increase nuclear power generation including regulatory risk insurance for 12 projects, accelerated depreciation for nuclear plants, a new investment tax credit to promote the construction of new generating facilities, $5.4 billion in loan guarantees and a manufacturing tax credit to spur the domestic production of nuclear parts.
* We improve the efficiency of the licensing process.
* We invest in the research and development of small, modular reactors and enhanced proliferation controls.
* We designate an existing national laboratory as a nuclear waste reprocessing Center of Excellence.

Reducing Transportation Emissions

* Emissions from the transportation sector will remain under the carbon pollution cap.
* Producers and importers of refined products will not participate in the carbon market, but will purchase allowances at a fixed price from the allowance auction.

Blocking Market Manipulation

* The bill only requires the largest sources of pollution to comply with reduction targets: those who produce more than 25,000 tons of carbon pollution annually. This means the program only focuses on 7,500 factories and power plants.
* Participation in the auction and primary cash markets is restricted to entities with a compliance obligation and a limited number of 'market makers.'
* Participation in the secondary market will be open to all participants, but it will only exist on a cash-cleared basis. It will be highly regulated, exchange traded and transparent.

"Harry Truman's Fair Deal--which sought to build on the New Deal by including healthcare, public housing and a permanent Fair Employment Practices Commission to prevent racial discrimination--was largely blocked by a Republican Congress."

Learning to Love the Healthcare Bill

By Katherine S. Newman & Steven Attewell

April 29, 2010

In his 1950 book The Liberal Imagination, Lionel Trilling said that “in the United States at this time liberalism is not only the dominant but even the sole intellectual tradition.” Liberalism was no less the dominant political tradition; a coherent conservative opposition had yet to emerge. Over the next 60 years, however, the liberal imagination lost its hold on the American mind. In October 2009 Gallup found that just 20 percent of Americans described themselves as liberals; twice as many called themselves conservatives.

What happened? Part of the answer lies in liberalism’s loss of an element that was essential both to its intellectual vitality and to its popular appeal. Liberalism in the middle of the 20th century maintained an equilibrium between the antagonistic principles within it. The classical liberalism that descended from Jefferson and Jackson survived in the movement; the social liberalism that derived from the theories of 19th-century social philosophers, though it was steadily gaining ground, had not yet obtained a complete ascendancy. Liberalism today has lost this equipoise; the progress of the social imagination, with its faith in the power of social science to improve people’s lives, has forced liberals to relinquish the principles and even the language of the classical conception of liberty.

The two philosophies that animated liberalism in its prime were widely different in both origin and aspiration. Classical liberty is founded on the belief that all men are created equal; that they should be treated equally under the law; and that they should be permitted the widest liberty of action consistent with public tranquility and the safety of the state. The classical vision traces its pedigree to Protestant dissenters who in the 17th century struggled to obtain freedom of conscience. Their critique of religious favoritism was later expanded into a critique of state-sponsored privilege in general.

The American patriots who took up arms against George III thought it wrong that some Englishmen were represented in Parliament while others were not. This sort of privilege, in the Old Whig language of liberty from which classical liberalism descends, was known as “corruption.” The revolutionary patriots, it is true, countenanced their own forms of corruption; when they came to write a Constitution for their new republic, the charter tacitly recognized slavery and other forms of discrimination. The country, in Lincoln’s words, was “conceived in liberty,” but not until it experienced various “new” births of freedom was the promise of its founding ideal extended to all of its citizens.



Unlike classical liberty, social liberty is formed on the conviction that if a truly equitable society is to emerge, the state must treat certain groups of people differently from other groups. Only through a more or less comprehensive adjustment of the interests of various classes will a really democratic polity emerge. The social vision traces its origins to thinkers who in the 19th century argued that the close study of social facts would reveal the laws that govern human behavior, much as physics and biology reveal the laws that govern nature. Auguste Comte, for example, believed it possible to elaborate a “social physics” (physique sociale); Karl Marx purported to discover the dialectical laws of human history.

Rulers skilled in the social sciences would translate the new knowledge into codes of behavior that would organize man’s activities in a more efficient and coordinated way than had hitherto been possible. (The classical liberal believes that however much the lawgiver knows of the innumerable factors that create desirable patterns of social order, he never knows enough to undertake an extensive renovation of society with any hope of success.) The new social technic, it was thought, would produce more equitable forms of social order than those created by the “invisible hand” of voluntary, spontaneous cooperation. A new communal life would overcome what Comte called the “perennial Western malady, the revolt of the individual against the species.” Man would be liberated from the biological or class-inspired rapacity that too often made him an “asocial” being. Yet although they dreamt of a more perfect human union, the social reformers made a fetish of the very distinctions they sought to overcome. The wolf will eventually lie down with the lamb, but in the meantime there is enmity between the rich man and the poor man, the white-collar worker and the blue-collar worker, the bourgeois and the proletarian.

The American liberals who in the last century embraced the social imagination looked, not to its most extreme forms, but to the more modest permutations associated with the Fabian socialists of England and the adherents of Otto von Bismarck in Germany. Yet mild as the social idealism of the liberal reformers was, it was, like the more rigorous theories of Comte and Marx, premised on the efficacy of discrimination between groups and classes of men, and on the need for extensive codes of commands that would realize the reformers’ vision of fairness — what in Europe is called dirigisme or droit administratif.



Theodore Roosevelt, who in his 1910 “New Nationalism” manifesto lamented the “absence of effective State and, especially, national restraint upon unfair money-getting” in America, called for a paternal form of government that would “control the mighty commercial forces” of the Republic. Under the system of social administration proposed by liberals, experts trained in the social sciences would determine the needs of particular groups and oversee the allocation of resources. George F. Kennan, in his memoirs, sketched the social dream of a powerful administrative magistracy that “would not demean or deceive [the people], would permit them to express freely their feelings and opinions, and would take decent account of the feelings and opinions thus expressed, and yet would assure a sufficient concentration of governmental authority, sufficient stability in its exercise, and sufficient selectivity in the recruitment of those privileged to exert it, to permit the formulation and implementation of hopeful long-term programs of social and environmental change.” A similar administrative ideal is found in the 1912 novel Philip Dru: Administrator, written by Woodrow Wilson’s éminence grise, Col. Edward House.

The privileged class of experts favored by liberals like Kennan was itself grounded in discrimination. It had something of the complexion, Milton and Rose Friedman observed, of an aristocratic caste:

Believers in aristocracy and socialism share a faith in centralized rule, in rule by command rather than by voluntary cooperation. They differ in who should rule: whether an elite determined by birth or experts supposedly chosen on merit. Both proclaim, no doubt sincerely, that they wish to promote the well-being of the “general public,” that they know what is in the “public interest” and how to obtain it better than the ordinary person. Both, therefore, profess a paternalistic philosophy.

If the object of American liberals who embraced the social imagination was to promote the well-being of the commonwealth, they could do this, they believed, only if they first promoted the well-being of particular groups within it. The result was a preference state. Although the reformers justified the new regime with various technical arguments, it was in many ways a rationalization of the informal preference politics and group sensibility of the old Democratic machine. In The Age of Reform (1955), Richard Hofstadter showed that “it was the boss who saw the needs of the immigrant and made him the political instrument of the urban machine. The machine provided quick naturalization, jobs, social services, personal access to authority, release from the surveillance of the courts, deference to ethnic pride.” The “boss, particularly the Irish boss,” Hofstadter wrote, “. . . became a specialist in personal relations and personal loyalties.”



Social liberals, both Republicans and Democrats, sought to make the machine more accountable by transferring its operations from the party to the government. Favored groups were given special deals fitted to their needs. Labor unions were endowed with new privileges under the Norris-La Guardia Act of 1932, which placed them, the Harvard scholar Roscoe Pound noted, in a protected legal category. Farmers were subsidized under the Agricultural Adjustment Act of 1933; the New Deal’s Federal Theatre Project, Federal Arts Project, and Federal Writers’ Project assisted struggling thespians, painters, and literatuses.

In establishing new systems of privileges and immunities for particular groups, the social reformers believed that they were mitigating the unjust privileges and immunities of market capitalism. And it is true that when E. L. Godkin or Louis Brandeis opposed protective tariffs, or when Woodrow Wilson opposed combinations in restraint of trade, each was fingering a genuine instance of unfair privilege. The struggle against monopoly, Wilson said, was “a second struggle for emancipation. . . . If America is not to have free enterprise, then she can have freedom of no sort whatsoever.”

Others in the social-preference school went farther and asserted that the free market was itself an unfair bulwark of class privilege and corruption. Hofstadter, for example, argued that the Founders’ rhetoric of liberty and private property concealed a desire to preserve their own economic power. Their status as members of the rich, propertied classes determined their politics and explains what Hofstadter called their “rigid adherence to property rights.”

Whatever one thinks of these arguments, they were a departure from the classical theory of liberty. Andrew Jackson condemned the second Bank of the United States not because he believed that private property or money made in the market was objectionable, but because he believed that money made with special help from the government was objectionable. He portrayed his attack on the bank (a private corporation with proprietary access to public funds) not as an attempt to regulate a corrupt private sector but as an attempt to abolish the “exclusive privileges” the bank had been granted by the state. In the “full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue,” Jackson said, “every man is equally entitled to protection by law.” The “gifts of Heaven,” for the classical liberal, were legitimate; the gifts of the state were suspect.



In spite of the challenge posed by the social imagination, the classical element survived in mid-20th-century American liberalism. A political movement, unlike a political theory, does not necessarily suffer from its internal contradictions; the lack of doctrinal purity that degrades a paper philosophy often strengthens a program that aims at practical results. Even as liberals in the last century promoted social policies, the classical countercurrent within liberalism mitigated the hubris that the new social ideal might otherwise have bred in its disciples.

Bliss there was in that social dawn, and the temptation to overreach was strong. “American socialists and liberals,” Edmund Wilson wrote in the 1971 edition of To the Finland Station, believed that it was possible “to get rid of an oppressive past, to scrap a commercial civilization and to found, as Trotsky prophesied, the first really human society. We were very naïve about this.” Liberalism’s leaders were less naïve. Classical liberalism formed part of their standard intellectual equipment, and it acted as a corrective to utopian arrogance. Woodrow Wilson, although he presided over an expansion of the powers of the federal government, counted such classical liberals as John Bright and Richard Cobden among his heroes. In 1924 John W. Davis, an unreconstructed Jeffersonian, headed the Democratic ticket. In The Liberal Tradition in America Louis Hartz argued that even such “Comtian” social planners as Lester Ward and Herbert Croly could not bring themselves to “transcend” America’s classical-liberal or “Lockian” consensus.

FDR himself, observing that government spending had risen dramatically under Hoover, campaigned in 1932 on a balanced-budget platform. Hofstadter argued that Roosevelt afterwards broke with the Jefferson-Jackson tradition of classical liberalism: The New Deal, he wrote in The Age of Reform, represented a “drastic” departure from the older tradition. It would be more accurate to say that FDR adjusted the balance between liberalism’s competing elements. In The End of Reform (1995), Alan Brinkley showed that the New Dealers’ faith in “statist planning” waned during the course of the Roosevelt presidency. Hartz believed that even the most radical New Deal reforms were made “on the basis of a submerged and absolute [classical] liberal faith.” If Roosevelt embraced the public-assistance measures of the Social Security Act of 1935, he also warned that the dole advocated by champions of the Sozialstaat was “a narcotic, a subtle destroyer of the human spirit.”



Federal spending under the New Deal tells a story of what in our day would be called fiscal restraint. Spending rose to just over 8 percent of the gross domestic product in 1933, the first year of Roosevelt’s presidency, an increase of slightly more than one percentage point from Hoover’s last year; it reached a pre-World War II high of 10.7 percent in 1934. (By comparison, federal spending in 2009 accounted for 24.7 percent of GDP, and is expected to exceed 25 percent in 2010.) Total government spending — federal, state, and local — in 1934 did not exceed 20 percent of GDP; in 2010 it is expected to approach 45 percent.

If the social element in liberalism spoke to the electorate’s hopes and its generous idealism, the classical-liberal element spoke to its desire for continuity and its attachment to America’s founding inspirations. Maintaining a balance between the two contending philosophies required considerable statesmanship on the part of liberal leaders. The social doctrines held the promise of a brave new world, yet the classical-liberal element, though it had less intrinsic appeal for visionaries, survived the New Deal and contributed to liberalism’s post-World War II appeal. The old antipathy to state-sanctioned privilege led Harry Truman to desegregate the military and Lyndon Johnson to sponsor civil-rights legislation. If Roosevelt had, until Yalta at any rate, made it his policy to vindicate the liberties of Europe, Truman laid the foundation for the Cold War struggle against the socialism of the USSR.

John F. Kennedy not only filled a number of posts in his administration with Republicans — among them C. Douglas Dillon, Robert McNamara, and McGeorge Bundy — he was willing to be guided by the advice of classical liberals. In 1962 he overruled economist Paul Samuelson and proposed tax cuts. Rejecting Keynesian spending models that are closely tied to the preference regime and enable politicians to distribute money to favored groups, Kennedy resolved instead to promote growth through private investment in the marketplace. He brushed aside those in his administration, such as Arthur M. Schlesinger Jr., who wanted to enlarge the preference architecture of the social state. Schlesinger, Kennedy said, “couldn’t get it through his head” that this was “1963, not 1933.” The president was quoted in Newsweek as saying, “Boy, when those liberals start mixing into policy, it’s murder.” To the dismay of his critics on the left, the balancing act Kennedy performed made him popular. When his approval rating rose in April 1962, he told Newsweek’s Benjamin C. Bradlee, “What really breaks their [the Left’s] ass is that 78 percent. That really gets them.”



Kennedy was the last liberal president to make classical liberalism an important part of both his policy and his rhetoric. In the half-century since he entered the White House, the social imagination has become, if not the sole element in liberalism, certainly the dominant one. Lincoln argued that the state should eschew the group politics of “classification” and “caste,” yet liberalism’s signature initiatives over the last 40 years require us constantly to classify people according to the particular social and even racial and sexual groups to which they belong: Both affirmative action and hate-crime legislation grow out of a faith in the discriminating power of classification.

“Today it is the Right that speaks a language of commonalities,” the sociologist Todd Gitlin has written. “To be on the Left, meanwhile, is to doubt that one can speak of humanity at all.” Schlesinger himself, in one of his last books, The Disuniting of America (1991), lamented the effect of social, racial, and sexual preference politics on liberalism, and he condemned the spread, in the Democratic party, of a “plague of institutionalized ‘caucuses’ representing minorities concerned more with ventilating their own grievances than with strengthening the party” as a whole.

The liberal who is committed to social classification counters that his preference criteria are a reaction against an unofficial culture of preference, the bigotry that has led to discrimination against blacks and gays and women. Yet if this really were the crux of the matter, surely the solution would be to insist even more passionately on the principle that all people are created equal and that the laws of the state ought to apply equally to all. Instead the liberal’s vivisectionist politics exalt, not the common humanity of the species, but the various social and genetic barriers that separate its specimens.

It is true that some of the groups the modern liberal seeks to protect constitute fluid classes rather than fixed ones, and therefore do not in a strict sense violate the equal-protection principles of classical liberalism. The 20th-century welfare state, for example, was designed to help the poor, and any citizen might fall into poverty. But even here the liberal’s social policy tends to exacerbate divisions within the body politic, or so the classical liberal argues. By subsidizing poverty, welfare-state policies perpetuated it. The public-assistance measures of the Social Security Act made barriers that are permeable in a healthy society harder to penetrate for those bred up in the culture of the dole. The policies widened the chasms they were intended to bridge and checked the upward mobility that Lincoln thought characteristic of a free society.



The classical liberal argues, too, that social-welfare codes — which give current beliefs about social problems the force of law — tend to forestall innovation. The pressing problems of earlier generations have often been simply outgrown, and the obstacles they confronted have been surmounted (with little or no government intervention), through the spontaneous progress of society, and through the emergence of new and unanticipated ways of doing things. The social reformer, far from embracing this voluntary, unplanned species of social regeneration, too often compels people to stand still: He institutionalizes problems that might otherwise be transcended. This is seen most clearly in societies where the social imagination has been carried the farthest. There one finds, not growth and change, but morbidity and stasis, the petrification of the social organism.

Preference politics is nothing new. It underlay the master-slave distinctions of the ancient world and the feudal distinctions of the medieval one. No political movement, it is true, can entirely escape such politics: Every party has its under-texture of tribalism and its cherished constituencies. But the preference politics of social liberalism transforms what ought to be a matter of embarrassment into an instance of virtue; there is no longer even an aspiration to purity. The damage has by no means been limited to Democrats; Republicans, too, trade in the pander-politics of group favoritism. The tax code is swollen with giveaways to favored groups. One instinctively applauds when a group that one happens to like, or to which one happens to belong, obtains grace and favor. But each extension of privilege erodes a little more the idea that all men are created equal and should be treated equally under the law.

The preference state is now so closely associated with the politics of group favoritism that the classical ideal of equal treatment has become untenable for liberals. To tout the classical vision in the teeth of such exercises as the “Cornhusker Kickback” — the provision of the Senate health-care bill subsidizing Nebraska’s Medicaid costs on terms given no other state — would be too palpable an imposture. In December, 13 states’ attorneys general threatened a legal challenge to the Cornhusker provision precisely because, if enacted, it would violate the equal-protection and privileges-and-immunities clauses of the Constitution. Whatever the constitutional status of such preference legislation, there is no doubt that it is incompatible with the classical ideal. Liberals themselves sense this. The classical motifs have ceased to form even a merely verbal element in liberal discourse; the note of freedom that President Kennedy sounded so often in his oratory is scarcely heard at all in President Obama’s.



Americans are alive to the change; their suspicion of state-sponsored privilege and their apprehension of the corruption it fosters have led to the revival of the “tea party” language of the Revolutionary patriots. A CNN poll conducted in February found that 56 percent of those questioned think the federal government has “become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens.” The social reformer inspires in many Americans today the same dread he once inspired in John Stuart Mill, who in 1855 wrote that almost “all the projects of the social reformers in these days are really liberticide — Comte particularly so.” Such projects, Mill predicted, would lead to “a despotism of society over the individual, surpassing anything contemplated in the political ideal of the most rigid disciplinarian among the ancient philosophers,” and stood “as a monumental warning to thinkers on society and politics, of what happens when once men lose sight in their speculations, of the value of Liberty and Individuality.”

Liberals dismiss such fears as mere right-wing hysteria. They have left the work of maintaining the integrity of the “Lockian” safeguards of freedom in America to Republicans and conservatives; it is no longer their responsibility or their shtick. Rather than try to revive the classical-liberal strain in their politics, they have devised new justifications of the managerial authority of the social expert, the master planner of public privilege. In their book Nudge, Richard H. Thaler and Cass R. Sunstein “show that by knowing how people think, we [i.e., the social experts] can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society.” Thaler and Sunstein do not propose to push people into doing what is good for them, as the social managers of old did; they propose only to manipulate their “choice environments.” It is nonetheless a departure from the liberalism of Mill, who believed that people must be free to choose badly. The cover of Nudge is revealing: It shows a mommy elephant nudging a baby elephant. The citizen is a child. The social expert, armed with the power of the state, is his benevolent mother.



Why, after kindred social movements have been discredited abroad and faith in the social school of political economy has waned at home, do liberals persist in their romance with the social imagination? A number of liberal leaders have attempted a reformation; Bill Clinton, after his party’s defeats in the 1994 elections, sought to establish a middle or “third” way between the social imagination and the classical-liberal one. But his attempt to find a via media was rejected by the protected classes that liberalism’s preference politics has created, and was repudiated still more vehemently by the social managers and public-sector workers whose prosperity is intimately bound up in the preference state.

These groups exert a disproportionate influence in Democratic-party councils. Champions of public-sector workers commend their commitment to public service in the language of republican virtue. But in offering their political support to sympathetic candidates in exchange for lucrative compensation packages, a number of the public-sector organizations have engaged in a politics that savors of corruption. Their allegiance, like that of the Praetorian Guard in Gibbon’s Rome, can be purchased only by those contenders for power who are willing to bestow what Gibbon called a “liberal donative” out of the public purse.

Liberal the donatives certainly are. The average salary of federal workers rose in 2009 to $71,206, a figure that does not include bonuses, overtime, fringe benefits, pension accruals, and the priceless gift of all-but-absolute job security. Some 19 percent of the civil service received salaries of more than $100,000. (The average private-sector wage in the same year was $40,331.) The federal government, Cato Institute scholar Chris Edwards observes, has become an “elite island of highly paid workers.” Liberalism is being devoured by the monster it created.

There is something else to be feared now that the dreams of the social imagination alone seem to inspire enthusiasm in those who identify themselves as liberals. The social philosophy that has become the essence of one of the great political movements of our age is, even in its mildest forms, tainted by a subtle tincture of compulsion, one that mocks the idea of freedom. The deepest thinkers in the social line suppose that man’s actions are determined by matter, or nature, or history; they claim that their own proposed commands are merely expressions of an overpowering necessity. The social realm is preeminently the realm of physis, of nature: it has no place for meta-physis, or that which is beyond nature. “Necessity is the kingdom of nature,” Schopenhauer says, “freedom is the kingdom of grace.” By “grace” he means the state of having got over nature. In The Human Condition (1958) Hannah Arendt contended that the idolatry of nature and necessity that is characteristic of the social dispensation might yet, if unchecked, “reduce man as a whole, in all his activities, to the level of a conditioned and behaving animal.” In sacrificing the classical imagination of liberty on the altar of social necessity, liberals have brought us a little closer to the realization of that dark prophecy.

-- Michael Knox Beran is a contributing editor of City Journal. His most recent book is Forge of Empires 1861-1871: Three Revolutionary Statesmen and the World They Made. This article first appeared in the April 5, 2010, issue of National Review.

The following multi-part series is taken from a paper that my colleagues and I published last year in the free, on-line journal Energies. You may access the entire PDF here. All references can be found in the pdf. Part 1 can be found here.

The first section of this post discusses how the economic cost of energy changes with changes in the price of energy. The second section discusses the impact of declining EROI on economies; specifically this section addresses whether or not the time trend of EROI supports the claim by some economists that advances in technology will overcome the depletion of fossil fuels. The third section discusses how surplus energy is used to run the economy by analyzing a simplified economy that is powered by oil only.

2.2. Economic Cost of Energy

In real economies, energy comes from many sources – from imported and domestic sources of oil, coal and natural gas, as well as hydropower and nuclear, and from a little renewable energy – most of that as firewood but increasingly from wind etc. Most of these are cheaper per unit energy delivered than oil. So let’s look at what this real ratio of the cost of energy (from all sources, weighed by their importance) is relative to its benefits.

Economic cost of energy = Dollars to buy energy / GDP

By this token the relation of the proportional energy cost in dollars is similar, as we shall see, to the proportional energy cost in joules; in 2007 roughly 9 percent (1 trillion dollars) of the U.S. GDP was spent by final demand for all kinds of energy in the US economy to produce the 12 trillion dollars worth of total GDP (Figure 1). This ratio certainly increased in the first half of 2008 as the price of oil exceeded $140 a barrel and then fell again. The abrupt rise in the 1970s, subsequent decline through 2000, and increase again through mid 2008 of this value had large impacts on discretionary spending because the 5 to 10 percent change in total energy cost would come mainly out of the 25 or so percent of the economy that is discretionary spending. Thus we believe that changes in energy prices have very large economic impacts. At least thus far the changes in price seem to reflect the generally decreasing EROI only sporadically although that seemed to be changing recently until the economic crash of fall 2008, when collapsing demand took over. What future prices will be is anyone’s guess but even as economies crash there is a great deal of information implying that dollar, and hence presumably energy, costs of fuels are increasing substantially. Our guess is that declining EROI will take a huge economic toll in the future [6].

Figure 1. Percentage of GDP that is spent on energy by final consumers (2006-2008 estimated).

2.3. EROI for U.S. and North American Domestic Resources and Its Implications for the “Minimum EROI”

In the past the first author worked with Cutler Cleveland and Robert Kaufmann to define and calculate the energy return on investment (EROI) of the most important fuels for the United States’ economy. Since that time Cleveland has undertaken additional and updated analyses for the US economy and Nate Gagnon and Hall have attempted to do that for the world average. Our results indicate that there is still a very large energy surplus from fossil fuels -- variously estimated as an EROI (i.e. EROImm) from perhaps 80 to one (domestic coal) to perhaps 11-18 to one (US) to 20 to one (World) for contemporary oil and gas. In other words, globally for every barrel of oil, or its equivalent, invested in seeking and producing more oil some 20 barrels are delivered to society. Thus fossil fuels still provide a very large energy surplus, obviously enough to run and expand the human population and the very large and complex industrial societies around the world. This surplus energy of roughly 20 or more units of energy returned per unit invested in getting it, plus the large agricultural yields generated by fossil-fueled agriculture, allows a huge surplus quantity of energy, including food energy, delivered to society. This in turn allows most people and capital to be employed somewhere else other than in the energy industry. In other words these huge energy surpluses have allowed the development of all aspects of our civilization -- both good and bad.

That’s the good news. The bad news is that the depletion of fossil fuels has been occurring since the first ton of coal or barrel of oil was mined, since these fuels need about 100 or so million years to regenerate. Many economists argue that technology, the market and economic incentives will continue to find oil to replace that which we have extracted, or that prices will increase as oil reserves deplete and society will substitute away from oil as technologies are developed that allow for such a substitution [21]. Thus one can argue that depletion and technology are in a race over time. Which is winning?

We argue that one can determine this from the time trend of EROI. The EROI for oil in the US during the heydays of oil development in Texas, Oklahoma and Louisiana in the 1930s was about 100 returned for one invested [22]. During the 1970s it was about 30:1, and for about 2000 it was from 11 to 18 returned per one invested [3, 4, 22]. For the world the estimate was about 35:1 in the late 1990s declining to about 20:1 in the first half decade of the 2000s (Gagnon et al. in preparation). In addition there is considerable evidence that, in the case of oil, we are mostly just pumping out old fields rather than replacing extracted oil with newly found oil. Globally we are using between 2 to 3 barrels for each new barrel found [23]. The analysis of Gagnon et al. suggests that if current trends continue linearly then in about two to three decades it will take one barrel of petroleum to find and produce one barrel of petroleum, and oil and eventually gas will cease to be a net source of energy. (A special case can be made for e.g. tar sands, where it may make sense to extract two barrels from the ground, use one for the process and then deliver the second barrel to society). This also means that the question is not necessarily what the size of global oil reserves is but rather what is the size of that portion that is extractable with a positive net energy value and at what rate the high EROI fuels can be produced. The implications of this are obvious and huge, and help make an argument for seeking possible substitutes earlier rather than later [6].

But the problem with substitutes to fossil fuels is that of the alternatives available none appear to have the desirable traits of fossil fuels. These include: 1) sufficient energy density 2) transportability 3) relatively low environmental impact per net unit delivered to society 4) relatively high EROI and 5) are obtainable on a scale that society presently demands (Figure 2). Thus it would seem that society, both the US and the world, is likely to be facing a decline in both the quantity and EROI of its principal fuels. Our next question is “what are the implications of this?”

Figure 2. “Balloon graph” representing quality (EROI – Y axis) and quantity (X axis) of the United States economy for various fuels at various times. Arrows connect fuels from various times (i.e. domestic oil in 1930, 1970, 2005 – “today”), and the size of the “balloon” represents part of the uncertainty associated with EROI estimates, i.e. larger “balloons” represent more uncertainty. The horizontal line indicates that there is some minimum EROI that is needed to make society work, and the vertical line to the left indicates one estimate of maximum forestry potential and the vertical line to the right is David Pimentel’s earlier estimate of total photosynthesis in the United States (Source: US EIA, Cutler Cleveland and C. Hall’s own EROI work in preparation). (Reprinted with minor changes from [6]).

3. The surplus available to run the rest of the economy

We first generate a simplistic view of the economy in every day units to try to develop for the reader an explanation of how an economy obtains the energy needed for its own function and how differences in EROI might affect that. Assume for the moment that the United States’ economy runs 100 percent on domestic oil, and that energy itself is not what is desired by the final consumer but rather the goods and services derived from the general economy. In the early years of this new millennium the U.S. Gross Domestic Product (proxy variable for the size of the U.S. economy) was about 12 trillion dollars, and it used about 100 quadrillion BTUs (called Quads, equal to 1015 BTUs), which is equivalent to about 105 ExaJoules (1 EJ equals 1018 Joules). Dividing the two we find that we use an average of about 8.7 Mega Joules (1 MJ equals 106 joules) to generate one dollar’s worth of goods and services in 2005. By comparison, gasoline at $3 per gallon delivers about 44 MJ per dollar (at 130.8 MJ per gallon of gasoline), plus roughly another ten percent to get that gasoline (refinery cost ≈ 4 MJ), so if you spend one dollar on energy directly vs. one dollar on general economic activity you would consume about 48/8.3 or 5.8 times more energy.

In the 1970s analyses were undertaken by Bullard, Hannon, Herendeen [24] and Costanza [25] that showed that (except for energy itself) it does not matter enormously where money is spent within final demand due to the complex interdependency of our economy (that is, the final products that consumers buy are relatively unimportant to overall GDP/energy efficiency because there are so many interdependencies, i.e. each sector purchases from many others within our economy, although this does not apply to the intermediate products purchased by manufacturers). According to Costanza [25], the market selects for generating a similar amount of wealth per unit of energy used within the whole economic “food chain” leading to final demand. While this is not exactly true it is close enough for our present purposes and it is certainly true for the average of all economic activity.

What is the energy “price” of the oil in this example to 1) the country (either domestic or if it is imported) and 2) to the consumer -- relative to the total economic activity of each entity? One can do some simple math. There are about 6.1 GJ in a standard 42 gallon barrel of oil, so the 105 EJ of industrial energy the U.S. uses to run its economy for a year is equivalent to roughly 17 billion barrels of oil. At $70 per barrel that amount of oil would take 1.2 trillion dollars to purchase (or at 3 dollars a gallon, 2.1 trillion to the consumer), which is either about one tenth of GDP, or one sixth if we consider it from the perspective of the consumer (the difference between the two estimates going to the oil companies after production or to refineries, gas station attendants etc. as inputs, profits, wages, delivery costs etc.). Thus the price of energy delivered to the consumer is roughly twice that of the wellhead price (or much more if converted to electricity).

Now assume that the real price of oil, that is the price of oil relative to other goods and services, increased by two, that is to $140 a barrel in today’s dollars (which it did briefly in 2008), and that the total size of the economy stayed the same – that is some other components of the economy were diverted to pay for that oil. If that happened, then one fifth (17 billion times 140 = $2.38 trillion/12 trillion) of the economy would be used to buy the oil to run the other four fifths (that is that part not including the energy extraction system itself). If the price of oil increased to $250 per barrel, about one third of all economic activity would be required to run the other two thirds, and at $750 a barrel then the output of the entire economy, that is 12 trillion dollars, would be required to generate the money to purchase the energy required to run the economy, i.e. there would be no net output. While in fact in a real economy there would be many adjustments, alternative fuels and nuances this analysis does at least give an overview of the relation of gross to net economic activity, and the importance of EROI in energy and economic terms to the rest of the economy. As the price of fuel increases (or as its EROI declines) there are large impacts on the rest of the economy. These impacts can be especially influential because changes in the price of energy tend to impact discretionary, not base, spending.

Of course most of our energy costs less than oil so that the 70 dollars a barrel we used in the example above translates to – in the real economy -- the equivalent of about $35 a barrel equivalent at the source or $70 a barrel by the time the consumer gets the energy, hence we can assume for this scenario that on average about 10 percent of the dollar economy (i.e. $70 times 17 billion barrels or 1.2 trillion out of 12 trillion dollars) is used just to purchase the energy that allows the rest of the economy to function, which produces the end products we want. This 10 percent of our economic activity means that roughly ten percent of all workers’ time, ten percent of the energy used in their jobs, and ten percent of the total materials consumed were used in some sense to simply get the energy to the final consumer to make the rest of the economy work. According to the official statistics of the U.S. Energy Information Agency in 2007 the cost of energy to the consumer was about 9 percent of the total U.S. economy Figure 1), so our numbers seem about right on average.

Organization: Acumen Fund

Location: New York, US

Talent Associate

Acumen Fund exists to help end poverty by changing how the world addresses it. We do this in two ways: we invest patient capital to identify, strengthen and scale business models that effectively serve the poor, and we champion and spread this approach as an effective complement to traditional aid, which can create dependence, or pure market approaches, which can bypass the actual needs of the poor. We raise philanthropic capital and invest in enterprises that provide critical goods and services - health, housing, water, energy and agricultural inputs - at affordable prices to low-income customers in India, Pakistan and East Africa.  Since 2001, Acumen Fund has grown from one office in New York City to a global organization with offices in India, Pakistan and Kenya.  To date, we have invested $40 million in 44 enterprises that have impacted the lives of 30 million people.  (More at: www.acumenfund.org).

Position Description

The Talent Associate's primary responsibility is to support the Director of Talent in building a strong human resource function capable of supporting a growing global team; as such the Talent Associate is responsible for supporting, and in some instances managing, the HR functions of each Acumen Fund office. The individual will be responsible for working with the Director of Talent and local Talent representatives to manage all employee-related matters and ensure compliance, recognizing each country's unique approach to managing human resources. The individual in this role must be able to efficiently balance the transactional and strategic responsibilities of this role. The Talent Associate also needs to be able to adapt to a constantly changing environment and thrive in an autonomous role in a fast-paced organization.

More detailed responsibilities include but are not limited to:

Domestic HR

• Serving as the primary contact for and liaison between Acumen Fund's staff and Acumen Fund's Professional Employer Organization (PEO)
• Working with the PEO to ensure that Acumen Fund is compliant with appropriate state and federal regulations
• Enrolling employees in the PEO system and ensuring that they are sufficiently knowledgeable about the benefits offered by Acumen Fund, such as health insurance, life and disability insurance and 401(k)
• Partnering with our internal and external legal counsel on personnel related matters, such as immigration and visas
• Coordinating with the Finance team to ensure accurate payroll

Global HR

• Coordinating with local Talent reps and legal counsel to ensure each office is complying with local government mandates
• Staying current with the benefit offerings of each office
• Serving as an HR resource to the local Talent reps

Recruiting & Staff Management

• Setting the standard for and driving forward Acumen Fund's hiring process
• Serving as the gatekeeper for all request to hire employees, interns, volunteers and consultants
• Managing the inflow of both solicited and unsolicited resumes through our applicant tracking system
• Implementing global relocations
• Drafting and reviewing offers for the US based positions and positions in our Kenya office
• Orienting new employees and offboarding terminated employees
• Tracking current Acumen Fund staff through an HRIS
• Conducting informational interviews for individuals interested in learning more about Acumen Fund

Performance Management & Compensation

• Establishing the timeline and steps in the performance management process and ensuring the compliance of all team members
• Conducting periodic compensation surveys for all offices
• Working with the Director of Talent and Management Committee to implement annual salary adjustments and bonuses

Training & Development

• Working with the Director of Talent to research training & development opportunities for all Acumen Fund employees

Policy Management

• Drafting policies for consistent and persistent issues faced by the organization
• Regularly updating our employee handbook

Miscellaneous

• Managing employee relations issues from inception through resolution
• Taking on ad hoc projects related to improving current HR processes and systems
• Keeping Talent-related pages of Acumen Fund's website and the Talent team's page on the company wiki current
• Setting and monitoring the Talent team's budget
• Coding invoices and monthly credit card statements

Qualifications

The Talent Associate will be an HR professional with at least 3 years of experience as a generalist. Ideally, s/he will have experience playing a major role in the HR function for an international non-profit.  A Bachelor's Degree is required while a Master's degree and/or additional certifications are a plus.

Additional qualifications include:

• Exceptional organizational skills and ability to work and deliver projects and achieve targets independently, proactively and under pressure
• Strong interpersonal skills: courtesy, tact, patience and strong team orientation; assertive team player with a sense of humor
• Willingness to affect change with an understanding of challenges often encountered
• A strong entrepreneurial spirit
• Dedication to working within the non-profit sector
• Excellent written and oral communication skills
• Commitment to accuracy, attention to detail and follow-through
• Commitment to, and enthusiasm for, the organization's mission and business model, and respect for our core values: generosity, accountability, humility, audacity, listening, leadership, and respect

Compensation

Acumen Fund offers a competitive compensation package commensurate with experience, including full benefits and a 401(k)

Location

New York, NY

Please follow the link to APPLY.

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America's Quiz: Are you a conservative?

Take our quick and easy Nolan Chart Survey!

Click the option which comes closest to your own views for each of the 10 issues listed below. Then click the large button at the bottom of the page. We will score your choices and show how your views appear on the Nolan Chart. We've tried to make the views expressed as comprehensive as possible. There may be some options listed that you may find hard to choose between, or perhaps you'll find that none of the options represent your viewpoint perfectly. That's understandable, but try anyway to pick the one that most closely represents your views. We think you will find the results worthwhile.

1. Speech, Assembly, Press, Internet, and Property Rights

A) Government should not restrict speech, press, media or Internet. The rights of free citizens who don't violate other people's rights must be respected and protected at all times. Exercise of eminent domain should be extremely limited and its use avoided whenever possible. Private property and privacy rights should be protected at all times.
B) Speech, assembly, press, and Internet should be free except when it comes to protecting against terrorism and other threats to public safety. Free speech zones can be established to protect the right of free speech while insuring security at public events. Eminent domain should be maintained in practice, but it should not be available merely as a means to enrich private developers via enforced land transfers.
C) Speech, assembly, press, and Internet should be free except when controversies such as global warming have already been settled and legitimate public policies would be undermined by its few remaining detractors. Property rights should be subject to the needs of the government but otherwise should be respected.
D) Government should regulate speech, press, media, Internet, and property rights at its own discretion within reason as needed to meet all of government's many obligations.

2. Guns
A)The Second Amendment only applies to "militias" (such as the National Guard), and thus there is no specific protection afforded by it to individuals. It should be up to the government to decide the degree to which guns should be regulated for the public good.
B) The Second Amendment to the Constitution clearly protects the right of all individuals to bear arms. Government regulation of guns is a violation of the Second Amendment. Having the right to self-defense is meaningless without also having the means to defend yourself. An armed society is a peaceful society, is the best defense against criminals, and serves as a deterrent against government tyranny. Gun control has encouraged society to become lax and negligent in teaching and training on the safe handling and maintenance of weapons by individuals.
C) In general, I support the right to bear arms. However, it is prudent to have government regulate arms via registration requirements and other regulations to ensure that mentally unstable people can't get guns and go on shooting rampages.
D) Gun control is essential and must continually be made stronger if we're ever going to reduce and hopefully eliminate gun violence in this country.

3. Homosexual Marriage
A) Gay rights should be supported by passing laws which protect gay marriage, including civil statute alternatives to gay marriage. All government benefits that heterosexual couples enjoy should also be granted to gay couples.
B) The government should pass laws that favor whatever view the majority of the population supports regarding homosexual relationships, including homosexual marriage.
C) There should be no laws regarding either heterosexual or homosexual relationships among consenting adults. Marriage of any kind is a private, contractual matter between free, private individuals that should not be regulated.
D) Homosexuality is an abomination and is banned by the Bible. Gay marriage should be illegal in all cases.

4. Foreign Policy
A)  A strong defense requires playing an active, interventionist role in world affairs. As the last remaining superpower, we have a moral duty to police the world at any cost, or else we will surely pay the ultimate price. If we don't militarily wipe out terrorism, the terrorists will wipe us out. We must resolve to win no matter how long it takes. It's better to strike now than to pay later for our inaction.
B) America should play an active role in world affairs. We need to move toward more world government, particularly when it comes to issues such as global warming. The war on terror should rely heavily on diplomatic action. Military intervention should be used when there is a threat to our sovereignty, but this position can and should be reversed whenever public opinion turns against it.
C) The role of our government, and the role of the United Nations, should be constantly expanded to help ensure that all of the world moves toward democracy. Complaints that government is too big already are simply counter-productive and should be ignored.
D) Peace, commerce and honest friendship with all nations; entangling alliances with none. America's interventionist policies over the past 100+ years have done little or nothing to reduce international instability, have led us into an endless series of wars, and have cost us dearly in American lives and money. The best defense of our borders is to defend our rights and liberty, not to sacrifice them while constantly growing our gigantic military, led by a parade of Presidents who repeatedly stick our nose into other countries' affairs.

5. National ID Card
A) There should be no national ID card. Period. The issuance of required National IDs controlled via interconnected databases will effectively end all privacy in this country.
B) We need a national ID card in order to prevent events like the attacks of 9/11 but without intruding too far into the personal privacy of the innocent.
C) National ID cards should be permitted but greatly restricted in scope because the potential for danger to personal liberty is present.
D) I'm not at all concerned about having a national ID card. Only the guilty need to worry.

6. Corporate Welfare
A) The government has a duty to ensure that all individuals have food, clothing, and shelter and should also invest in private industry whenever it deems such investment to be in the public interest.
B)End "corporate welfare." No government handouts to business.
C) Government involvement is necessary where private industry can't do the job all by itself. As an example, agricultural subsidies should continue to support small farmers.
D) Corporate welfare should be eliminated for big business, but the social safety net for individuals should be retained.

7. Trade and Money
A) Trade that isn't fair isn't free. Fair trade practices should be enforced as needed to ensure free trade while maintaining reasonably open borders. The Fed's policies should be revised to help the poor rather than the rich.
B) The government should involve itself in the regulation of trade as needed to ensure a healthy economy at all times. The Federal Reserve system has made our money supply the most stable in all history.
C) End government barriers to international free trade. The regulation of trade tends enrich selected interest groups and industry captains at the expense of everyone else. We must move away from the inflationary approach of the Federal Reserve by re-adopting a hard money approach and dissolving the Federal Reserve system. Ever wonder why prices of everything (including real estate) keep going up over time? The Federal Reserve system is the culprit.
D) Trade should be free in general, but it should be controlled as needed to ensure that our borders are protected against outside threats. Monetary policy under the Fed has generally been good for our economy. Hard money can't keep up with a modern economy.

8. Social Security
A) Social Security should be maintained and protected by the government, although we do need to offer individuals an alternative government-managed solution if they so choose.
B) Social Security is a vital part of the social safety net and should be properly funded and protected at all times. If necessary, make big business and the rich pay for any shortfalls.
C) Government has an obligation to provide for people in their twilight years, and Social security is a proper expression of governmental control. The system is sound and does not need anything more than minor adjustments from time to time.
D) Let people control their own retirement and they'll retire richer and better off. The Social Security system is already bankrupt, despite what the politicians and bureaucrats keep telling us. Allow individuals to choose for themselves whether to opt out of the Social Security system. If we force everyone to remain in its pyramid scheme, the end result will be disastrous. We must act now before Social Security becomes completely insolvent.

9. Health Care
A) Government regulation of health care is the main cause of the health care industry's upward spiraling costs. The FDA, EPA, Medicare, and a host of other bureaucracies have created mountains of regulations that have led to the deaths of thousands and even millions of people who were denied needed treatments and resources. The cost of creating new treatments is also out of control because of this regulation. The only way to make health care affordable again is to get government out of the health care business.
B) Health care costs are spiraling primarily due to lawsuits. We need to place caps on these suits while avoiding socialized medicine. Where possible, we should reduce regulation to save money. The rising cost of health care is primarily the fault of big government politicians and lobbying groups.
C) Government regulation has gone a long way toward making health care universally accessible and safe, but there's a long way to go. We need universal health insurance to ensure all Americans are adequately protected.
D) Private enterprise has failed to deliver satisfactory health care. Government's role is clear: fix the problem.

10. Taxes, Spending, and the National Debt
A) There should be no limits placed on the ability of government to raise sufficient revenue to do all the jobs government should be doing better, as expressed via majority rule.
B) Cut taxes and government spending by 50% or more. This will have an incredibly positive impact on the economy starting at its very lowest and smallest levels. The national debt must be paid down rather than endlessly increased, or we'll soon face national bankruptcy.
C) The budget should be balanced and fully funded at all times, rather than actually cutting spending on a permanent basis. As needed, the national debt should be expanded to ensure that there is sufficient funding for government operation and military growth needs. Occasional, temporary tax cuts should be offered in token amounts to keep the taxpayers mollified.
D) We should be emphasizing the good that government can do to help people without getting all wrapped up in the costs involved. By spreading the load, such good can be spread out fairly and evenly. Progressive taxation helps ensure that the rich don't live at the expense of the poor. However, we want to make sure we don't place too much of a burden on the middle class.

In a recent TNR article about the Citizens United decision, “Roberts versus Roberts,” I argued that the chief justice has so far failed to achieve his goal of promoting narrow, unanimous decisions rather than ideologically polarizing ones. After the piece came out, Ed Whelan claimed that Roberts had never promised to try to lead the Court in such a fashion. In fact, in an interview in 2006, Roberts acknowledged to me that he had set himself a daunting task in seeking unanimity and consensus rather than polarizing 5-4 decisions, but he said it was one worth pursuing because it would be good for the court and the country.

Today, TNR contributor Doug Kendall and I are testifying before the Senate Judiciary Committee for a hearing entitled "We the People? Corporate Spending in American Elections after Citizens United." I've included in my testimony, posted below, remarks he made at a commencement address at Georgetown University Law Center in May 2006, as well as more extensive selections from what Roberts told me in July of that year. (“It’s a high priority to keep any kind of partisan divide out of the judiciary,” he said.) As these statements clearly show, the chief justice presented his vision for more consensus on the Court forcefully and repeatedly, although he acknowledged that it would be difficult to achieve.

Hearing before the Senate Committee on the Judiciary

We the People? Corporate Spending in American Elections after Citizens United

Wednesday, March 10, 2010



By Jeffrey Rosen

Professor of Law

George Washington University

Legal Affairs Editor

The New Republic

Dear Senator Leahy and members of the Senate Judiciary Committee,

Thank you very much for holding this hearing and inviting me to testify about the Supreme Court’s recent decision in Citizens United v. Federal Election Commission. My name is Jeffrey Rosen; I teach constitutional law at George Washington University and am the legal affairs editor of The New Republic and a nonresident senior fellow at the Brookings Institution.

The 5-4 ruling in Citizens United v. Federal Election Commission has been strongly opposed by Americans of both parties: last month, in a Washington Post-ABC News poll, 80 percent of respondents said they opposed the Court’s decision to allow unregulated corporate spending in general elections, with relatively little difference among Democrats (85 percent opposed to the ruling) and Republicans (76 percent opposed).  That’s not a surprise during a time of financial crisis when the influence of money in politics—Justice Louis Brandeis called it the “curse of bigness” and “our financial oligarchy”—is the most pressing political question of the day.

You asked me to testify about the constitutional implications of the decision—and what it suggests about the Roberts Court's attitude toward corporate interests and government regulation of the economy in the future. Unfortunately, the implications are not encouraging.

Citizens United is an activist decision by any definition of judicial activism. It is activist in its disregard of constitutional history, tradition, Supreme Court precedent, and the considered views of the president and Congress. It is precisely the kind of divisive and unnecessarily sweeping decision that Chief Justice John Roberts pledged to avoid in his confirmation hearings and after, when he said he would try to promote narrow, unanimous opinions, rather than deciding hotly contested questions by ideologically polarized 5-4 votes. The most significant area where the Roberts Court has succeeded in achieving near unanimity is in cases affecting business interests, which tend to be decided in a pro-business direction. The broad rhetoric in Citizens United about the rights of corporations, combined with the apparent willingness of the 5-4 conservative majority on the Roberts Court to invalidate federal regulations that have broad bipartisan support, could lead to future confrontations between the Supreme Court and Congress on matters of economic fairness that citizens care intensely about. 

Let me begin by describing how Citizens United is hard to reconcile with the vision of bipartisan unity that Chief Justice John Roberts originally embraced. In 2006, at the end of his first term on the Court, Chief Justice Roberts said in several speeches and interviews that that he was concerned that his colleagues, in issuing 5-4 opinions divided along predictable lines, were acting more like law professors than members of a collegial court. His goal, he said, was to persuade his fellow justices to converge around narrow, unanimous opinions, as his greatest predecessor, John Marshall, had done. Speaking to the Georgetown University Law Center commencement in May 2006, Chief Justice Roberts said:

[T]here are clear benefits to a greater degree of consensus on the Court. Unanimity or near unanimity promote clarity and guidance to lawyers and to the lower courts trying to figure out what the Supreme Court meant. Perhaps most importantly there are jurisprudential benefits: the broader the agreement among the justices, the more likely it is that the decision is on the narrowest possible grounds. It’s when the decision moves beyond what’s necessary to decide the case that justices tend to bail out. If it’s not necessary to decide more to dispose of a case, in my view it is necessary not to decide more. In Felix Frankfurter’s words, a narrow decision helps ensure that we “do not embarrass the future too much.”

And in an interview with me for a book on the Supreme Court in July 2006, Chief Justice Roberts talked extensively about how he hoped to achieve his vision of narrow, unanimous opinions. He expressed frustration about the focus in the media on the number of 5-4 decisions on the Court, and lamented that his colleagues were acting more like law professors than members of a collegial Court. “If the Court in Marshall’s era had issued decisions in important cases the way this Court has over the past thirty years, we would not have a Supreme Court today of the sort that we have,” Roberts said. “That suggests that what the Court’s been doing over the past thirty years has been eroding, to some extent, the capital that Marshall built up.” Roberts added, “I think the Court is also ripe for a similar refocus on functioning as an institution, because if it doesn’t it’s going to lose its credibility and legitimacy as an institution.”

In particular, Chief Justice Roberts declared, he would make it his priority, as Marshall did, to discourage his colleagues from issuing separate opinions. “I think that every justice should be worried about the Court acting as a Court and functioning as a Court, and they should all be worried, when they’re writing separately, about the effect on the Court as an institution.”

Chief Justice Roberts praised justices who were willing to put the unanimity of the Court above their own ideological agendas. “A justice is not like a law professor who might say … I had a consistent theory of the First Amendment as applied to a particular area,’” he explained. He said he would try to emphasize the benefits of unanimity for individual justices, in order to effect what he called the “team dynamic”: “You do have to put people in a situation where they will appreciate, from their own point of view, having the Court acquire more legitimacy, credibility, that they will benefit from the shared commitment to unanimity in a way that they wouldn’t otherwise.” He said he intended to use his power to assign opinions when he is in the majority to achieve as broad a consensus as possible. And while acknowledging that he had set himself a daunting task in trying to resist the polarizing of the judiciary with 5-4 decisions, he said he also viewed it as a “special opportunity” in our polarized age. “Politics are closely divided,” he observed. “The same with Congress. There ought to be some sense of stability [in the Court] if the government is not going to polarize completely. It’s a high priority to keep any kind of partisan divide out of the judiciary as well.”

I was impressed by the chief justice’s concern about the bipartisan legitimacy of the Court and have no doubt that he meant what he said when he talked repeatedly about the importance of promoting narrow, unanimous opinions. I was also encouraged by the fact that in his first term, which his colleagues had treated as something of a honeymoon, the Court decided just 13 percent of cases by a 5-4 margin, one of the lowest rates in recent history. And so I watched with interest his efforts to promote unanimity over the past three terms, where his success was more mixed. In the term that ended in 2007, the percentage of 5-4 decisions soared to 33 percent, a ten-year high, as the justices divided bitterly along ideological lines in cases involving partial-birth abortion, affirmative action, and campaign finance. (The percentage of 5-4 decisions would fluctuate up and down a bit over the next two years, falling to 20 percent in the 2008 term and rising back to 29 percent in the 2008 term, which ended last June.)

There has been one category of cases in which Chief Justice Roberts has managed to steer the Court toward narrow, nearly unanimous opinions: those involving business interests. About 40 percent of the Court’s docket is now made up of business cases, up from 30 percent in recent years, and 79 percent of them are decided by margins of 7-2 or better. The best measure of the pro-business orientation of the Supreme Court is the success rate of the Chamber of Commerce’s National Chamber Litigation Center, which files briefs in cases that affect the “unified interests of American business.” In the 2006 term, Chief Justice Roberts’s first term on the Court, the Chamber’s litigation center filed briefs in 15 cases and won 13 of them, the highest percentage of victories in the center’s thirty-year history. If you leave out the environment, labor, and employment cases, which tend to be more politically polarized, and look at the remaining 46 business cases before the Roberts Court in which the Chamber participated as of 2009, most of them are decided in a pro-business direction, in areas ranging from punitive damages to preemption, false claims acts, securities suits, and antitrust cases.

So this was the record of the Roberts Court on the eve of the Citizens United decision: near unanimity in many pro-business cases, and—with the exception of one important 8-1 decision avoiding a constitutional confrontation over the Voting Rights Act—bitter 5-4 ideological divisions in cases involving affirmative action, abortion, campaign finance, and religion.

That’s what made Citizens United such an important test of Chief Justice Roberts’s vision for the Court. After all, narrow grounds for avoiding a constitutional conflict in Citizens United were certainly available. Just as Chief Justice Roberts had held in the voting-rights case that Congress intended to let election districts bail out of federal supervision, he could have held—even more plausibly—in Citizens United that Congress never intended to regulate video-on-demand or groups with minimal corporate funding. The free-speech interests of the producers of the film in question, Hillary the Movie, are significant, but First Amendment values could have been protected with a far narrower opinion that avoided broad, unnecessary, and historically unsupported claims about how corporations share the same First Amendment rights as real American citizens. By ruling narrowly, the Roberts Court could have protected free speech without calling into question decades of regulations of corporate speech in American elections. And this sensible compromise—protecting the free speech rights of small, mostly ideologically oriented corporations while regulating the speech of huge for-profit corporations (which still have the option of speaking through PACs), would have been consistent with the historical pattern of regulation of corporate speech in America dating back to the Progressive era.

But Chief Justice Roberts chose not to avoid a constitutional conflict. He assigned the majority opinion to Justice Anthony Kennedy, who wrote an unnecessarily sweeping opinion declaring that corporations are persons with full First Amendment rights. The majority opinion is perfectly principled as an abstract discourse on the First Amendment, and indeed is supported by some civil libertarian liberals. It is a plausible, if highly abstract, reading of the text of the First Amendment, completely removed from its historical context—the kind of opinion that could have been written by Chief Justice Earl Warren. But it is a highly activist opinion, if you take any of the many definitions of constitutional activism that Chief Justice Roberts had pledged to avoid. In particular, as Justice John Paul Stevens pointed out in his powerful dissent, the opinion refuses to defer to the text of the First Amendment, which distinguishes between the freedom of speech and freedom of the press, the original understanding of the Constitution, the settled traditions of the American people, as expressed for more than a century by the president and Congress, and it overturns or mischaracterizes several important Supreme Court precedents.

My colleague Doug Kendall will discuss how both the majority and concurring opinions in Citizens United mischaracterize constitutional text and original understanding and the longstanding traditions of the American people in suggesting that the rights of corporations are identical to those of real people. But as Justice Stevens noted, the opinion seems baseless as a matter of original understanding—“unless one evaluates the First Amendment’s ‘principles’ or its ‘purpose’ at such a high level of generality that the historical understandings of the Amendment cease to be a meaningful constraint on the judicial task.” The text of the Constitution does not refer to corporations as persons; but it does distinguish between “the freedom of speech, or of the press,” suggesting that the Framers were perfectly capable of treating newspaper corporations differently than other for-profit corporations.

As the debate between Justice Scalia and Justice Stevens shows, the framers of the First Amendment did not think extensively about the rights of corporations when the Bill of Rights was ratified, because general incorporation statutes did not emerge until the 1800s. To the degree the Framers thought about corporations, they were concerned about the special privileges that might result from the grants of special charters. Moreover, the majority in Citizens United ignores the powerful suspicion throughout American history of monopoly privileges and “class legislation” that favored for-profit corporations. This tradition started in the Jacksonian era, was embraced by Abraham Lincoln and the Reconstruction Republicans, was extended by the trust-busting Theodore Roosevelt, and culminated in the work of Louis Brandeis during the Progressive era and Franklin Roosevelt during the New Deal. All of these economic populists, both Republican and Democratic, in the nineteenth and twentieth century, would have strenuously rejected the Supreme Court’s claim that Exxon should have the same free speech rights as a mom and pop proprietor.

The longstanding American suspicion of corporate monopoly power is embodied in a century of federal laws that the Citizens United decision could be read to call into question—ranging from the Tillman Act of 1907, when Congress banned all corporate contributions to candidates on the grounds, as the Senate Report observed, that “[t]he evils of the use of [corporate] money in connection with political elections are so generally recognized that the committee deems it unnecessary to make any argument in favor of the general purpose of this measure,” to the Taft-Harley Act of 1947, where Congress extended the prohibition on corporate support of candidates to include not only direct contributions but also independent expenditures.

In addition to refusing to defer to the original understanding and longstanding traditions of Americans, the Citizens United decision is also troubling in its treatment of Supreme Court precedents. On this score, it’s worth noting how unusual it is for the Court to overrule its own precedents. The Marshall Court didn’t overturn a single constitutional precedent; and the Taney Court only one. The Hughes Court, which challenged Franklin D. Roosevelt during the New Deal and then retreated, overturned 25 precedents. The Warren Court, although criticized for activism, overturned 32, which was less than the Burger Court, which overturned 76. And the Rehnquist Court overturned 39 precedents.

Some originalist judges, such as Justice Thomas and, to a lesser degree, Justice Scalia, see nothing wrong with overturning precedents that clash with the original understanding of the constitution: on the Rehnquist Court, Justice Thomas voted to overrule more precedents per year than any other justice, followed by Scalia and then Rehnquist and Kennedy. But Chief Justice Roberts in his confirmation hearings took a very different approach. He described himself as a “bottom-up” rather than a “top-down” judge, a perspective that he said included a respect for stare decisis. Extending the metaphor of judicial modesty, he compared judges to umpires.

In his first terms on the Court, Chief Justice Roberts was criticized by both his liberal and conservative colleagues for chipping away at precedents incrementally rather than overturning them openly, but nevertheless joining opinions that held the exact opposite of what the Court had held only a few years earlier. In Federal Election Commission v. Wisconsin Right to Life, for example, a 5-4 majority struck down a provision of the Bipartisan Campaign Reform Act (BCRA) that limited expenditures by corporations, a provision that the Court had upheld only four years earlier in McConnell v. FEC. But Roberts refused to overrule McConnell openly, leading Justice Scalia to object:

[T]he principal opinion’s attempt at distinguishing McConnell is unpersuasive enough, and the change in the law it works is substantial enough, that seven Justices of this Court, having widely divergent views concerning the constitutionality of the restrictions at issue, agree that the opinion effectively overrules McConnell without saying so. See post, at 24–25 (Souter, J., dissenting). This faux judicial restraint is judicial obfuscation.

In Citizens United, Roberts seemed to vindicate Scalia’s charge. “Relying largely on individual dissenting opinions, the majority blazes through our precedents,” Justice Stevens declared, “overruling or disavowing a body of case law including FEC v. Wisconsin Right to Life, Inc., 551 U. S. 449 (2007) (WRTL), McConnell v. FEC, 540 U. S. 93 (2003), FEC v. Beaumont, 539 U. S. 146 (2003), FEC v. Massachusetts Citizens for Life, Inc., 479 U. S. 238 (1986) (MCFL), NRWC, 459 U. S. 197, and CalMedical Assn. v. FEC, 453 U. S. 182 (1981).”

Even more troubling, in the eyes of the dissenters, was the fact that the majority did not characterize these precedents candidly. For example, Justice Stevens said the majority had mischaracterized Buckley v. Valeo, the landmark campaign-finance decision, in suggesting that it was only concerned about quid pro quo corruption rather than less explicit forms of undue influence on the electoral system. (Congress had come to the opposite conclusion in extensive fact-finding that the majority ignored.) And the majority also mischaracterized earlier opinions in claiming that the Supreme Court has always protected corporate speech as vigorously as the speech of real people. “The only relevant thing that has changed,” Stevens wrote, “is the composition of this Court.”

Why would Chief Justice Roberts have said he wanted to promote narrow, unanimous opinions while insisting on broad protection for the rights of corporations even though narrower grounds were available? Perhaps he thought he could produce a unanimous court by convincing his liberal colleagues to come around to his side, rather than by meeting them halfway. In the most revealing passage in his concurrence in Citizens United, he wrote that “we cannot embrace a narrow ground of decision simply because it is narrow; it must also be right.” But the great practitioners of judicial restraint had a very different perspective. “A Constitution is not intended to embody a particular economic theory,” Oliver Wendell Holmes wrote in his most famous dissent, in Lochner v. New York. “It is made for people of fundamentally differing views.” Holmes always deferred to the president and Congress in the face of uncertainty. He would never have presumed that he knew the “right” answer in a case where people of good faith could plausibly disagree.

Why should the public care that the Roberts Court now seems willing to impose ideologically divided, constitutionally polarizing opinions rather than narrow, unanimous ones? As Chief Justice Roberts himself recognized, this is a highly polarized age, and when the Court imposes bold decisions on a divided nation on the basis of slim majorities, it risks a political backlash. Is the Court, therefore, on the verge of repeating the error it made in the 1930s? Then, another 5-4 conservative majority precipitated a presidential backlash by striking down parts of FDR’s New Deal.

One lesson from the 1930s is that it takes only a handful of flamboyant acts of judicial activism for the Court to be tarred in the public imagination as partisan, even if the justices themselves think they are being moderate and judicious. Although vilified today for their conservative activism, both the Progressive and New Deal-era Courts had nuanced records, upholding more progressive laws than they struck down. As Barry Cushman of the University of Virginia notes, of the 20 cases involving maximum working hours that the Court decided during the Progressive era, there were only two in which the Court struck down the regulations. But those two are the ones that everyone remembers. And, during the New Deal era, Cushman adds, we remember the cases striking down the National Industrial Recovery Act and the first Agricultural Adjustment Act, forgetting that the Court upheld the centerpiece of FDR’s monetary policy and, by a vote of 8-1, the Tennessee Valley Authority.

It may be hard to imagine a full-scale assault by the Roberts Court on Obama’s regulatory agenda because, with the exception of Justice Thomas, the conservatives on today’s Court tend to be pro-business conservatives, rather than libertarian conservatives, and are therefore unlikely to strike down government spending programs (like the Troubled Asset Relief Program) that help U.S. business. But it’s not hard to imagine the five conservative justices reversing other economically progressive regulations on the basis of contested constitutional arguments. Later this term, for example, the Court may follow Citizens United with another activist decision, striking down the Public Company Accounting Oversight Board (nicknamed “Peek-a-Boo”), which was created to regulate accounting firm auditors in the wake of the Enron and Arthur Andersen scandals. If the Court strikes down Peek-a-Boo, even if the decision is narrow enough not to call into question the constitutionality of the Federal Reserve, it may turn rumbling against the Court’s activism into full-blown outrage.

It’s impossible, at the moment, to tell whether the reaction to Citizens United will be the beginning of a torrential backlash or will fade into the ether. But the Roberts Court is now entering politically hazardous territory. I continue to admire Chief Justice Roberts’s original bipartisan vision of unanimity and consensus and still hope that he has enough political savvy and historical perspective to recognize and avoid the shoals ahead. But the success or failure of his tenure will turn on his ability to align his promises of restraint with the reality of his performance. At this moment in our economic history, the American people are concerned about the influence of corporations in our political life, and this committee should be concerned, too, when bipartisan legislation is struck down by activist judges on the basis of questionable constitutional arguments imposed by ideologically polarized 5-4 majorities. We have seen narrow conservative majorities strike down progressive economic regulations in the name of corporate rights before—and it always ends badly for the Court.

Jeffrey Rosen is the Legal Affairs Editor of The New Republic.

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While leaders in Washington have been war-gaming
the national security risks of climate change, they’ve only started to
connect the dots to the closely related threats emanating from the growing
crisis of global freshwater scarcity. At first blush, water and national
security may not seem to be interlinked. But the reality, as narrated in my new
book WATER: The
Epic Struggle for Wealth, Power, and Civilization, is that the
unfolding global water crisis increasingly influences the outcome of America’s
two wars, homeland defense against international terrorism, and other key U.S.
national-security interests, including the transforming planetary environment
and world geopolitical order.

Former
U.N. Secretary-General Boutros Boutros-Ghali famously predicted 25 years ago
that the “next war in the Middle East will be
fought over water.” While that has yet to come to pass, the greatest present
danger stems from failing nation-states—and not just in the bone-dry Middle East. With world water use growing at twice the
rate of human population over the last century, many of the Earth’s vital
freshwater ecosystems are already critically depleted and being used
unsustainably to support our global population of 6.5 billion, according the
2005 Millennium Ecosystem Assessment, and the situation can only be expected to
get worse as the population pushes toward 9 billion by 2050. As great rivers
run dry before reaching the sea, groundwater is mined deeper and deeper beyond
replenishment levels, and water quality erodes with growing pollution, an
explosive fault line is cleaving between freshwater Haves and Have-Nots across
the political, economic, and social landscapes of the 21st century.

Among
the water Have-Nots are the 3.6 billion who will live in countries that won’t
be able to feed themselves within 15 years due largely to scarcity of water—likely
to include giant India.
Throughout history, states that have been unable to feed themselves with
homegrown or reliably imported cheap food have stagnated, declined, and often
collapsed, with grievous adjustments in living standards, population levels,
and regional turmoil.

Health and humanitarian crises are
likely to emanate from the dark side of the Have-Not divide where 1 billion
abject poor lack regular access to clean, fresh water for minimal needs and 2.6
billion don’t have basic sanitation. Upriver water Have states increasingly
exert control over the precious water flows to their dependent neighbors
downstream, while within nations the wealthy and those with greatest political
clout commonly enjoy the formidable competitive advantage of better, and often
subsidized, access to the best water resources. Global warming exacerbates the
water crisis with extreme, unpredictable floods, droughts, glacier melts, storm
swells, and other water cycle–related
depredations that fall disproportionately on already water-insecure, Have-Not
regions and overwhelm existing, fragile water infrastructures. Such dislocating
events are expected to create 150 million environmental refugees within a
decade.

A tumultuous
adjustment to the freshwater scarcity crisis lies ahead, and in our global
society the feedback effects will buffet even the security of distant nations.
Two cases from the headlines—Yemen
and Pakistan—illustrate
some of the problems and challenges.

Yemen

Arid
Yemen is an impoverished, failing
state, home to al-Qaida in the Arabian Peninsula, which helped to train and arm
the would-be Detroit-bound, Christmas suicide bomber from Nigeria. The
Yemeni government is not much better than a large, corrupt tribe competing for
control of the nation’s diminishing resources through patronage payoffs and
proxy alliances with other strong tribes. There is warfare in the north between
Houthi tribesmen and Saudi-backed government forces, while politically and
economically disaffected southerners are trying to secede. The government is
also battling al-Qaida, which flourishes in ungoverned no-man’s-lands.

Terrorism—which
claimed 17 U.S. sailor lives
in the attack in Aden Harbor on the USS Cole in 2000, and was beaten back
for a few years with the help of U.S. drones—is resurgent. The
Yemeni government’s policy of routinely releasing captured or repatriated
terrorists after little more than a promise not to do it again frustrates the
Obama administration’s efforts to shut the Guantanamo Bay prison, where about
half of the remaining 200 prisoners are Yemeni.

One of the world’s
most dire freshwater scarcity crises underlies Yemen’s extreme poverty and
faltering state. The average Yemeni lives at eight times below the world
freshwater availability poverty line, and has 1/20th the world average. Less
than half have access to enough clean, fresh water for basic needs, while
five-sixths lack adequate sanitation. Illegal well drilling is ubiquitous. Yet when
the government tried to remove state subsidies for the diesel fuel powering the
illegal pumps, riots forced it to desist. The lion’s share of the groundwater
is commandeered (and used wastefully in flood irrigation) to grow the cash crop
qat, a narcotic stimulant chewed by Yemeni men and an integral part of Yemeni
culture.

The net result is
an ecological and human catastrophe unfolding in slow motion: Water tables
around the country are plunging—in many places two to four times faster than
the natural replenishment rate. Soaring 7 percent annual population growth, adding
to the current 23 million Yemenis, compounds the water scarcity crisis. As much
as two-thirds of rural violence, including some deaths, is related to water. As
life in rural areas grows untenable, Yemenis are crowding into already swollen
cities, where water riots are not uncommon and mosques dispense minimum free
water as charity to the poorest. In the capital, San’a, 100 of the 180 wells in
use a decade ago have run dry. Within just five to 10 years, it is widely
predicted to become the world’s first capital city to literally run out of
water.

To try to retain some control, the government
delegated power over water to local authorities and urban water companies. Al-Qaida
is strongest in places like ancient Marib and Shabwa where no water companies
operate, and it gains the support of the populace by providing health care and
helping to dig wells. What viable diplomatic policy America and its allies can pursue
in such a situation is unclear, as international financial aid simply
disappears down the government’s sieve of corruption.

Pakistan

As dangerous as Yemen is as a failed state, it pales in
comparison to Pakistan,
which is nuclear-armed, Taliban-besieged, regionally fractious, and severely
water fragile. Osama bin Laden and Al-Qaida’s core leadership are believed to
be hiding out in its rugged northwest regions.

American leaders
had a big fright in April 2009 when Muslim fundamentalist Taliban fighters
broke out of the northwestern provinces and struck within 25 miles of the Indus River’s
giant Tarbela Dam, a critical site they’d attacked through terrorism before,
and only 30 miles from the capital, Islamabad.
The Tarbela Dam is the strategic heart of Pakistan’s irrigation, hydropower,
and flood-control network. If the Taliban damaged or took control of the giant
dam, and gained critical leverage over Pakistan’s food and energy
security, the government’s viability would be imperiled.

While Pakistan’s
American-trained elite counterterrorism forces and air power quickly rallied to
beat back the Taliban, the U.S. responded to the Taliban’s show of strength in
the spring of 2009 by accelerating its $7.5 billion five-year aid package to
Pakistan—the lion’s share of which is focused on rehabilitating the nation’s perilously
deteriorating and inadequate agricultural and hydropower waterworks. During her
tumultuous October 2009 visit to Pakistan, Secretary of State
Hillary Clinton was repeatedly warned about the nation’s impending freshwater
crisis.

At the heart of Pakistan’s
crisis is the Indus
River, its water lifeline
and foundation of its farm economy, which provides the livelihood for 60
percent of Pakistanis. It’s already so badly overused that its water rarely
reaches its now dried-up delta, and its huge fertile irrigated basin cropland is
heavily reliant on overpumped groundwater and in dire need of a refurbished
drainage system to remove poisoning salts. The Indus River also faces an alarming loss of up
to a third of its flow by 2025 from the global warming–induced melting of its source Himalayan
glaciers. In the same period, moreover, the nation’s population will grow 30
percent more to 225 million. Global climate change is further menacing monsoonal
Pakistan
with more unpredictable and intense seasonal floods and droughts. In a country
where the water-storage capacity to buffer prolonged drought and loss of
hydropower is only 30 days—1/30th as much as in the U.S.
and 1/15th as much as in China—the
effects of climate change can quickly become catastrophic and destabilizing.

Complicating
Pakistan’s water crisis is that most of its water originates outside its
borders, in archenemy, nuclear-armed India—with whom it has fought several wars
and still heatedly disputes the Kashmir border region—as well as in Afghanistan
and China. The Indus water dispute with India, which helped trigger the
first war between the countries, was resolved with a 1960 treaty. But under the
strain of population growth and climate change, the treaty is in dire need of
renegotiation. One source of tension is that both countries are building new
hydropower dams on Indus tributaries in the Kashmir.
Pakistan is also highly
suspicious of India’s
increased aid to Afghanistan
for dams on rivers that flow into Pakistan;
it fears it is an Indian subterfuge to put Pakistan
in an east-west hydrological vise once America
leaves Afghanistan.
For their part, the Pakistanis have awarded their dam contract to China, India’s adversary with whom it has
its own water disputes and testy political relations.  

The chessboard of Pakistan’s
destiny is immensely complex, of course. But how it manages its critical water
challenges—both from internal and external pressures—is one of the paramount
variables in whether it will hold together as a coherent nation-state. Given
its nukes, radical Muslim fundamentalists, and regional stature, what happens
to it is of grave significance to American national security and Asian regional
security.

The global water
crisis is unfolding in many other places around the world, and in many
different ways, posing vital national security challenges to the U.S.  Israel’s
conflicts with Palestinians and Syria
include contentious disputes over the vital water supplies of the West Bank and
Golan Heights, which Israel
won in the 1967 war and which today account for two-thirds of Israel’s total
freshwater. Iraq’s national viability
and prosperity depend significantly on how much water its upstream neighbors Syria and Turkey
(the Middle East’s rising water superpower)
permit to flow downstream. How tightly China, in its dam-building frenzy for
economic growth, squeezes the waters from the 10 major Asian rivers originating
in its Tibetan plateau will affect the prosperity and political robustness of
downstream nations across Asia, China’s geopolitical status, and with it, U.S.
national security interests. Whether and how big a food importer India becomes
as its own water management runs short will affect global food prices, and
conditions of famine and health, in food import–dependent countries worldwide.

Water and national
security may not seem at first to be interconnected. But they are-increasingly
so as the global freshwater scarcity crisis deepens.

Related Links:

EPA stands by as polluters ignore the Clean Water Act

Ask Umbra on down comforters, soapy gray water, and canned tomatoes

Ask Umbra’s pearls of wisdom on gardening

The history of humankind has undergone two major energy transitions, marked by the invention and development of agriculture and the discovery and exploitation of oil. The two energy transitions partition human history into three phases: hunter-gatherer, agricultural, and industrial. Faber et al. (1996) refer to these phases as “Paradigmatic Images of the World,” because they describe the common structure of societies throughout the world. The most important question is “what is the next paradigmatic image of the world?” (Figure 1. A !Kung hunter-gatherer from the Kalahari Desert in Africa, image from here)

Each major energy transition in human history shared a common trait: they provided society access to larger quantities of higher quality energy. An analysis of the !Kung bushmen of the Kalahari Desert, one of the only hunter-gatherer populations remaining in the 20th century, revealed that the entire societal structure, including migration patterns, gender roles, and work schedules, was dictated by the availability of water and food (energy) (Lee 1972). The development of agriculture supplanted most hunter-gatherer populations because it focused the energy from the sun into food-bearing crops, which created much larger amounts of food per unit land area. As a result food storages accumulated, populations grew, and settlements began to flourish. The food surpluses created by the development of agriculture allowed some people to focus their attention off the farm, leading to higher education, trade specialization, tool development, etc. But even the most productive of ancient farms can't compare to the productivity of a modern, industrial farm (i.e., in terms of gross output).

The modern industrial era began in earnest in the late 19th century with the discovery of oil, and today is defined by the exploitation of the three major fossil fuels: oil, coal, and natural gas. Never before was society exposed to energy of such a high quality and in such large quantities. For example, harvesting a ton of wheat in the US at the beginning of the 19th century required 30 hours of work, but by 1970 that number had decreased to less than 2 hours (Smil 1994). The decrease in labor hours was due in large part to the use of fertilizers and mechanized farm equipment, both of which rely on fossil fuels. Exploitation of fossil fuels in all sectors of the economy led to vast increases in productivity, which was the driving force behind the transition from an agricultural to industrial society in the early 20th century. But economic theories developed during industrialization failed to reflect the value of fossil fuel energy in the transition from an agricultural to industrial economy, with theorists claiming, “The world can effectively get along without resources.” (Solow 1974)

Historically, economic theories of value have reflected the “Paradigmatic Image of the World” at the time they were developed. For example, in the mainly agrarian societies of early 18th century France, a few academics, called Physiocrats, posited that land was the ultimate source of value as they noticed how higher quality land produced more food and hence profit for the farmer. By the turn of the 19th century, European society began to industrialize, and the focus of economists switched from land to labor. These economists, called the Classical Economists, focused on labor as the primary source of wealth as they saw that the output from a factory was directly related to the productivity of the labor force. By the turn of the 20th century, a new school of economists called Neoclassical Economists, began to focus mainly on the market, and believed that the value of any object should not be measured by either the amount of resources or labor that went into producing it, but rather by the value it commanded in the market. Accordingly, the welfare of the people under the neoclassical economic paradigm was equal to the amount they could consume in the market, and as a result income became the yardstick by which human welfare was measured. Since a person’s welfare was directly proportion to their income, increasing income, or growing the economy, become the de facto goal of neoclassical economics.

But today’s world is much different from the world that existed during the beginning of industrialization, with far more people and countries vying for an increasingly small resource base. The failure to realize that fact is a one of the reasons why the less developed nations of the world today struggle to advance out of poverty. Most of the modern development policies crafted for the less developed countries emphasize internal industrialization for export-led growth, and for numerous reasons they have often failed to meet their goals (Kroeger and Montayne 2000). Many of these less developed countries even have large endowments of natural resources, including fossil fuels, yet remain poor. Simply having access to high-energy fossil fuels does not necessarily translate into a wealthier life. Other variables, such as corruption, education, trade and investment must be accounted for when analyzing the causes of economic growth (Papyrakis and Gerlagh 2004).

The widespread adoption of the idea that economic growth will increase human welfare is essential in understanding why countries around the world continue to pollute the air, water and earth in the name of economic growth. Growth in Gross Domestic Product (GDP) above all was and still is the focus of neoclassical macroeconomic theory, and as such, it has been coveted by almost all economies around the world as the yardstick against which all must measure human welfare. But infinite growth on finite resources is not possible, and at some point, the fossil energy supply will decrease and the type of economic growth that occurred during the beginning of industrialization will no longer be possible.

Whereas past energy transitions have exploited new, larger sources of energy that enabled exponential growth in many areas of society, the reality of the geologic constraints imposed upon today’s society relegate unbridled economic growth, the defining economic characteristic of the industrial era, to be a thing of the past. A new economic model is needed--one that focuses on human welfare as being separate from income, and one that focuses on the resiliency of society rather than the growth of society over the long term.

Abandoning the previous economic paradigm of growth is paramount because, unlike previous energy transitions in history, the next energy transition will most likely involve a reduction in the energy available to society. But reducing energy consumption should not be viewed negatively. There is evidence that raising the incomes of all does not increase the happiness of all (Easterlin 1995). Furthermore, people that engage in local, low-energy food programs, such as Community Supported Agriculture (CSAs) or farmer’s markets, tend to not only have a healthier life but also more of a connection with the local community (Wells et al. 1999). These are very basic examples of the type of low-energy solutions that the world must begin to adopt for the next energy transition.

There are no substitutes for oil, natural gas, or coal at the scale needed to maintain the economic status quo into the future, and there is absolutely no reason to expect that technology will yield a silver bullet solution. However, with the appropriate mix of reducing energy consumption (by a lot) and instituting energy-saving techniques (passive solar, local food, etc), society could transition to the next “Paradigmatic Image of the World” without huge catastrophe. Whether this is possible given the current financial issues and governmental structure is another issue that I will not get into here, aside from saying that a pivotal part in beginning this energy transition will be to change the attitude and behavior of people (hence governments) around the world from the belief that the only way to happiness is through financial wealth.

The run-up in the price of oil and ensuing economic collapse of 2008 are evidence that the world is dependent upon a depleting stock of fossil fuels, and change is coming. Society has one of two options: 1) acknowledge that fossil fuels will sooner or later run-out and begin to prepare to transition to a much less energy dense society, or 2) maintain the status quo, hoping that the economy can grow in perpetuity as the stock of fossil fuels declines.

References

Easterlin, R. A. (1995). Will raising the incomes of all increase the happiness of all? Journal of Economic Behavior and Organization, 27(1), 35 - 47.

Faber, M., Manstetten, R. and Proops, J. (1996). Ecological Economics: Conepts and Methods. Cheltenham: Edward Elgar.

Kroeger, T. and Montayne, D. (2000). An Assessment of the Effectiveness of Structural Adjustment Policies in Costa Rica. In C. A. S. Hall(Ed Quantifying Sustainable Development (pp. 665 - 693). New York: Academic Press.

Lee, R. B. (1972). !Kung Bushman Subsitence: An Input-Output Analysis. In A. P. Vayda(Ed Environment and Cultural Behavior) Garden City: Natural History Press.

Papyrakis, E. and Gerlagh, R. (2004). The Resource Curse Hypothesis and its Transmission Channels. Journal of Comparative Economics, 32, 181 - 193.

Smil, V. (1994). Energy in World History. Westview Press.

Solow, R. M. (1974). The Economics of Resources or the Resources of Economics. The American Economic Review, 64(2), 1-14.

Wells, B., Gradwell, S. and Yoder, R. (1999). Growing food, growing community: Community Supported Agriculture in rural Iowa. Community Development Journal, 34, (38-46).

If Greece wants to avoid an Argentine-style meltdown, it needs to stay clear of the restructurings and IMF programmes

Even as the European Union and the International Monetary Fund lay the groundwork for a giant first-round bailout, debate is swirling about whether Greece can avoid sovereign default.

Some view Greece as Argentina revisited, noting the stunning parallels with the country that in 2001 set the record for the world's largest default (in dollar terms). Others, such as Greek prime minister George Papandreou, see the country's problems as difficult but manageable, and complain of interference from ill-intentioned foreign speculators.

Avoiding default may be possible, but it will not be easy. One has only to look at official data, including Greece's external debt, which amounts to 170% of national income, or its gaping government budget deficit (almost 13% of GDP).

But the problem is not only the numbers; it is one of credibility. Thanks to decades of low investment in statistical capacity, no one trusts the Greek government's figures. Nor does Greece's default history inspire confidence.

As demonstrated in my recent book with Carmen Reinhart, This Time is Different: Eight Centuries of Financial Folly , Greece has been in default roughly one out of every two years since it first gained independence in the 19th century. Loss of credibility, if it comes, can bite hard and fast. Indeed, the historical evidence slams you over the head with the fact that, whereas government debt can drift upward inexorably for years, the end usually comes quite suddenly.

And it can happen to any country, although advanced countries can usually tighten fiscal policy with sufficient speed and credibility that the pain comes mainly in slower growth. Unfortunately, for emerging markets, adjustment is often impossible without outside help. That is the precipice on which Greece stands today.

A debt crisis is not inevitable. But the government urgently needs to implement credible fiscal adjustment, concentrating on not only higher taxation, but also on rolling back some of the incredible growth in government spending – from 45% of GDP to 52% of GDP – that occurred between 2007 and 2009. The government must avoid relying too much on proposals for tax increases, which ultimately feed back on growth and sustainability. It would be far preferable to balance tax increases with some reversal of runaway government spending.

I have Greek friends who say that Greece is not alone. And they are right. Some countries are almost inevitably going to experience bailouts and defaults. One of the more striking regularities that Reinhart and I found is that after a wave of international banking crises, a wave of sovereign defaults and restructurings often follows within a few years.

This correlation is hardly surprising, given the massive build-up in public debts that countries typically experience after a banking crisis. We have certainly seen that this time, with crisis countries' debt already having risen by more than 75% since 2007.

But, whereas we are likely to see a wave of defaults and IMF programmes this time, too, fiscal meltdown does not have to hit every highly indebted country. Indeed, what a country like Greece should be doing is pulling out all the stops to stay clear of the first and second wave of restructurings and IMF programmes. If it can, then perhaps watching other countries suffer will help convince the local political elite to consent to adjustment. If not, Greece will have less control over its adjustment and potentially experience far greater trauma, perhaps eventually outright default.

There is an old joke about two men who are trapped by a lion in the jungle after a plane crash. When the first of them starts putting on his sneakers, the other asks why. The first answers: "I am getting ready to make a run for it." But you cannot outrun a lion, says the other man, to which the first replies: "I don't have to outrun the lion. I just have to outrun you."

Greece has yet to put on its sneakers, while other troubled countries, such as Ireland, race ahead with massive fiscal adjustments. Greece's new socialist government is hampered by campaign promises that suggested the money was there to solve the problems, when in fact things turned out to be far worse than anyone imagined. Unions and agricultural groups tie up traffic with protests every other day, hinting at possible escalation.

Most Greeks are taking whatever action they can to avoid the government's likely insatiable thirst for higher tax revenues, with wealthy individuals shifting money abroad and ordinary people migrating to the underground economy. Greece's underground economy, estimated to be as large as 30% of GDP, is already one of Europe's biggest, and it is growing by the day.

In the case of Argentina, a pair of massive IMF loans in 2000 and 2001 ultimately only delayed the inevitable harsh adjustment, and made the country's ultimate default even more traumatic. Like Argentina, Greece has a fixed exchange rate, a long history of fiscal deficits, and an even longer history of sovereign defaults. Nevertheless, Greece can avoid an Argentine-style meltdown, but it needs to engage in far more determined adjustment. It is time to put on the running shoes.

Copyright: Project Syndicate, 2010.

www.project-syndicate.org

The Reserve Bank of India (RBI) today hiked the cash reserve ratio (CRR) of scheduled banks by 75 basis points and raised its projection for the growth of the economy for 2009-10 to 7.5 per cent, encouraged by the second quarter growth of 7.9 per cent.

The increase in the CRR from 5 to 5.75 per cent of the banks' net demand and time liabilities (NDTL) will be in two stages. The first stage of increase of 50 basis points will be effective the fortnight beginning February 13, followed by the next stage of increase of 25 basis points effective the fortnight beginning February 27.

As a result of the increase in the CRR, about Rs. 36,000 crore of excess liquidity will be absorbed from the system, the RBI said in its Third Quarter Review of Monetary Policy 2009-10.

The RBI has, however, retained the Bank Rate at 6 per cent and the repo rate under the Liquidity Adjustment Facility (LAF) at 4.75 per cent. The reverse repo rate under the LAF has been retained at 3.25 per cent.

The central bank said it would continue to monitor macro-economic conditions, particularly the price situation, closely and take further action as warranted.

The RBI had, in its Second Quarter Review of October 2009, placed the baseline projection for GDP growth for 2009-10 at 6 per cent with an upside bias.

"The movements in the latest indicators of real sector activity indicate that the upside bias has materialised. Assuming a near zero growth in agricultural production and continued recovery in industrial production and services sector activity, the baseline projection for GDP growth for 2009-10 is now raised to 7.5 per cent," RBI Governor D Subbarao said while presenting the Third Quarter Review in Mumbai.

Keeping in view the global trend in commodity prices and the domestic demand-supply balance, the RBI has raised the baseline projection for Wholesale Price Index (WPI) inflation for end-March 2010 to 8.5 per cent. The The Second Quarter Review had projected WPI inflation of 6.5 per cent with an upside bias for end-March 2010.

NNN

Introduction:

R.W. Smith & Co. is seeking to immediately identify and hire an experienced Credit and Collections Manager with 5-7 years of progressive, successful experience leading a team whose success is based on improving technology, automating credit and collections processes, reducing days outstanding to maximize cash flow and being critical team players in assisting the Company with our intended growth to a $200M wholesale distributor and design and build contractor over the next five years.

Position is responsible for:

• Hiring, training, mentoring, motivating and managing collectors, credit support personnel and our construction contracts coordinator;
• Investigating the financial standing and reputation of credit applicants, approving or rejecting customers’ requests for line of credit; establishing initial credit lines including terms and conditions (including lien or bond action to be taken), determining when credit should be curtailed or expanded and authorizing and releasing credit holds;
• Planning, reviewing, evaluating, implementing and continuously improving all aspects of credit & collection functions including enhancement of processes through greater utilization of technology;
• Establishing and maintaining department policies, standards and operating procedures;
• Ensuring professional business relationships are established and maintained with customers, agencies, attorneys and trade associations;
• Recommending, tracking and reporting legal or third party collection action, including bad debt write-offs;
• Departmental Budgeting
• Strategic planning and follow through on strategic initiatives
• Approving adjustments; forecasting cash flow and reviewing daily cash reports;
• Approving lien waiver requests; filing bond claims, mechanic’s liens, stop notices and UCC recordings and handling small claims actions as required;
• Working closely with V.P. of Sales and Outside Sales Consultants to respond to credit and collection concerns with existing and potential customers

Skills, Abilities & Knowledge:

The ideal applicant will have a Bachelor or Master’s degree in finance, business administration or a related field plus 5-7 years progressive commercial credit and collections experience, five of which have been in a leadership role. Prior experience with a wholesale distributor, a construction firm or food/beverage distributor and/or within the hospitality sector, with an enterprise that annually generates between $100-200M gross revenue, would be a significant plus. Applicants must possess advanced windows-based ERP experience; solid follow-up, analytical and negotiating skills, hands-on knowledge of cash management processes; effective oral and written communication skills with individuals inside and outside of the company, and thorough knowledge of commercial credit and collection laws including small claims, lien and bankruptcy timeframes, requirements and proceedings. You must enjoy working in a fast-paced environment and be able to thrive under pressure.

About Our Company:

R.W. Smith & Co., an employee owned company since 1997, was established in San Diego in 1935 as a wholesale food service equipment and supply distributor serving San Diego County. Currently, we have three distinct business lines including:

• A full-service turnkey supplier of food service equipment and supplies for independently owned and national chain account food service establishments (e.g., restaurants, casinos, bars, grills, corporate cafeterias, country clubs, hospitals);
• A contract design division, with offices in Costa Mesa and Los Angles, that is committed to specifying, designing and/or installing commercial kitchens within the hospitality, education and healthcare industries; and,
• A custom design and fabrication division devoted to hot and cold controlled environments (e.g., agricultural/research universities, pharmaceutical firms, the FDA, and crime/law enforcement labs).

Our employee owners have been honored with two national awards – one being a customer choice award chosen by national customers; and, the other picked by our peers for high achievement in the industry. Our growth in ownership builds from each of us throughout the company – partnering for our future.

Our home office is located in north inland San Diego County in the neighborhood of Mira Mesa. We employ a full corporate office including specialists in accounting, credit, purchasing, human resources, information technology, and customer service and inside sales. We have Territory Sales Consultants in Arizona, California, Florida, and Texas with distribution facilities located in San Diego, Dallas and Orlando.

Our Benefits Package:

Our total compensation package includes market competitive base salaries; monthly and annual bonus programs; and, employee benefits, which are available the first of the month following 3 months of consecutive full-time employment. Our paid time off program includes two weeks vacation, five days sick time and seven holidays. Additionally, R.W. Smith & Co. offers 100% employer-paid medical insurance with prescription drug coverage and long term disability insurance; a voluntary dental insurance with a add-on vision discount program; our Section 125 pre-tax premiums and health care/dependent care spending accounts; to participate in the Employee Stock Ownership Plan and a 401(k) retirement savings plan; and, you are eligible to join a credit union. We appreciate that our employee/owners are the company’s most valuable asset.

R. W. Smith & Co. is an Equal Opportunity Employer. Qualified applicants will receive consideration without regard to age, race, color, religion, sex, sexual orientation, disability, or national origin or any other protected characteristic. Employment is contingent upon successful completion of background investigation and drug/alcohol screen. R.W. Smith is a drug, alcohol and smoke-free workplace. All resumes are held in confidence. Only candidates whose profiles closely match requirements will be contacted during this search. Relocation costs are not covered by R.W. Smith & Co. You must be eligible to work in this country and live within 30 miles of the San Diego office.

619, (858), 858, 760, 619, (619), (760), San Diego, Mira Mesa, credit, administrative, collections, reconciliation, AR, A/R, manager, 92126, 92129, 92123

• New rate expected to fuel price rises and inflation
• Chávez claims jets intercepted American 'warplane'

Venezuelans went on a shopping spree this weekend after President Hugo Chávez announced a currency devaluation that is expected to sharply increase prices.

Families packed shopping malls across the country to stock up on electronic goods and other items in anticipation of many prices doubling tomorrow. Queues of shoppers snaked from stores on to pavements in the capital, Caracas, amid shouts of "Buy, buy, the world is going to die".

Chávez announced late on Friday that the bolivar, which has been fixed at 2.15 to the dollar since March 2005, would be devalued in a new multi-tiered exchange rate regime. The rate will be fixed at 2.6 for the import of essential goods and 4.3 for non-essential goods.

"This is to boost the productive ­economy, to reduce imports that aren't strictly necessary and to stimulate exports," he said.

Analysts said the devaluation would erode Chávez's support but should help stabilise the economy of South America's top oil exporter and relieve pressure on the state oil company, PDVSA.

The measure will also fuel inflation – at 25% already one of the world's highest – by making imports more expensive. A ­shrivelled manufacturing and agricultural base means Venezuela imports most of its food and goods. "I don't know how my family is going to cope," said Marta Bernal, a mother of two. "We've stocked up as much as we can today but I dread to see the prices when we come back. This is going to be really nasty."

The finance minister, Ali Rodriguez, said the devaluation would add between 3% and 5% to inflation. Some analysts ­predicted a higher spike, pushing inflation over 30% this year.

Economists have long warned that a devaluation is needed to reduce distortions but Chávez ruled it out and vowed last year that the global financial crisis would not touch "a hair" of Venezuela's economy.

The U-turn came amid a tumble in oil revenues from record highs, squeezing the government's free-spending ways, and a 2.9% economic contraction.

The president made the announcement during a crucial baseball game and avoided using the word devaluation. State media followed suit and referred to "adjustments".

In another surprise statement, the former tank commander said he ordered two F-16 jets to intercept a US military plane that twice entered Venezuelan skies on Friday. "They are provoking us, these are warplanes," he said, brandishing a photo of the plane, which he described as a P-3. Chávez has accused the US of plotting an invasion.

The Pentagon admitted one of its planes entered Venezuelan airspace last year but denied that any US military aircraft did so on Friday. Venezuelan opposition politicians accused the president of trying to cause a distraction and bloggers said the photo appeared to be one uploaded to Wikipedia in 2005.

After 11 years the president's socialist revolution has nationalised key industries and regulated much of the private sector. He retains support in the slums but his popularity has slumped in recent months because of inflation, violent crime and crumbling public services. Electricity and water are severely rationed.

The opposition, which hopes to wrest control of the national assembly in September elections, branded the devaluation as "black Friday" and another sign of government incompetence.

"By establishing the exchange rate at 4.3 bolivars per dollar, the quality of life for Venezuelans is automatically devalued since we now have half the money we had before," said Antonio Ledezma, the mayor of Caracas and a Chávez opponent.

One of the chief responses to the continuing disaster that is America's unemployment situation runs along the lines of: It's a lot better than it was last year at this time. That depends on how you look at it.

In terms of the number of jobs the Bureau of Labor Statistics reported lost in the Decembers of 2008 and 2009, the situation is a lot better. Jobs aren't being slashed in anywhere near the same numbers they were a year ago, 681,000 vs. 85,000. Layoffs are way down and, on average, people who still have jobs are more secure that they'll keep them than they were just a few months ago. Various indicators of a slowly improving economy can be seen everywhere. No doubt, thanks to government intervention, however imperfect, there have been innumerable sighs of relief.

^{Click here for larger image.}

But looked at from the standpoint of accumulated job losses, with no real hiring in sight, the situation looks far worse than it did a year ago. Back then, "only" 3.1 million jobs had been lost since the recession began in December 2007. Today, 5.0 million more Americans are officially out of work. And 6.1 million of them have been out of work for at least six months. Altogether, those counted as jobless number 15.3 million. That, says the BLS, is 10% of the work force, the "U3" number. Add in the part-timers who want full time work and people too discouraged to keep looking for a job and this "U6" measurement rises to 26.5 million and 17.3%.

The numbers, however, are actually worse than they first appear. Because, as BLS statistics show, 661,000 people left the labor force last month. We don't know where they all went. Retired, enrolled in school, left the job market to raise a child, took time off to write a book, sank into despair. What we do know is that if they had stayed in the labor force and kept looking for one of those jobs that isn't yet available, today we'd be looking at a 10.4% unemployment rate, with 16 million officially out of work. Maybe 27 million when the underemployed and discouraged get tallied.

^{Click here for larger image}

What these terrible numbers represent are persons with rent to pay, kids to feed, tuition to cover, loans to repay. Not abstractions. People. Which is why everyone - except for Republicans hoping to make political gains off of misery - eagerly hopes each new job report will announce that the numbers have begun to be reversed.

However, given the BLS's tweaky application of seasonal adjustment formulas and calculations about new businesses arising and old ones folding (called the birth-death model), this focus on when positive job numbers will finally be announced is really a perverse waste of time.

I don't say this with any malice toward anyone. I've watched for that crossover from negative to positive, too. Nor am I saying there's anything wrong with following the job trends that appear over a period of a few or many months. It's just that when the day the numbers finally appear to go positive for more than a one-month blip, it will be a maybe-yes, maybe-no affair.

And, more importantly, that breakthrough, such as it is, will only mark the beginning of what must be obvious to everyone by now will be a long, long trek back to the employment levels of December 2007 when there were 8.1 million more people working than there are now and millions more had full-time instead of part-time jobs.

^{Click for a larger version of this Calculated Risk chart.}

Our attention instead ought to be focused on the problem of how long it's going to take to return to the number of jobs there were when the recession started two years ago.

As many others and I have pointed out for months, and Robert Reich noted Friday, it normally takes the creation of about 100,000 jobs each month just to keep up with added new job seekers entering the labor market. So, add to that 8.1 million jobs we've lost another 2.5 million "never entereds." That's 10.6 million jobs that have to be made up.

To achieve that by the summer of 2012, in time to have a favorable effect on the presidential election, would mean, Reich says, 400,000 jobs created each month. During the Clinton boom, the best rate was 280,000 a month. If that could be matched, it would still take until early 2013 to cover those 10.6 million jobs. And, it should be remembered, each month going forward we will need yet another 100,000 jobs to handle people entering the market for the first time. So the actual number of needed jobs over the next three years is more like 13-14 million. A formidable task.

If there were at least program in place that was showing marked improvement in the unemployment situation, even if the jobless numbers were still high, it would be harder for Republicans to spin things in their direction for the election. But what kind of program?

The imperfect stimulus has helped stop the bleeding. But the only way for the administration to do a timely job of putting Americans back to work is with a dynamic and massive federally run jobs program, one that employs millions as quickly as possible. That means more government spending. Not only should it be done right away for all the obvious human reasons, but also because the already somewhat dicey political situation for Democrats in November is going to be far dicier if more jobs aren't generated soon. Excuses won't go over well.

It would be the toughest imaginable sell on Capitol Hill. Fought against tooth and nail by obstructionist Republicans, Democratic deficit hawks and assorted worry warts. It might very well go down to defeat. The only alternative then would be diverting some TARP repayments and unspent stimulus dollars. That's legally problematic and, at any rate, wouldn't produce enough money.

But the possibility of defeat should not be a deterrent to trying. The White House should bite the bullet on this, go all out, take the issue to the American people and fight like hell in Congress to make this happen. The next few months will offer the only chance, however slim, of accomplishing it. Marching into November with massive numbers of Americans still unemployed and no program for effectively reducing those numbers could make it a painful year at the polls.  

There is, as pointed out many times before, far more to do than merely try to get more Americans back to work. We need a frontal assault on deregulation, deunionization, privatization, unfettered globalization, wage stagnation and the outrageous transfer of wealth to the upper 20%, especially the top 1%. Fixing, even ameliorating, structural unemployment will require rejiggering out trade policy and establishing a progressive industrial policy.

Atrios makes an excellent point in that regard:

One of my longstanding pet peeves is that everyone in the US pretends we don't have an "industrial policy" because that implies naughty state intervention in certain sectors. But of course we have lots of naughty state intervention in certain sectors, we just don't do it even notionally for any good reason. We prop up the single family homebuilding industry and the automobile industry (even before the bailouts). We prop up certain agricultural sectors. We favor big business over small. Now we're massively propping up one skimmer industry - the financial industry - and are about to prop up another skimmer industry - health insurance.

So, yes, by design or accident we have industry policy. We should recognize that and then decide what we should be doing instead of pretending we don't have any.

Whatever we do in that regard, however, will have to wait until we solve the immediate crisis. For one thing, there aren't anywhere near enough fighting progressives in Congress to deal effectively with these deeper problems with the economy. For now, Band-Aids will have to do.

Prime Minister Manmohan Singh today admitted that world leaders who had gathered at the UN climate change summit in Copenhagen last month had made only limited progress and no one was satisfied with the outcome.

"And yet, there is no escaping the truth that the nations of the world have to move to a low greenhouse gas emissions and energy efficient development path," he said in his inaugural address at the 97th Indian Science Congress at Thiruvananthapuram in Kerala.

Dr Singh said climate change posed a threat to the planet and to its way of life. He said it was a problem that was challenging the knowledge and wisdom of humankind.

He said that, all over the world, countries were chalking out strategies to achieve greater energy efficiency and a shift to renewable sources of energy. They were also chalking out strategies for adapting to such climate change as is inevitable.

"India must not lag behind in these areas. Indeed we should plan to be among the leaders in the development of science and technology related to mitigation and also adaptation to climate change. The market for such technologies is not just India. It is indeed the whole world," he said.

The Prime Minister said that, as far energy was concerned, renewable and clean energy supplies would need to pay a much bigger role than what they do currently.

He said nuclear and solar energy supplies would need to increase considerably. According to him, the agreement reached last year with the Nuclear Suppliers Group (NSG)represented a landmark in lifting long standing restrictions on the transfer of nuclear fuel and technology to India. He said he was confident that India could now plan for an accelerated nuclear power development programme.

Dr Singh said the Government had also decided to launch a Jawaharlal Nehru National Solar Mission for the establishment of 20,000 MW of solar generation capacity by the year 2020.

He said the mission provided an opportunity to the county's indigenous scientific institutions to contribute in this important area. He said he was happy that a PAN IIT programme for Solar Energy Research had been launched by the Union Ministry of Science and Technology to drive down the costs of solar energy technology options through R&D-led innovations. The Ministry had also launched joint development programmes with knowledge networks of the European Union and the United Kingdom on solar energy research with investments of 5 million Euro and 5 million UK pounds, respectively, on each side, he said.

The Prime Minister said that if India had to re-emerge as a knowledge power in the 21st century, it could only be through developing a strong capability in science and technology.

He said that the Government had, in the past few years, invested heavily in expanding and upgrading the science, technology and innovation system in the country as well as in supporting a more broad-based educational base.

"We have worked hard to do what is good for science. We are determined to ensure that what we have announced does get implemented. We also know that we need to do much more because scientific capability is what will determine our ability to overcome the challenges which lie ahead. We face new challenges of climate change and the management of our scarce water resources. We also face old challenges of food security and disease control. In all these areas, our success will depend critically on the quality of our institutions of science and technology," he said.

He said the the world was becoming increasingly complex with growing interdependence among different sectors of the economy. Every solution to a particular problem had consequences in other areas, he pointed out.

"Take forests for instance. When we thought of forests as an economic resource the focus of forest planning was almost exclusively on growing the stock of timber and other commercially valuable forest products. This led to decisions about the choice of tree species and planting practices that we now know were sub-optimal because they did not pay sufficient regard to other functions of forests like controlling water run-off or for the protection of bio-diversity," he explained.

According to him, a single-minded focus on carbon reduction could lead to a similar distortion if forestry choices were based solely on how good they were in sequestering carbon.

"Mitigation of greenhouse gas emissions is no doubt an important goal. But it must co-exist with other equally important goals," he said.

Dr Singh also spoke about the importance of water resource management and expressed happiness that the Ministry of Science and Technology had initiated a Technology Mission for Winning, Augmentation and Renovation of Water Resoures.

He said technology solutions for 25 different water-related challenges were being found through pilot trials under real field conditions in about 60 locations covering all the 20 river basin systems in the country. These solutions woud then be applied to 100,000 population clusters to study their financial viability and location neutral applications, he said.

According to him, strengthening food security was another important area. Pointing out that better weather forecasting is critical for sound agricultural management, he said that a Geo-spatial Technology Applications Mission to provide crop planning and monitoring as well as flood management had recently been mounted.

The Prime Minister said developments in biotechnology presented prospects of greatly improving yields in major crops by increasing resistance to pests and also to moisture stress.

He said BT cotton had been well accepted in the country and had made a great difference to the production of cotton. The technology of genetic modification was also being extended to food crops though this raised legitimate questions of safety, he said.

"These must be given full weightage, with appropriate regulatory control based on strictly scientific criteria. Subject to these caveats, we should pursue all possible leads that biotechnology provides that might increase our food security as we go through climate-related stress," he said.

Dr Singh said providing affordable health care and improving the quality of life of the elderly population was yet another major challenge. He said it was a matter of pride that scientists of the Council of Scientific and Industrial Research (CSIR) had recently succeeded in mapping the genome of an Indian through a collaborative national research effort. He also commended the Defence Research and Development Organisation (DRDO) for developing a new and rapid diagnostic method for detecting the H1N1 virus.

"We need to build our scientific capabilities in a way that they can respond in real time to problems such as pandemics," he said.

The Prime Minister spoke in detail about the steps taken by the Government to improve the Science and Technology education and research infrastructure, including the Innovation in Science Pursuit for Inspired Research (INSPIRE) scheme, under which it would soon announce the name of at least one science awardee per school in the age group of 10-15 in the entire country.

He said the Government was considering the revision of the value of doctoral and post-doctoral fellowships as well as the formulation of schemes that would cover all research scholars with some funding support.

"We are keen to make our science education outreach inclusive and also affordable. Last year I had announced a special package for the North Eastern Region. We have since started implementing a similar package for the Science & Technology sector in Jammu and Kashmir. We are planning similar investments in other regions of our country like Bihar to bridge asymmetries," he said.

He said the efforts to attract many more talented young women to take up careers in science must be redoubled. A step in this direction is a new scheme now available for women’s universities named Consolidation of University Research, Innovation and Excellence (CURIE). This scheme provides financial help for complete upgradation of facilities in these universities, he said.

Dr Singh announced that the National Science and Engineering Research Board would start functioning before March 2010. A National Policy for Data Sharing and Accessibility has also been formulated. The Protection of Intellectual Property Bill, focusing on sharing revenue from intellectual properties with researchers will be taken up for discussion in Parliament very soon, he said.

The Prime Minister said all Indians felt proud that an Indian origin scientist, who earned his early spurs in India, was a recipient of this year’s Nobel Prize in Chemistry.

"I salute Dr Venkatraman Ramakrishnan for his creativity, his talent and for his deep commitment to good science. I have also noted Dr Ramakrishnan’s recent comment on the need for greater "autonomy from red tape and local politics" for Indian scientists," he said.

Dr Singh said it was unfortunately true that red tape, political interference and lack of proper recognition of good work had all contributed to a regression in Indian science in some sectors from the days of Dr. C V Raman, Meghnad Saha, J C Bose, Homi Bhabha, Vikram Sarabhai, Satish Dhawan and other great pioneers of Indian science.

He urged all scientific institutions to introspect and to propose mechanisms for greater autonomy, including autonomy from the government, which could help to improve standards for research and development.

"We must make a special effort to encourage scientists of Indian origin currently working abroad to return to our country including coming to our universities or scientific institutions for a short period. In this way we can, convert the 'brain drain' of the past into a 'brain gain' for the future. This will require special incentives. We need to think creatively on how this can be done so that high quality minds are attracted to teaching and research in our country," he said.

The Prime Minister said that the efforts to improve science required, apart from money, a change in mindset, including the mindset of senior faculty and university administration. "Sometimes that is the hardest thing to do," he said.

"I invite you all to explore all these issues and engage with the Government so that we can do what is needed to liberate Indian science from the shackles and deadweight of bureaucratism and in-house favouritism. Only then we can unleash the latent talent and creative energies of our vast scientists and engineers too," he said.

Noting that the Government had declared 2010-2020 as the "Decade of Innovations", he said the country needed new solutions in many areas to achieve its goals of inclusive and sustainable growth – in healthcare, in energy, in urban infrastructure, in water management, in transportation, and so on.

"We cannot continue with business as usual. Solutions from developed countries available are also not applicable all the time. They are often too costly and at times not sustainable," he said.

According to him, the country must develop an innovation eco-system to stimulate innovations.

"Innovators must be challenged to produce solutions our society needs. And innovative solutions with potential must be nurtured and rapidly applied," he said.

He said scientific establishments must be central to the innovation eco-system. "But this system must include industry, and providers of venture funds, as well as regulators who set high standards of performance for their products. We also need to think creatively on how to increase private investment in R&D. Some innovative policy readjustments may be required to build vibrant Public-Private Partnerships in the Science & Technology Sector," he said.

The Prime Minister said elite institutions such as the Indian Institutes of Technology (IITs) must do more to address the technological challenges of the 21st century. Their research goals and the expectations of the industrial and social sectors must be better aligned, he said.

He said the Planning Commission had recently set up an Expert Group to strengthen the innovation eco-system in the country and also to point to areas where innovations were required to meet the country’s goals of more rapid, more inclusive, and sustainable growth.

He said the Indian scientific establishment should have a strong outward orientation and must work in partnership with industry.

"We need to concentrate on strengthening the linkages between academic institutions, research institutions and industry. Today each operates within its own silo. Unless we close those gaps, our research and development sector may report high performance in terms of published papers but our challenges of the 21st century may still remain unsolved," he stressed.

He said Indian science should step up global alliances that would expose the country's scientists to the best in the world and enhance its competitiveness. "The time has come to give a new boost to science and technology in India," he added.

NNN

International Institute of Tropical Agriculture (IITA) Ibadan.

IITA with headquarters in Ibadan, is an international Agricultural Research Centre in the Consultative Group on International Agricultural Research (CGIAR), which is an association of about 50 countries, international and regional organizations, and private foundation. IITA seeks to increase agricultural production in a sustainable way in order to improve the nutritional status and well-being ob people in tropical Sub-Saharan Africa.

The International Institute of Tropical Agricultural Seeks suitable candidate for this position at the Institute in Ibadan:

Accounting Officer

This is a two years renewable contract.

DutiesSuccessful Candidate will:

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• Prepare and review financial statements.
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• Check, process and report on returns and justifications of funds granted to IITA collaborator/partners.
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• Raise journals for adjustment necessary on various accounts and loading same on Oracle interface.
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• Attend to queries raised by Budget Officers on core restricted projects.
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• Update, review and reconcile bill receivables from donors with the total grant income of core restricted project.
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• Assist in the preparation of overhead charges to restricted projects.
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• Assist in the checking of Cashier’s cash balances as scheduled.
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• Perform any other duties that could be assigned from time to time.
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Qualification and Experience

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• BSc or HND Accounting or ICAN PE II plus at least four years working experience in the Finance Office of a large organization.
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• He/she must have sound analytical mind and good knowledge of computer spreadsheet, oracle application and must be willing to put in extra hours.
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Remuneration

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• We offer highly competitive salary with equally attractive fringe benefits and excellent working conditions in pleasant campus environment.
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Method of Application

Interested candidate should forward their application with a detailed CV, the names and addresses of three professional referees (including telephone, fax and email address, if available), evidence of current remuneration package and photocopies of credential, to the Personnel Manager, International Insititute of Tropical Agriculture, PMB 5320, Oyo Road, Ibadan, Nigeria not later than two weeks from the date of this post.

For more information visitwww.iita.org

A reader e-mails:

It might be helpful to compare this bill to the Social Security Act of 1935, which, when passed, had some really bad elements. Most significantly, the bill excluded domestic and agricultural workers, which meant a large number of poor workers, especially African Americans, were not eligible for retirement or disability benefits. (The provisions were, of course, inserted to get the votes of southern senators who controlled key committees.) It also required people to pay into the bill for several years before seeing benefits.

But subsequent legislation in the 1950s and 1960s expanded those covered to the point that it became a fairly universal component of the American welfare state. Indeed, even Barry Goldwater consistently voted on Social Security expansion in the 1950s Senate. Now today is certainly different in the Senate but Social Security shows that adjustments that broaden existing systems are far easier to pass than the creation of new components of a welfare state.

If this is the end of health care legislation, I too would be dissatisfied. But logically, it can be seen as the second step after medicare/medicaid toward the creation of a broadly universal health care system.

I'll just add that I understand the model in which you don't agree that this bill will expand and improve as it develops its constituency over time. But I don't understand the model by which you believe this bill won't be improved over time but you simultaneously believe reformers can get something better in the foreseeable future.