Monday, May 19, 2014

New Jersey State Lawyers Join Electricians' Union

           An article in the May, 2014 issue of The Electrical Worker,  the house organ journal of the International Brotherhood of Electrical Workers, details the successful organizing efforts of Local 33, which now represents about 400 lawyers who work for the State of New Jersey.  These employees, the Deputy Attorneys General (DAGs) are the men and women who prosecute polluters, shut down scams, investigate civil rights law violations, and so forth.  In short, they do the routine, day to day legal work required to defend the people of New Jersey. 
            Over twenty years ago, a consensus was emerging within this group of workers that they needed union representation. Many felt that theirs was a classic case of employee abuse:  broken promises, especially promised pay raises that never happened, unilateral increases in work load, arbitrary changes in work schedules, etc.  The DAGs felt that their deteriorating  work environment was not only undermining morale but making it difficult for them to do their jobs.  But as soon as it became known that these workers were considering joining a union, the state legislature passed a law forbidding it.
            Over the years, the DAGs considered many strategies, and eventually approached the IBEW.  This may seem like an unusual choice of bargaining agent, but actually it was a very reasonable choice.  The IBEW is a fairly large, long established international union, having about a thousand local unions in the U.S. and Canada.  In its 120+ years of operation, it has represented workers in a broad range job classifications with hundreds of separate specialized skill sets.  The IBEW also has experience representing public sector workers, as well as white collar professionals.
            When approached by the DAGs, the IBEW representative had one question:  Are you guys really committed to this effort? This will be a long struggle.  If we at the IBEW go all in on this, will you guys see it through to the end?  The DAGs affirmed that they would.   The first thing which had to be done was lobby the legislature to repeal the law forbidding  the DAGs to organize.  So the DAGs, the IBEW, and all their union friends appealed to the lawmakers---and this appeal was eventually successful.  The question which the lobbyists asked was this:  "How can you tell someone who is being mistreated that they shouldn't be able to do anything about it?"  No one really had an answer to that question, so they passed a bill repealing the law, and governor John Corzine signed it into law on his last day in office.
            The union won its NLRB election, and negotiations for the first contract began. It was a long, grueling process, with the state dragging its feet the whole way.  But eventually a contract was signed. Many people will ask, "What would an electricians' union know about the issues facing lawyers?"  Well, obviously, they know how to negotiate wages and working conditions. But the question is mostly irrelevant anyway.  When a new union local is formed,  the new members themselves select leadership from their own ranks, write their own by-laws, and select their own delegates and committees, including their negotiating committee.  When the state began negotiating with "the union,"  it was a committee of their own employees they were negotiating with.  The international union supplies a rough skeletal framework, in the form of a constitution. It also supplies financial and organizational backing,  and its vast expertise in organizing unions and setting them up in ways that work.   But in every case, "the union" is the workforce.   Any employer that hates "the union" simply hates his own workers. 

Thursday, May 8, 2014

Oil, Climate Change, and the Moneyed Class

            There was a wonderful article  by Christopher Hayes in the May 12, 2014 issue of The Nation entitled, "TheNew Abolitionism."  According to the current scientific consensus, the maximum planetary temperature increase that still allows the survival of civilization as we know it is about 2 degrees Celsius (that's 3.6 degrees F).  We have already increased the temperature by 0.8 degrees Celsius, so we have 1.2 degrees to go.  Given the relationship between carbon emissions and global average temperature, this means we can still release about 565 gigatons  of carbon into the atmosphere by mid-century.   That's it---just 565.   Yet according to the Carbon Tracker Initiative,  the total amount of carbon in the proven reserves owned by all the world's fossil fuel energy companies and by major fossil fuel producing countries is now about  2,795 gigatons---nearly five times the amount we could ever safely burn.  That means, in order for civilization to survive, the world's governments must either cajole or coerce the owners of that carbon to leave 80% of everything they own in the ground---and walk away from it forever.
            It's hard to put an exact price on that hoard of carbon, but its estimated worth is between ten and twenty trillion dollars.  Has there been any occasion in all history where the wealthiest, most powerful class on the planet has been asked to walk away from an asset of that size?   According to Hayes, there has been only one such event----when the American abolitionists demanded that southern planters free their slaves. It is distasteful to think of  slaves as "assets," but that's what the civil war was about;   whether slaves were people or property.   And as property, their value exceeded the combined worth of every railroad, bank, and factory in the country. Yet the abolitionists did eventually free those slaves, but only after a long and bloody civil war.  This is not going to be easy.
            You may be tempted to assume that the energy companies have so much wealth that even with 80% of it gone, they would still be obscenely rich----but you would assume wrong.  Oil companies have a lot of wealth, but they also have a lot of debt.  The debts are secured against the assets, but the biggest share of the assets are proven reserves. The day it becomes illegal to drill or dig more carbon, the value of those carbon assets goes away,  as does the value of the infrastructure built to process that carbon.   But the mountain of debt stays, and every coal and oil company in the world becomes insolvent.  At that point, all their employees are laid off forever,  from the CEO down to every drill-rig worker.   And when they return home, jobless, they would return to permanent ghost towns, because everyone else living in the same region would be laid off for the same reason.
             So it is understandable why oil industry people will resist all attempts to force them to act rationally. There are only two choices.  In one case, we continue to burn carbon, which destroys the planet and turns our lives into a living hell if we survive at all. In the other case, we ban carbon, which just turns oil workers' lives into a living hell.  With such a choice, you can see why oil industry people will cling to the insane hope that we can go on burning carbon.   An insane hope is better than no hope at all.
            Besides comparing the abandonment of carbon to the abandonment of slavery in terms of absolute asset loss, Hayes also makes another comparison. When something starts to become more profitable, everyone joins the parade to cheer for it.  At the time of the American Revolution,  no one really defended slavery.  Everyone agreed that we were stuck with it, but no one really liked it.  Patrick Henry, a Virginia slave holder, called slavery an "abominable practice."   Richard Henry Lee, also a Virginian,  called the slave trade "an iniquitous and disgraceful traffic,"  and introduced a bill in 1759 to end it.
            But in the early 19th century, because of the cotton boom, slavery suddenly became much more profitable.  Between 1805 and 1860,  the price of a slave increased from $300 to $750,  and the number of slaves increased 400%.  And as slavery became more profitable,  everyone started finding something to like about it.   By 1837, John C. Calhoun claimed that slavery was not an evil, but a positive good, and should be expanded. One Southern social theorist, George Fitzhugh, said, "Our negroes are not only better off as to physical comfort than free laborers, but their moral condition is better.....  They are the happiest, and, in some sense, the freest people in the world."   No matter how bad something is, when it begins making a lot of money, there will be no shortage of people to sing its praises.
            As shale oil production has recently become practical,  the continued burning of carbon is starting to be rehabilitated from  "a  horrible but necessary evil"  to "a celebrated boon for all."  Just as the United States before the Civil War was having a "slavery boom,"   the U.S. is now having a carbon boom.   Because of both deep water oil and gas and shale oil and gas, the U.S. is once again becoming a net exporter of oil.  It will soon surpass Saudi Arabia as the world's largest oil producer and Russia as the world's largest natural gas producer.  Of course, this situation is temporary.   Unlike conventional wells which can pump for 30 or 40 years,  the shale wells are tapping very shallow formations, and whether they even last long enough to return the rather considerable cost of drilling is still an open question.
            As recently as 25 years ago,  no one was really defending our continued reliance on fossil fuel, not even conservative Republicans.  Hayes quotes several Republicans on this issue:  Dan Quayle, in 1988 said, "The greenhouse effect is an important environmental issue.   It's important for us to get the data in,  to see what alternatives we have to fossil fuels."   And in 1989, Newt Gingrich was one of 25 Republican co-sponsors of the Global Warming Prevention Act, which held that "the Earth's atmosphere is being changed at an unprecedented rate by pollutants resulting from human activities."  In 1990, George H. W. Bush said, "We all know that human activities are changing the atmosphere in unexpected and in unprecedented ways."  And even in 2005, George W. Bush said, "It's now recognized that the surface of the earth is warmer, and that an increase in greenhouse gases caused by humans is contributing to the problem."  In 2008, John McCain's platform included a cap and trade bill.
            The reason that even conservatives were ready to abandon oil then is that it appeared that oil had already abandoned us.   As our own domestic production of oil declined, we were importing increasing amounts from other countries, at ever increasing prices. We paid higher and higher prices at the pumps, but the oil companies themselves made little profit, because they were being price-squeezed by the producer states who supplied the crude.  So continued reliance on oil wasn't going to benefit anyone.  It was  like a ball and chain around our ankle. There would be no economic freedom in our future unless we could break free from our dependence on oil and free from the despised price gougers who supplied our crude.
            But with the development of fracking, we have, at least temporarily, a source of oil that could make us net exporters of oil.  (Whoopee! Now we get to be the despised price gougers)  That changed the tone of the debate.  In 2008, the same year that McCain included a cap and trade plank, Sara Palin was leading a rally of people chanting "Drill, baby drill!"   After the election, McCain dropped support of his own bill, and in a South Carolina primary, Tea Partiers defeated a conservative incumbent for refusing to deny climate science.  Gingrich repudiated his acceptance of climate science and totally embraced denialism. According to Hayes, denialism is now the official Republican line. It's not just the money to be made from selling all that oil or the influence of the powerful interests that own it.   Washington's "Arm Chair Imperialists" are now beginning to dream about using "The Oil Weapon."   The oil interests intend to corrupt our political system with every billion they have, to insure that no one tries to stop them from wrecking the planet.   And of course, the Supreme Court has found unconstitutional any attempt to restrict or discourage such corruption.
            Not only do the energy companies intend to burn all of the known reserves, they are still spending money on exploration.  This is their way of saying, "After we have burned 5 times the amount  required to wreck the planet, if there is anything left of it, we plan to burn some more."  At this point in his article, Hayes explains that if you are not totally depressed by now, then you didn't quite understand what he has told you. But Hayes sees some reason for hope.  For one, whereas slaves could generate cash flow with very little capital investment, carbon assets require massive investment---perhaps more than will ever be returned in operating profit.  As a result, most oil stocks pay only fairly modest dividends.  If shareholders begin to demand that cash be used for dividends instead of  exploration, that could change everything. 
            Hayes doesn't mention it, but fracking and horizontal drilling, the two technologies needed to recover shale oil, are so God-awful expensive that unless the oil is sold for a very  high price, the operation doesn't even break even.  Last year a couple of major oil companies began selling off their Bakken shale leases because they were not sure they could ever make a profit no matter how much oil they found.  So there is an alternative explanation to why oil majors are still spending money on exploration.  Supposing that the shale oil recovery is yielding no profit at all, but has a slight operating loss, a loss covered by creative accounting and  increased borrowing.  The borrowing is covered by the company's assets---in the form of proven reserves.  As long as "proven reserves" increase every year, then increased borrowing is justified, and the theoretical net worth of the company continues to increase, justifying increased stock value. But as soon as anyone admits that not all this oil in the ground will ever be pumped, then the game is over.  To stop exploring would be to admit this.   So the whole thing begins to look like an asset bubble.   Am I the only one to think this is an asset bubble?  No.  Last year Al Gore and David Blood co-authored an article in the Oct 29, 2013  Wall Street Journal entitled "The Coming Carbon Asset Bubble,"  which warned that all fossil fuel investment could be considered an asset bubble. Unless the profit made from selling just the oil and coal that will actually be extracted is sufficient to retire the outstanding debt, then none of these companies have any net worth whatsoever.  Sooner or later, all bubbles collapse.  And when this one collapses, the "drill baby drill" crowd will have some egg on its face, and sustainable energy will be celebrated again. So, what can we do until then?
            First, continue to push for more wind and solar power. Not just at the back yard level, but at the power company level.  Having a gazzillion-dollar power company on your side helps.             
            Second, continue to oppose coal-fired power.  Oppose the licensing of new plants; demand the retirement of old plants.  This will cause a lot of natural-gas-powered gas-turbine power plants to be built.  This is a good thing.  These plants have much less carbon emission than coal, and when we get switched to mostly wind power, we will need these things as a backup, because the wind does not always blow. Gas turbines are the ideal backup because wind can increase or decrease very quickly, so you need a countercyclical source that can crank up or shut down fast enough to match it.   Only a gas turbine can do this.
            Third, continue to fight for fuel efficiency standards, not just for cars, but for everything.
Show your support by buying a new, high-efficiency car if you can afford it. Depending on what you trade in, the money you save in fuel might make the payments if you do a lot of driving.
            Fourth,  push for more mass transit---mainly the kinds that can run on electricity. Because electricity is the kind of energy we are going to have.