Krugman's Rural Despair Misses the Mark

I have a great deal of respect for Paul Krugman, but his March 18th New York Times piece, “Getting Real About Rural America” badly missed the mark. Like fellow Times analyst, Eduardo Porter, Krugman begins with the premise that “nobody knows how to fix rural America.”  In point of fact, a consensus has begun to emerge about a range of strategies that work in rural communities, based on economic revitalization success stories from the Midwest to Central Appalachia, where I live.  And we don’t just know what works; it’s also increasingly clear what doesn’t, including specific policies and strategies that are crushing the people and the economies of the countryside.  Here then are four challenges to Mr Krugman and the many other analysts wondering aloud what the heck is wrong with us folks in the boonies.

First, while the economic and social problems of rural America are indeed real, they’ve become the default narrative for city-dwelling commentators and experts, overshadowing tangible progress and effective solutions.  In Appalachia for instance, the poverty rate has been cut in half since the launch of Great Society programs in the early 1960’s, and the number of “distressed” counties has dropped from 295 to about 90 (Appalachian Regional Commission).  This improvement, even as three out of every four coal jobs have been lost.  Nationwide, according to USDA’s Economic Research Service, rural unemployment rates dropped from 10.3% in 2010 to 4.4% in 2017, during which time 650,000 net new jobs were created.  And while too many young people continue to leave, 2017 actually saw a net increase in population for rural counties.  Broadly speaking then, things are getting better across many parts of rural America, albeit much too slowly and sporadically. 

Second, things are getting better in large part because, well, some people do know how to fix things in rural areas.  Like Brandon Dennison in southern West Virginia, whose Coalfield Development Corporation is successfully putting miners and others back to work with comprehensive, hands-on training in solar installation, deconstruction and sustainable farming. Or Bren Smith, whose ecologically restorative vertical ocean farming system is being adopted by fisherman along the east coast.  Or the folks at We Own It, whose work to reform and open up the leadership of Rural Electric Cooperatives has begun to redeploy some of the $3 trillion in assets REC’s hold to better serve their members and communities. Or the innovators at Windustry, who for more than a decade have been helping farmers, public schools and rural communities increase their stake in community wind power, part of the larger wind industry on course to pay nearly a billion dollars annually to rural landowners by 2030 (Presidential Climate Action Program).   

Brandon, Bren and hundreds of others like them, are catalyzing new and better approaches to local economic development in rural communities across the US, usually with meager outside investment from the public or private sector.  Jobs are being created.  Local wealth is being developed.  Ecosystems are being reimagined as community assets, rather than a source from which to extract and export wealth.

Third, as bottom up strategies emerge and mature across rural America, they frequently must confront a lack of sustained investment along with contemptibly bad federal policies that restrain or undermine them.  The sense one gets from reading Krugman’s piece is that, like the former East Germany, extraordinary sums of money have been spent in rural communities with little to show in return.  The reality however is very different.  An analysis by the W.K. Kellogg Foundation revealed that between 1994 and 2001, the feds actually spent between two and five times more, per person, on community and economic development in urban versus rural areas, a disparity that has changed little to the present day.  And it’s no better in private philanthropy, where a 2011 Economic Research Service report showed that rural communities garnered less than six percent of foundation grants, even though one fifth of the population lives there.  Bottom line: There are plenty of effective initiatives in rural communities, but a paucity of capital to support them.

It’s not just a lack of direct investment in rural areas.  Even more destructive are long standing trends in federal policy that promote wealth extraction, economic concentration and undermining of the local economic base.  In an outstanding article in Washington Monthly, Claire Kelloway describes how extreme levels of market consolidation have resulted from the lack of anti-trust enforcement and the weakening of laws to combat monopolies.  This of course is an enormous problem for the country as a whole, but in rural regions, it is destroying farmers and sucking the life out of small towns. As Kelloway points out, “Farmers are caught between monopolized sellers and buyers.  They must pay ever higher prices to the giants who dominate the market for the supplies they need, like seed and fertilizer.  At the same time, they must accept ever lower prices from the giant agribusiness that buy the stuff they sell, like crops and livestock.” 

When three companies control well over half of the global seed market, and four enormous packers account for 85% of the meat that comes to US markets (USDA), farmers are like serfs, with falling incomes and astronomical debts.  And it isn’t just food monopolies.  Thousands of community banks – the engine of lending in rural communities – have closed or been bought up by regional megabanks, further eroding the base of local capital.  The obeisance of elected officials and the courts to monopolists, the enormous subsidies expended to lure huge, cash-rich corporations to small towns, and the accelerating privatization of public spaces, lands and functions ensure that building strong, self-reliant rural economies is a rare and heroic task.

My fourth and last challenge is simply this: That Mr Krugman broaden his sources and stop relying on assessments from people who neither live in nor understand rural America.  Talk to the folks at the Center for Rural Affairs or the Institute for Agriculture and Trade Policy, or the practitioners at Coastal Enterprises, the Mountain Association for Community Economic Development or the Federation of Rural Cooperatives.  Or me.  What you’ll quickly learn is that rural America is neither a monolith nor a region ‘left behind’ by the dynamic folks in the big cities.  Rather, it’s the place from where most of the food, fiber and energy upon which we all depend originates.  And it is home to hundreds of innovators, problem solvers and entrepreneurs who do know how to make things better.  They just need real investment, and an end to wealth extraction facilitated by federal policy and an endless stream of bad advice.

Read it here on the Stansbury Forum.

The Green New Deal – A Compelling Idea that Challenges Both Parties

For the past two months, I’ve been one of several people across the state working to flesh out what a Green New Deal might look like in the Commonwealth.  By early April, we should be ready to begin sharing our vision and ideas for a GND, and soliciting your thoughts, hopes and concerns.  I’ll talk more about this in our March newsletter, but If you think there might be interest in your community, please let me know.

Whether at the state or national level, a Green New Deal could take a number of different forms, with various policies and strategies for implementation.  Whatever those come to be, one element is essential:  It must be ambitious, both in scope and urgency.  Why?  First, because the economic model we’ve used for the past 40 years isn’t working for the majority of Americans, even more so for young people, rural communities and people of color.  Our low unemployment rates mask a whole range of very serious problems, from low and still-stagnant wages, to extraordinarily high student debt, from staggering levels of inequality to infrastructure decay and deficits (especially in rural places).  We should, and we can build an economy that works for everyday people.  That shouldn’t be a radical idea.

Of equal urgency is the rapidly growing problem of climate change, increasingly impacting coastal cities, fisherman, farmers, and vulnerable communities across Virginia and the nation. From the International Panel on Climate Change to our own federal agencies, the most knowledgeable scientists are sounding the alarm bells.  More accurately, they’ve been sounding the alarm bells, for a good twenty years.  The ‘worst case’ models they’ve been putting forward are looking increasingly likely.  So, it’s essential that we start taking  truly serious action, both to reduce the rate of change and to prepare for it.

A Green New Deal is not the only thing we could do to address emissions and climate change.  And it’s not the only strategy for creating better jobs, more widely shared prosperity and a people-centered economy.  But it is the only approach I know of that does both.   For 40 years, most Americans have been losing ground economically, even as the economy has grown six times faster than our population.  During that same period, this same trickle-down economy has dramatically increased our carbon emissions and launched us on the road to severe changes in the climate and our environment.  If a GND offers a roadmap for a better economy and a restored, sustainable ecosystem, what the heck is wrong with that?

Well, no surprise here, but there’s plenty of resistance from many of our political ‘leaders’.  It’s by far the strongest on the Republican side, where everyone from Donald Trump on down is trashing a GND as “big government”, even “socialism”.  Our own 9th District Congressman has stated his complete opposition to the idea for those reasons and, it appears, because he thinks everything is going just fine as is.  In his recent newsletter, he focused on one GND goal - getting millions of residential and commercial buildings weatherized and retrofitted for improved energy efficiency.  Mind you, McKinsey and Company estimated that this would save American homeowners at least $50 billion annually; for the economy as a whole, it would save $1 trillion by 2030.  Yet Mr Griffith focused not the billions of dollars we could save and the tons of emissions we would prevent, but on fear that a commitment to making most of our buildings more energy efficient would be draconian government intrusion.  His preferred path, like nearly all of his party colleagues, is more of the same – tax cuts for the wealthy, environmental deregulation, and complete reliance on the market to figure it out.

There is strong and growing support for a GND among Democrats, but not without many naysayers.  Too many Democrats are casting the Green New Deal as ‘unrealistic’, ‘too expensive’ or ‘pie in the sky’.  Why would Democrats resist an economic strategy likely to foster better jobs, address injustice and fight climate change?  In my assessment, it is the culture of incrementalism that has overtaken the Democratic establishmentThomas Frank’s book, Listen Liberal makes a compelling case that the Democratic Party, particularly since the Clinton years, has increasingly become the party of intellectual elites, of political insiders and of technocrats.  That is to say, people who embrace incremental change rather than transformative action.  That’s part of why we got Dodd Frank – and in a few short years, a return of megabanks behaving recklessly - rather than a renewed Glass-Steagall Act and limits on bank size.  Many of these same Democrats are also resisting Medicare for all.  And now, the Green New Deal.

As a pragmatist myself, I appreciate others who work for real, concrete change, and who recognize that we can’t always get what we want (apologies to Mick Jagger).  Nevertheless, very large, entrenched problems that have been going on for decades, call out for ambitious, creative solutions.  For far-reaching yet practical strategies that make a big difference.  I believe that the Green New Deal offers that potential, and I sure don’t believe that cautious incrementalism will win public support or address the enormous economic and ecological challenges we face.



Flaccavento for Congress, Post-Election Meeting: Summary of Brainstorming on Next Steps

During a meeting on December 3rd, the group of approximately 50 people brainstormed a range of possible ‘next steps’ and other actions that might be undertaken, following the campaign.  That list is attached as part of a meeting summary.  The list below includes those same ideas, organized into five groupings.


Local Actions

  • Update VAN - Voter Activation Network – list to improve accuracy (One county core group intends to do this by mailing notes to all strong and leaning Dems, and independents)

  • Flacc Volunteer Core Group members join and strengthen local Democratic Committees (DCs)

  • Local DCs do tangible work in community (food drives, etc) to help improve reputation of Dems

  • Make local DCs more inclusive, diverse through outreach/engagement with African Americans, millennials and others

    • Consider using the Dialog on Race as a model for this

    • Reach out across ‘Red-Blue divide’ as well, using Dialog on Race approach

  • Surface, support candidates for local offices

  • Local core groups contact Virginia Organizing to look at forming new local chapters of VO

Regional Actions

  • Undertake ‘deep canvassing’ in different parts of the region, that is, canvassing to build trust, to listen to people’s concerns and potentially to educate folks on specific issues or campaigns, rather than based on VAN and a specific candidate

    • This might include a focused effort in the coalfield counties, as the power of coal companies continues to wane

  • Create a ‘Resource directory’ on line that includes groups/resources/events/information at both local and regional level (Could include national groups as well)

  • Develop and implement a ‘multi-media’ approach to help educate and engage folks in the region, especially Republicans and people not currently engaged

    • Set up a speakers’ bureau (possibly focused on the Rural Progressive Platform, bottom up economics, as well as other issues and ideas)

  • Develop our own alternative media, likely beginning with podcasts

  • Reach out to students and millennials, not just during campaigns

National Actions

Reach out to, advocate with the national Democratic Party to push for more understanding, involvement with rural communities

  • Revive and disseminate the Rural Progressive Platform

  • Develop a ‘Rural Progressive Think Tank’ to help lead and support the effort to strengthen progressive ideas and strategies in rural areas (possibly other goals as well)

  • Reach out to conservative think tanks in efforts to find common ground

Legislative Actions

  • Support efforts currently underway to fight gerrymandering, including:

    • Support for legislation in the VA House – HB 1641 (would allow absentee voting without voters needing to have a justification for it) and HB 1658 (would create a pilot, ‘vote by mail’ program in VA)

    • Support, involvement with One Virginia 2021 (Advocates for fair redistricting in the state)

  • Make calls for Christian Worth, the Democratic candidate running in a special election on December 18th that could bring Virginia’s House to 50:50 (contact Daniel Shearer if you’re willing to make calls –

  • Support Yasmine Taeb, who is running against Dick Saslaw in the Democratic Primary for his House seat, as he is heavily supported by Dominion Power

  • For 2019, consider focusing on a few or even one House of Delegates and VA Senate seat, utilizing the races as opportunities for voter education, with strong, broad support for the candidate(s)

Issues (on which people would like to focus)

  • Public education – support, financial support and other advocacy for public schools, better teacher pay, etc, especially in rural areas

    • It was noted that Virginia Organizing is already working on this issue, locally and at the state level

  • Climate Change – we must begin to raise this critical issue with urgency

  • Find or develop better ‘frames’ through which we can discuss abortion, guns and other hot button issues

    • New frame on abortion might emphasize our commitment to children, moms, the elderly and students

Post-Election Reading List

Since my campaign ended, I’ve been catching up on my reading.  As usual, I’ve mostly chosen books that, as my son Josh once said, “add to my sense of moral outrage”.  Oh well.

Among the most eye-opening of these have been two, Ta-Nehisi Coates’ We Were Eight Years in Power and Joan Isenberg’s White Trash:  The 400-Year Untold History of Class in America.  At one level, these highly persuasive books offer fundamentally different premises about inequality and injustice in our nation.  White Trash, as you might expect, focuses on poor and working-class whites and their centuries-long disparagement, economically, politically and culturally.  Isenberg documents this systematic marginalization of folks, originally referred to as “waste people”, going all the way back to Jamestown and the earliest European settlements.  Rather than being an aberration in need of periodic correction, the author reveals how class is baked into America’s DNA, our language and our economic system, from its founding to present times.

Coates’ focus is on the foundational role that white supremacy has played in our nation’s history from the outset, and to a shamefully significant degree, still does today.  The “eight years in power” references two periods in American history when the levers of power began to open, significantly, to African Americans:  The first occurred during Reconstruction following the Civil War’s end; the second was 2008 – 2016, when Barack Obama was president.  While there have certainly been other times when civil rights and racial justice advanced in the US, these two moments stand out, both because they seemed to offer opportunities for fundamental change, and because both were greeted with enormous and violent opposition, as they unfolded and immediately after.  While the severity of the backlash to the gains black people made were far more severe following Reconstruction, Trump’s ascendency likewise has galvanized indignation at the prospect of real equality for African Americans, and unleashed a backlash against all things Obama within the right wing of the political establishment.  Through the essays in his book, Coates makes clear how integral, distinct and enduring white supremacy has been in our country. 

These two extraordinary books together raise urgent and troubling questions: Can we truly overcome systemic racism, in this country?  Can the myth of a color-blind and classless society in the United States ever come to fruition?    And can we accomplish these things not just in our words – where we still have a long way to go – but more importantly in serious, tangible economic and political gains for poor and working class folks of all colors?  I honestly don’t know.  But both Ta-Nehisi Coates and Nancy Isenberg compel me to recognize how enduring injustice has been in our country, and to keep working, in my personal, economic and political life to overcome these core elements of what it means to be an American.  I’m guessing that many of the people who supported my congressional campaign, and those of you committed to building on that effort share these convictions.  Let’s keep at it, and let’s find better, more effective ways to get there.

VA 9th post-election poll results

Flaccavento Campaign:  Summary of Post-election Poll Results

 The Flaccavento for Congress Campaign commissioned a post-election poll in an effort to better understand the reasons Anthony was defeated by a margin of nearly 2:1 by Morgan Griffith, a weak incumbent who ran a lackluster campaign.  The phone poll was conducted by Public Policy Polling, based in North Carolina, on November 16/17, 2018, ten days after the election.  Seven hundred voting households were contacted, well beyond the 400 HH minimum suggested for a population the size of the 9th District.  All findings below pertain solely to the 9th District of Virginia.

What follows is a summary of the poll’s findings, along with some other takeaways from post-election data, including turnout rates and results in specific counties and cities.


Top line poll results:


  • The margin of victory for MG vs AF on election day was 65:35. This was corroborated by the poll which put the margin at 63:33 (4% were unsure or voted for someone else)

  • This margin also dovetails almost exactly with Donald Trump’s job approval rating in the 9th district, with 66% of poll respondents approving of his performance, more than double the 30% who disapproved

  • Survey respondents were asked their reasons for voting for MG, with seven choices given, along with “other/not sure”.  The same question was asked twice, to allow them to give their top two reasons.  Three reasons rose to the top, both as their first choice and as their top two choices:

o   “Liked MG’s policies on things like abortion & guns” (First choice – 39%; first and second combined – 54%)

o   “Wanted to support Pres Trump” (First choice – 25%; combined – 41%)

o   “AF was too liberal” (First choice – 17%; combined – 36%)

  • The fourth most common choice, well behind the top three, was

o   “Happy with how things are going/didn’t want to make a change” with 10%/22%)

  • Wasn’t familiar enough with AF to vote for him” received only 3%/5%.

  • Two other choices that had very low selection rates were: “Always vote Republican” and “My church/pastor encouraged me to vote Republican”.  These are likely lower than is actually the case, as many people would likely not believe, or not want to believe that they always vote the party line, or that their political choices are a direct result of their church’s influence.

  • Asked if they had attended any of the town hall meetings or otherwise met or spoken with AF during the campaign, a surprisingly large 20% said yes, while 77% said no.

  • Demographic information from the poll:

o   44% identified as Republican, 31% as Independent and 25% as Democrats

o   53% were women, 47% men

o   81% identified as rural, 14% as suburban and 5% as urban

o   As with other polls, this sample skewed towards middle aged and older people, likely because of reliance on land lines, with 76% of respondents 46 and older.

Other interesting findings:


  • Views of Trump

o   95% of people who voted for him in 2016 still approve of his job performance, with only 3% disapproving. 

o   Among women in the 9th, an extraordinary 61% approve of Trump’s performance, with only 36% disapproving 

o   Trump also had a 21% approval rating among Democrats and an astounding 50% approval among people aged 18 – 29

  • Women

o   In addition to comparable rates of approval for Trump, female respondents gave the same top three reasons voting for MG, in nearly equal percentages to the overall sample.

  • Race

o   93% of African Americans in the survey disapprove of Trump’s performance and 79% indicated they voted for AF (only 7% voted for MG)

  • Age

o   Trump’s approval rating climbed as age of respondent increased, with the highest approval rating – 70% - among people 46 – 65.  Trump’s approval declined modestly to 63% among people 66 and older

o   MG’s strongest base of support, surprisingly, was among people 30 – 45, with 69% voting for him, declining slightly with age, down to 60% among those 66 and older

o   Millennial respondents (18 – 29) also favored MG over AF, by a margin of 54% to 46%.  Note that this result seems at least somewhat skewed, given our margins of victory in Radford and Blacksburg.  However, it’s worth considering that the millennial vote is far from overwhelming for Democrats in the 9th.

  • Those attending town halls or otherwise met/spoke with AF

o   AF won among those attending a town hall or otherwise meeting AF by 50% to 47% (I guess I should have held 1000 town halls…)

o   Interestingly, 49% of this group approve of Trump while 51% disapprove

  • Poll respondents who voted for AF

o   59% were women

o   31% attended a town hall or otherwise spoke to AF

o   18 % voted for Trump in 2016 and 14% continue to approve of his performance

o   9% identified as Republicans, 32% as independents and 59% as Democrats



 Voter Turnout

As everyone knows, voter turnout increased significantly across the country and the Commonwealth, where 59% of registered voters voted in 2018, up from the mid 40% in the past two mid-terms.  However, while voter turnout in the 9th increased, it was the lowest of all congressional districts at 53%.  Other findings:


  • Comparing voter turnout in 2012 – AF’s first run and a presidential election year – with voter turnout in 2018, we expected lower overall numbers for the midterm. Nevertheless, the drop off in voter turnout between 2012 and 2018 was much higher for Democrats than Republicans

o   Compared with 2012, Republican voters declined by 13%, while the decline in Democratic voters was nearly double, down by 25%

o   In Washington County (AF’s home county), the difference was even more striking: Republican voters declined by 9% while Dem voters fell by 35%

  • Looking at counties where the campaign had a particularly strong presence – several and well attended town halls, very strong core groups, persistent activities, letters to the editor, canvassing and phone banking – the same pattern of higher Democratic voter decline persisted, in spite of what appeared to be very strong energy at the ground level.  This included the counties of Floyd (Rep decline of 6%, Dem decline of 12%), Grayson (R – 1%, D – 35%), Dickenson (R – 20%, Dem – 50%), Wise (R – 25%, D – 43%), Pulaski (R – 11%, D – 23%) and others.  The only exception was the city of Salem, which saw Republican voters decline at twice the rate of Dem voters, 22% vs 11%.

  • Discouragingly, AF lost by comparable margins across the 9th, regardless of the strength of the local effort in place



From the election results themselves, the turnout numbers and the poll results, I’d offer the following thoughts regarding the reasons behind such a resounding loss:


1.     It was not due to lack of name recognition or general knowledge of me or my campaign.  Fewer than 5% of people cited this on the poll, and I lost in counties with the strongest campaign presence by virtually the same margins as in less traveled spaces.  And besides, I lost overwhelmingly in my home county, where I’m pretty well known (and to my knowledge, generally well-regarded).

2.     I do not believe the problem was messaging or “preaching to the choir”.  I hope to test this more through focus groups, but I believe our message had broad, non-partisan appeal and that it was delivered more and more effectively than MG’s message.

3.     Related to the above, it’s clear from the numbers that MG’s voters were in no way confined to working and lower income working people, or to men.  He also won strongly among women.  To have won by 2:1, he almost surely also got significant support from professionals, middle class people and those with college education.

4.     The power of Trump, combined with a fear and or loathing of Democrats around key ‘big issues’ (abortion, guns, likely immigration as well) seems the most likely reason for the loss of this proportion.  At present, this appears more important to voters than local/regional issues, or the performance of their congressman.




Yes! Magazine: "Why Rural America Isn't a Lost Cause for Progressive Ideals"

An excerpt from a new piece at Yes! by Ivy Brashear: 

"Rural politicians across the country are buying into a new way of campaigning, with platforms that might sound more aligned with those of college students living in Berkeley, California, than former miners from the central Appalachian coalfields. They’re talking about raising the minimum wage, universal health care, debt-free college and investing in local assets, like natural landscapes and small business development, instead of industrial recruitment."

Read the full article here. 

And read the full Rural Progressive Platform here. 

What's different about the New Economy?

While there is no one definition for the “new economy”, most folks working in this field would probably agree on a few basic elements that distinguish this economic approach from the current dominant economic model.  I’ve attempted to summarize those below.

Six Elements of Emerging New Economies, Contrasted with the Dominant Economy

1) New economies are more just, work better for people.

The dominant economy has used tax, trade and patent policy to greatly favor huge corporations and the very wealthy over small businesses and working people, leading to extreme levels of wealth concentration at the top alongside stagnant wages for working and middle class people, and growing poverty.  The very wealthy pay lower taxes on much of their income than do teachers and truck drivers; giant corporations pay an effective tax rate that is 6 – 8% less than what small businesses pay.  Trade policy grants corporations the right to sue nations, states and communities over health and environmental protections. You can’t make this stuff up.

In the new economy, small businesses and family farms create more jobs per dollar of sales; by purchasing from other local businesses, they create ‘economic multipliers’ that add much more value to the local economy than do chains and big boxes.  New corporate forms, such as the Benefit Corporation, which commits a business to positive social and environmental outcomes as well as financial profit, are also emerging in the new economy, with over 1000 nationwide.  Some localities have begun to use Community Benefit Agreements to hold big corporations legally accountable for the promises they make.  These and many other creative measures ensure that economies work for people, not the other way around.

2) New economies are more diverse, less dependent on outside corporations, foreign markets.

The dominant economy rests on two core assumptions:  that prosperity requires endless growth, and that jobs and income for the many ‘trickle down’ from the top, so long as taxes on this group are low.  In actuality, the record of the past 60 years demonstrates unequivocally that lower taxes on the wealthiest and on the biggest companies have not made for a bigger economic pie; and economic wealth, rather than trickling down has been sucked up from working people, community banks and small businesses.  There are many reasons for this, but one of them is the subsidies we provide to big boxes and big business, averaging over $100 billion per year.  The results?  Several studies have shown how communities with a diverse array of local businesses are stronger economically and socially, with better incomes, higher employment, and lower rates of poverty, incarceration, health problems and substandard housing, than those dependent upon a few big employers.

In the new economy, small to mid-size businesses take hold that build on the assets of their place, including music, art and culture, farms, forests and fisheries, the outdoors, historic downtowns and more.  Local business associations, like the Business Alliance for Local Living Economies (BALLE) help strengthen these local enterprises and increase the connections between consumers and producers.  Instead of spending millions of dollars to entice a big box chain, resources are redirected to homegrown businesses and entrepreneurs, making for more resilient economies and communities.

3) New economies build broadly-based prosperity, real wealth from the bottom up.

The five biggest Wall Street financial institutions own more than twice the capital of all the community banks in the nation combined.  Yet these mega banks direct very little of their resources towards local prosperity:  The community banks, with just half the assets, provide more than twice as much lending to local businesses.  Big banks, especially since the overturning of the Glass-Stegall Act, concentrate on generating high returns for the biggest, wealthiest investors, often through the use of derivatives and other means that don’t produce tangible wealth.

In the new economy, capital is refocused towards small to mid-sized businesses, towards infrastructure that enables farmers and entrepreneurs to add value to their products, and towards technologies and businesses that meet real needs, such as affordable, green housing, renovated buildings and revitalized downtown business districts, and regenerative farm and food enterprises.  Cooperatives, Employee Stock Ownership options, community land trusts and community-owned energy systems are among the means used to broaden prosperity, while increasing the productivity of businesses.

4) New economies fit within the ecosystem, recognizing limits rather than depending upon endless growth.

The dominant economy both depends upon endless growth and assumes that it is possible forever into the future.  Yet serious limits confront us, from enormous declines in groundwater reserves, to an 80% reduction in productive land per capita, worldwide.  And of course, there’s climate change and the consequences of too much carbon in our atmosphere – drought, floods and severe weather, sea level rise and more.  In spite of these increasingly serious problems, the dominant economy fights all environmental regulation and assumes that technology and ‘the market’ will fix things.

In the new economy, our places, our ecosystems are understood to have limits, but also to present new and better ways of meeting needs and creating work.  From organic farms and restorative fishery systems to super energy efficient building systems and solar and wind power companies, the new economy is spawning products and services that meet people’s needs with far less impact on the environment.  Complementing that is a growing emphasis on urban and community design that makes our towns and cities more walkable, more bike-able and more enjoyable.

5) New economies focus more on meeting real needs, fostering innovation in the process.

The dominant economy has been enormously productive and has made countless products much more affordable for ordinary folks, from cars to computers.  However over the last thirty years or so, it has also become increasingly dependent upon what is called financialization, that is a focus on money and monetary products as a central part of the economy and the policy guiding it.  This has led to what David Korten calls “phantom wealth”, where trillions of dollars of ‘assets’ are traded on Wall Street, making a small group of people spectacularly rich, while real assets – bridges, roads, high speed rail, rural health clinics, waterways and agricultural lands – are neglected and fall into decline.

In the new economy, there is a strong focus on addressing real needs and doing so in a way that helps people and communities to become more self-reliant.

Business incubators and accelerators help local firms be more competitive, more innovative.  Poor communities, from Detroit and Buffalo to Appalachia and the Southeast launch community gardens, urban farms, and ‘green development zones’.  New techniques and systems enable farms to simultaneously increase their productivity while pulling excess carbon from the atmosphere. Businesses put people to work in reclamation of disturbed land, urban brownfields and energy efficient housing.  Lower income people gain access to healthier foods through mobile markets and farmers market EBT initiatives.  In the new economy, the driving question shifts from “Where are the jobs?” to “What work needs to be done?”

6) New economies cultivate citizens, not just consumers.

The dominant economy is now a consumer economy, fundamentally dependent upon more and more people buying more and more stuff.  At the same time, the belief in private, market-based solutions to a whole host of societal problems – from prisons to public schools – has become increasingly commonplace.  Alongside both of these developments is the reality of widespread cynicism, even disgust with politics and government.  Taken together, these trends have convinced many people to give up on civic, political or even neighborhood engagement, believing that their opportunities as well as their responsibilities play out almost entirely as consumers.  

The new economy welcomes the creative force of the marketplace and encourages people to use their dollars to support businesses that reflect their values.  But it recognizes that this is not enough; that in order to have an economy that works well for all people, and that is sustainable into the lives of our grandchildren and beyond, we also need a vibrant democracy and honest public debate.  Many new economies are therefore emerging alongside community based media, arts and theater that give voice to folks from all walks of life.  The revival of public squares, parks and community centers has facilitated both new commerce and broader public participation.  The work of Policy Link and other organizations is helping to find ways to revitalize communities economically without falling into the trap of gentrification and even greater racial segregation.


*Originally published at

Wall Street and the New Economy

I’m going to throw out 2 numbers and ask you to keep them in mind: 2 Trillion; and 3.7.

When I first studied economics more than 30 years ago, the textbooks said that businesses and economic activity were comprised of 3 basic ingredients: land, labor and capital.  Land, what folks like Paul Hawken now call “natural capital”, represented the raw materials needed to make things.  This work of making things was presumably done by people, that is, labor.  And capital, the third component was understood to be the machines, equipment, and technology which increased the productivity of both land and labor, along with the financial investment which sustained it.  Thirty years ago, most economists were certainly not friends of land or labor, but they did at least understand that both were essential to a healthy economy.

But all of that has changed.  First, we shifted from an economy based primarily on manufacturing goods to one based on providing services.  Now this is not altogether bad, as many services are useful, even essential to a healthy world.  But this transition to a service economy, particularly in an increasingly globalized world, accelerated our estrangement from the land, both its wonders and its limits.  Of course we all still used stuff – food, wood, oil, steel, computers, appliances – in fact, more than ever.  It’s just that we weren’t growing or making those things ourselves anymore, preferring to outsource and offshore these functions.  With those basic, life-sustaining things now largely taken for granted, we could focus more on the services and amenities that seemed to make life more convenient, more comfortable.

The service economy soon gave way to the so-called information or “knowledge” economy.  This is the notion that economies based on things, or even tangible services have been replaced by an economy based on ideas.  So strong was – and is – this belief in a “knowledge” economy, that the old notions of land and labor, even capital in the tangible sense, became passé. George Gilder, a frequent writer and cheerleader for this new economy said “We have seen the overthrow of the tyranny of matter… our ability to create wealth is not bound by physical limits, but by our ability to come up with new ideas.  In other words it’s unlimited.”

But ideas of course are abstractions. You can’t eat them or heat your home with them. They don’t filter the impurities out of water, or sequester carbon.  To believe in a “no limits” economy, is to believe that we can live from abstraction, what James Howard Kunstler calls the “fictitious economy.”  It shouldn’t surprise us then, that the final stage of this economic paradigm is the global financial services sector, where “wealth” became completely estranged from, even antagonistic to productive activity; where liabilities – things like risky mortgages, or the energy speculations of Enron, or even bets as to when sick people will die – could be “repackaged”, and, voila, stock values sore.  In such an economy, sickness and predation become more valuable than health and self-reliance.

And that brings me back to my numbers.

In 2008, Wall Street lost $2 Trillion in just a few weeks.  That’s nearly $20,000 for every household in this country.  If there really was that much wealth to go around, we’d all be doing pretty well.  But it isn’t real. And because that wealth was fictitious, we are still struggling to recover from the economic bust of six years past.

What is real is the 3.7 acres of productive land per person that remains on our planet.  A century ago we had 14 acres per person.  Now it’s 3.7. That land, including the soils, grasslands and prairies, wetlands and forests, is the true foundation of our wealth.  Whether our job comes from farming or manufacturing, the service sector, or banking and finance, we all depend upon a productive landscape to meet our most essential needs.  If accelerating climate change and the Wall Street debacle have taught us anything it should be that we’d better target our capital and use our labor to restore this shrinking base of land and build communities of modest, but real wealth.

*Originally published at


Is there an Alternative to Trickle Down Economics?

There are at least four key components of what I’m calling a “bottom up economy”:   Focusing on the assets and strengths of your community; developing infrastructure to support and build upon these assetsfostering local ownership of businesses and capital; and building entrepreneurial networks that increase the competitiveness and impact of local businesses.    Before we examine how public policy can help communities develop each of these elements of a bottom up economy, it is fair to ask, “Why bother?  What is wrong with traditional, top down economic strategies?”

Most of our economic policy and practices over the past thirty years have been top down, or “trickle down” in nature, based upon this belief:  If we free up a small group of job creators at the top – wealthy investors and large corporations – they will create wealth which will trickle down to the rest of us.  This has been the driver of our economic, fiscal and labor policy since Ronald Reagan was president.  Trickle down economics did create wealth, but there were two problems with it:  First, much of it has been based upon financial speculation, rather than real wealth.  As stock market “bubbles” and so-called derivatives both demonstrate, Wall Street can create a lot of “wealth” that has little real value or base of productive assets.   We’re talking here about the difference between the house that someone owns – a tangible asset – and the value of the debt on their home, repackaged with the debt and risk of thousands of other aspiring home owners as a tradeable commodity, known as a derivative.  One is real, providing shelter, warmth, pleasure (usually…).  The other exists purely in the mind and can rise or fall in value dramatically, overnight.  And that is exactly what happened to trillions of dollars of Wall Street “wealth” in 2007 and 2008.

The other fundamental problem with trickle down economics is that the promised prosperity never trickled down.  In fact, it has been quite the opposite, as income and wealth have moved up, not down, from working folks and the middle class to the rich.  From the end of World War II until the mid 1970’s, the benefits of economic growth were widely distributed, with Americans in the bottom and middle of the economic spectrum seeing more gains than those at the top.  However from 1980 on, we’ve seen those gains stagnate or decline, as the vast majority of new income and wealth has gone to people at the very top.  Rather than widely shared prosperity, we’ve become the most unequal country of all the advanced nations of the world.  The most unequal.

The problem with this inequality, this concentration of wealth goes beyond the question of fairness or justice.  In fact it is quite costly to our nation, as Joseph Stigletz (The Price of Inequality, WW Norton, 2012) and Richard Wilkinson (The Spirit Level:  Why Greater Equality Makes Societies Stronger, Bloomsbury Press, 2010)point out in separate books.  Stigletz demonstrates that economic inequality leads to lower overall economic output and less productivity, not more.  Wilkinson looks at a host of quality of life indicators, including life expectancy, obesity and health, educational attainment, teen pregnancy, substance abuse, crime rates and others.  He finds that the more unequal the society, the worse they do in nearly every one of these areas.   This mirrors a study, done by Thomas Lyson of Cornell University, of 200 rural counties across the country which found that those with one or two large companies dominating their economy were worse off in terms of health, economic and social indicators than the counties with a broad base of small to mid-sized businesses.

Every one of these problems is costly, both in terms of taxpayer dollars and the well- being of people.  Trickle down economic strategies haven’t solved these problems; they have made them worse.  It is time for fresh thinking about how to create jobs, to broaden the base of wealth, to lift people out of poverty and to increase the resilience of households and communities.  Fresh thinking based on successful, real world examples emerging across this nation.

What Bad Trade Policy Looks Like

Our so-called “free trade” policies are, quite simply, not about freeing up trade among people and businesses across national boundaries.   Instead, they are about freeing transnational corporations to increase their reach and profitability, and to reduce any risk that large companies and investors might face.  This is particularly true of the Trans Pacific Partnership (TPP) and the Trans Atlantic Trade and Investment Partnership (TTIP), both of which have now entered the final stages of negotiation.    Based on this, I’ve summarized in several categories below why I believe the TPP to be a very bad proposal.  Some of these issues relate to specific provisions in this proposal (as best as we can know, given the secrecy), while others pertain to the results of other trade deals, results which are likely to be repeated and exacerbated, given the extraordinarily overwhelming influence of major multi-national corporations in the current negotiations.


  • In 1993, before the signing of NAFTA, the US trade deficit with Canada and Mexico totaled $27 billion. By 2012, our deficit with these NAFTA partners had increased almost seven-fold to $181 billion.
  • More recently, we signed a trade agreement with South Korea, called KORUS, an agreement said to be one of the models on which the TPP agreement is being based. In just two years, our trade deficit with South Korea has grown by $8.7 billion while our exports to them have fallen by $3 billion.


  • In the 2 years since implementation of KORUS, Robert Scott (Economic Policy Institute) estimates that 60,000 US jobs, mostly in manufacturing, have been lost due to the increased trade deficit and reduced US exports.
  • Between 2001 and 2011, EPI estimates that 3.3 million US jobs were lost as a result of ballooning trade deficits with China, whereas only 1/6 of that number, 538,000 new jobs were created. Six times as many jobs lost as new jobs created.
  • David Autor, in a paper in the American Economic Review, estimated that between 1990 and 2007, growing imports from China (and rising trade deficits) accounted for fully ¼ of all manufacturing jobs lost in the US, as well as lowering wage rates.


  • Between 2009 and 2012, of US workers who lost their jobs due to offshoring of manufacturing but who found new jobs, two thirds had to take a pay cut, most at 20% or lower wages. Of course, hundreds of thousands of displaced workers have not found new employment.
  • Nine of the eleven nations in the TPP have significantly lower average wages than the US, making further downward pressure on American wages highly likely.

Currency manipulation

  • Even though many members of Congress have asked the US Trade Representative to make currency manipulation a key part of the TPP negotiations, and even though he has acknowledged that it is critical reason why US exports lag in relation to imports, as recently as April of this year he was still telling members of Congress that they have not included it even in the discussions taking place.

Patent Law

  • Patent Law, which already favors big, “incumbent” companies over smaller businesses and individual inventors and entrepreneurs, is likely to further extend both the scope and duration of patentsfor major multi-national corporations through the TPP.   This is true in terms of pharmaceuticals, internet and information companies, and others.  This has at least three negative impacts:
    • First, inventors, innovators and entrepreneurs, who generate 16 times as many new patent innovations than do large corporations (per dollar of revenue) will now face more legal and bureaucratic hurdles as a result of these trade deals;
    • Second, much of what now continues to be in the “public sphere” – particularly in the realm of creativity, the arts and the exchange of ideas across the internet – will likely face pressures of privatization and control by large providers;
    • Third, pharmaceutical companies will make critical, sometimes life-saving drugs, much less available and affordable, by maintaining patents for longer periods, precluding the availability of lower cost “generics”. This will almost surely cost lives, probably tens of thousands of lives.  If you think that the big drug companies must do this to cover the high cost of research and development, consider that they spend more on promotion and marketing than they do on R & D, and that they are already among the most profitable companies in the world.

Secret Negotiations

  • The intense public secrecy and the extreme restrictions even on elected officials in being able to view the proposals is absurd, unjustifiable and really, quite an offense to citizens and the public interest. Even the Bush administration, for goodness sake, provided more information on pending trade deals.  President Obama, to my knowledge, has never explained the need for such secrecy and for the great access granted to corporate representatives in the negotiations.

Investor State Dispute Settlement agreement – ISDS

  • Existing ISDS agreements in NAFTA, the WTO and other trade agreements is already very bad, but the TPP’s setting up of “independent” panels, to whom only corporations and investors can bring a claim (not citizens, unions, or local/state governments) makes a very unfair system far worse. The use of ISDS by corporations to bring suit against communities has grown dramatically over the last ten years, now averaging about 60 such suits annually.  Here’s a very short sampling of some of those suits:
    • Phillip Morris has brought suit against both Australia and Uruguay for their efforts to reduce smoking, especially among young people, through stronger mandatory health warnings and smoker cessation campaigns.


      The Renco Group filed an $800 million suit against Peru for closing the company’s Zinc smelter, which they had refused to adequately clean up. Even though the WHO found that 99% of children living nearby had lead levels 3x greater than safe levels, and eventhough Time Magazine cited the community, LaOroya as one of the “world’s most polluted places”, Uruguay was forced to reopen the smelter as a result of the lawsuit.

    • After Ontario adopted its “Green Energy and Green Economy” plan in 2009, the growth of businesses, jobs and revenues in renewable energy grew dramatically in the province. In part this was due to the law’s requirement that a minimum of 40% of materials in the solar industry be sourced from within the province.  That generated a great deal of investment in solar manufacturing, including a state-of-the-art Italian facility, Silfab, to produce super efficient PV panels.  Japan and the EU brought suit, investment dried up, and the Silfab company and others are stuck in limbo, unlikely to ever open.

I think that all of these examples, and countless more, point to the fact that what we’ve been pursuing through these treaties is not “free trade” but “corporate trade”.  When corporations are invited into all of the negotiations, for several years running, but the US public is kept completely in the dark, and our elected representatives have only very limited access to see portions of the proposed agreement, what else can we call it?  When the US has steadily shed jobs, especially better paying jobs by the millions, while its trade deficit has grown, how is this good for workers, our communities, our nation?  When major multi-nationals are able to sue governments for working to protect their citizens from deadly pollutants, for discouraging smoking, or for building a home-grown, job-creating solar industry, how does this square in any way with the well-being of people, or with the development of more resilient, healthy and bottom up economies?  Cleary it does not.

It is time to take a stand against the TPP and the TTIP.  Beyond that, it is time for a completely new approach to international trade agreements, an approach that puts people, their communities and their environment at the top of the agenda, not ever-increasing corporate profits and ever-expanding corporate control.  Trade could be about the fertile exchange of ideas and innovations across borders, about filling the critical gaps in what a nation needs, and that other countries can produce better.  Current trade policy has nothing to do with these goals.  It must change, dramatically.


*Originally published at