government

In a crazy twist of Italian politics – in a nation known for its zany political life – the Roman lawyer, scholar and commoner Stefano Rodotà unexpectedly became the presidential candidate of the Five Star Movement in Italy, the rising political force there.  The amazing thing is, he nearly won!         

Rodotà is a kindly, clever, fiercely intelligent and straight-shooting left-wing legal scholar and politician.  Now nearly 80 years old, Rodotà is a something of a grey eminence in Italian politics.  He has served four times in the Italian Parliament and once in the Parliamentary Assembly of the Council of Europe.  He helped write the Charter of Fundamental Rights of the European Union.  He has taught at universities in Europe, Latin America, the US and India.

The recent success of the Five Star Movement (M5S) in the February 2013 elections abruptly opened up this opportunity for Rodotà and the commons.  M5S was launched in 2009 by a comedian and activist, Beppe Grillo, to focus on five key issues – public water, sustainable transportation, development, connectivity and environmentalism.  The movement is less of a real party than a cultural vehicle for voters to express resentment, frustration and hostility toward the political class in Italy.  M5S is generally populist and libertarian in orientation, sometimes with a right-wing flavor (anti-immigrant policies). But Grillo is a showy amateur as a politician and not exactly a small-d democrat (he gives no press interviews and doesn’t welcome debate within M5S).

Still, the movement's issues and profile are compelling enough that M5S won more than 25 percent of the vote in the February 2013 elections – second only to the Democratic Party, which won only a fraction more votes.  Forming a government in a country with dozens of political parties can be a difficult proposition, however, especially when personalities, political history, ideology and various odd circumstances are thrown in.    

Borrowing from the future without understanding the actual risks, and then spending the money carelessly?  Sounds like Wall Street all over again. But this time, it's a little-known tax mechanism known as tax-increment financing, or TIF.

TIF is an ingenious local economic development tool that lets city governments borrow against future tax revenues for a given area of town in order to invest in new projects today. While TIFs can work as intended and spur development, they are also highly vulnerable to abuse because their details and implementation are shrouded in complexity: a convenient temptation for expedient politicians.

TIF lets politicians borrow money from the city's future tax base, and then spend it on development projects with minimal public or legislative oversight. The scheme is sustained by the the supposition that the TIF bond money, if well-spent today, will pay for itself with future tax revenues generated by new development.

Always on the prowl for new assets to exploit, investors are trying to push some of the crown jewels of American government – land, highways, civic infrastructure – onto the auction block.  From the perspective of the owners of these assets, we the American people, it’s a terrible time to strike a deal.  Why sell off prime equity assets in a down market for a fraction of their actual value?  Ah, but that’s the point, from the point of view of investors:  Let’s snatch these assets for a song while governments are so desperate for cash! 

The latest example is a 387-acre tract of land in West Los Angeles that has long been prized as a precious bit of open space in an over-built city.  The land is owned by the Veterans Administration, and is estimated to be worth $5 billion in today’s market.

As the Wall Street Journal (July 16) reports, “For 25 years, wealthy locals and veterans groups—backed by California's congressional delegation—have successfully resisted efforts to sell or develop the land, delighting in the open space and fearing the consequences of development.”  But now the GOP – with scant resistance from Democrats – is pushing to sell off the land in order to raise money.

I’ve always been uncomfortable using the words “developing” and “developed” when talking about countries.  At a certain intuitive level I felt that that very axis of valuation was wrong.  Should the United States be considered the apotheosis of “development” – an obvious ideal of human progress and satisfaction that the rest of the world should emulate? 

In light of the many unsustainable ecological and social pathologies that the neoliberal market order has spawned, that seems presumptuous, if not ridiculous.  Similarly, to call India or Brazil or Costa Rica a “developing” country is to imply that they are lagging behind the “developed” nations even though their cultures may be far healthier and happier than ours. 

So how did the whole discourse of “development” and its theory of value get going in the first place, and evolve into the international ideal of human aspiration?  I just had a crash course on that topic by reading a fantastic book, The History of Development:  From Western Origins to Global Faith, by Gilbert Rist, a Swiss scholar of development.  The book first appeared in French in 1996, and was translated into English only in 2008; the latest edition, the third, by Zed Books, came out in 2010.

A federal judge has ruled that Google’s ambitious attempt to digitize all books, including those for which the copyright holders cannot be found, cannot go forward as planned.  That’s great news.  It will prevent Google from claiming a de facto monopoly over millions of “orphan works” whose copyright holders cannot be found.  The company will not be able to charge exorbitant prices for access to books that ought to be free or at-cost. 

Even better, the rejection of Google’s plan means that the nation’s libraries and research institutions can now entertain the idea of building their own repository of digitized books.  It can be a real commons, and not a “free” proprietary platform that would come with all sorts of strings attached. 

Robert Darnton, the director of the Harvard University Library, makes these points in a terrific oped piece in the NYT today.  After detailing why Google’s book project deserved to be rejected, Darnton asks:  Why not build a digital library better  than Google’s?  Let’s build “a vast collection of resources that can be tapped, free of charge, by anyone, anywhere, at any time,” he writes.

A memorable Dilbert cartoon strip features Dogbert as a “creativity consultant” who is directed by his boss to come up with some hard quantitative data.  The boss barks:  “The only way to make decisions is to pull numbers of the air, call them ‘assumptions,’ and calculate the net present value.”  The punchline:  “Of course, you have to use the right discount rate, otherwise it’s meaningless.”

That encapsulates the faux-rigor of regulatory decisions for protecting health, safety and the environment.  Ascertaining the dollar value of human life using the most rigorous science possible is a politically useful charade. 

As the New York Times recently reported, the scientifically determined value of a life at the Environmental Protection Agency has gone up from $6.8 million in the Bush II years to $9.1 million at present.  Across town, the FDA decides whether to ban an unsafe drug based on a valuation of $7.9 million per life.  In deciding whether automakers will install new safety features, the Transportation Department figures $6 million.

Finally, a bit of great news:  California Governor Jerry Brown is courageously bucking a national trend by refusing to sell off state buildings and then lease them back.  This trend has been the budget subterfuge of choice among many of the nation's governors.  Lease-backs of state assets are a backdoor way of getting a quick hit of money for troubled state budgets (in California's case, $1.2 billion) while saddling future taxpayers with huge additional expenditures (in California, $6 billion over 35 years).

Yes, welcome to the next frontier in the business campaign against government.  First it was the fight against regulation and public-sector spending, both largely successful.  Now business is vying to own the equity assets of government through arcane lease-back and securitization deals. 

These strategies not only hurt us as taxpayers and citizens (through higher expenditures for less value, and through reduced public discretion over public assets).  They fling open the doors to all sorts of other investor schemes to buy and privatize public assets.  Next stop:  the withering of the State and the arrival of the Total Market Order.