Amidst the millions of words that will be spent discussing the dire state of the world, it’s worth spending a few on something practical that would make every difference in the world, for the world: building Strong Towns.

In the end, all aspects of the catastrophe we face are rooted in the way we occupy the landscape, and nothing has done more to turn that into a wildly resource-intensive and destructive process than putting automobility at the center of our concerns.

As we celebrate — or mourn, if we are to be honest — Earth Day, here is more from a lengthy traveling interview with Chuck Marohn, president and founder of Strong Towns, a recovering civil engineer and urban planner, who visited Oregon last October. The Strong Towns message is so important because it answers the question “But what can I, just one ordinary person, do about all this?

You can get involved locally, insisting on honest accounting for development projects and moving your town in the direction of becoming a Strong Town. For the overwhelming majority of us, there is nothing we could do that would be more effective than that.
 
The first part of this OregonPEN interview with Chuck Marohn is here.

[Scene – driving through suburban West Salem and looking at two new schools built there.]

Chuck Marohn:  I’ve come to realize that essentially everything we build assumes that the typical user of a system is a middle-class or higher person who can afford the burn rate of having one or two cars, who can afford the lifestyle that almost all of our designers, engineers, and project miners come from, right?

One of the things that we’ve talked about [is] — and my experiences in Memphis, Tennessee, where you cannot avoid rubbing up with people, who don’t look like you and don’t come from the same place as you — what we really need to do as planners, as engineers is to humble ourselves to, actually, observe people. Observe where people struggle within their environment.
We can spend less time in environments that are comfortable for us. Design rooms are comfortable for us. Public hearings are set up to be comfortable for us. We can present three options, and then listen to all the complaints, and then catalogue them, and demonstrate that we’ve gone through an acceptable process . . .

OregonPEN:  Check the box.

Chuck
: Check the box, right. That’s all comfortable for us. What isn’t comfortable for us is to actually go out and sit on the street corner in a folding chair for two hours, and watch how people interact with the stuff we’ve built.
If you look at successful businesses — and I’ll go way to the far end and say — if you look at the make believe land of the theme park, the theme park designers obsess over the interaction of people with their physical layout.

If you go to the Apple iPhone, the genius of Steve Jobs was not being able to put all your music on a little player. There were a lot of people doing similar things. His genius was the interface. Watching how people worked with it and actually designing that.

As engineers, we’re brilliant at throughput for traffic.

But we need to humble ourselves to actually look and say, “How do people actually use this type of environment?” When we do that, this radical disparity between the way the vast majority of people actually live and the way we assume they live becomes so glaring that you cannot ignore it.

I’m not going to pretend in any way that I’ve traveled this journey of great social enlightenment. But I have been forced, by the questions that I’ve asked, to become a lot more sensitive to the fact that the environments we build are despotic to a large majority of people.

Incidentally, those same people are also who, on a per foot basis, are paying the highest taxes, generating the most viable, sustainable wealth for a community.

In Memphis, I sat down with the Mayor of Memphis. We showed him how their poorest neighborhoods were generating, on a per acre basis, two, three, four times the taxes as their wealthiest neighborhoods.

For an African American mayor in a predominately African American city to see that the poorer neighborhoods — which were predominantly African American were struggling mightily — couldn’t get sidewalks fixed, couldn’t get streets repaired, really, really difficult places — that they were actually paying the bulk of the freight for the expenses of the community.

OregonPEN: But getting much less services.

Chuck: Not only that, but the cultural disdain. That’s the thing that has weighed on my conscience as an American, as a Catholic, as a human being. This just isn’t the right way to go about doing things.

OregonPEN:  Getting engineers to even think outside their own race, class, and experience is tough. One of the things is simply that disability is not considered at all. If you cannot drive, you’re a prisoner.

Look at this, we just built this high school. We’ve just took you to the high school. Here is a middle school. [Both very difficult to access except by car, and surrounded by parking lots.]

Chuck: We have an obesity problem in this country. “Here we go kids, we got a chain link fence around your school.”

OregonPEN: We have huge amounts of parking, because we expect the kids would drive. We built the school at the top of the hill to make it easy for bicycling I guess. I don’t know.

Chuck: Yeah, well, school funding . . . huge personification of the dysfunction of our whole system. The idea is that it is very efficient for administrators, very efficient for teachers, very efficient for operations of lunches and busing to create a school factory.

We can sell it to the public by adding bling. I mean, we can put a planetarium in it, and we can put a fancy auditorium in, which we couldn’t do if we had a bunch of different schools, smaller buildings. But really, those are community facilities that we could build anyway. They don’t have to be attached to a school. In some ways, they’re almost a detriment when they are in a school because you can’t just freely access them. They can’t be repurposed and reprogrammed for broader community use.

OregonPEN:  Right. If an adult gets on a school grounds these days, they call the cops.

Chuck:  Everyone freaks out. We’ve commoditized schools in the same way we’ve commoditized the building of communities. Efficiency, when you listen to really smart people talk about the reason that they’re doing things, almost always they will bring up the notion of efficiency. I think that efficiency is one of the worst goals that we can aspire to as a nation.

OregonPEN:  Doing the wrong…

Chuck:  Doing the wrong thing efficiently is really horrible. But we obsess about it in America because of the way our economy is structured, because of the dependence we have on growth and accelerating levels of growth. In everything from paying pensions to making mortgage payments, we require growth.

Efficiency has become the buzzword. When you are obsessed with efficiency, you give up resiliency, redundancy, adaptability. The human body is not efficient. You have two kidneys, you use a small percentage of your brain at any one time.

You have all of these built‑in redundancies in your body. Why? Not because it’s efficient but because it’s resilient. Because that’s what it takes to survive over multiple thousands of millions of years and times that are good and times that are bad, and what have you.

In America, we’ve obsessed over efficiency and we’ve lost our resiliency. We’ve lost our adaptability. We’re not able to adapt our thinking. We’re so honed into efficiently delivering more of this [suburban sprawl – Ed.].

“The environments we build are despotic to a large majority of people”


OregonPEN
: On the issue of the proposed bridge, part of the situation here is that the bridge is really, if it’s anything, it’s for getting people to the coast quicker, getting people to other places that aren’t the city but with the city paying for it.

I’m wondering if you could talk about how you can have a sustainable city while at the same point dealing with a larger regional area and how those two interface.

We are paying for everything right now on the proposed bridge, and it’s really not going to benefit us. It’s going to benefit people outside of our city if it has any benefit at all. But even with that, how do you balance the needs of our individual cities? Individual cities versus what is perceived as a larger regional need?

Chuck
:  I think this gets back to the conversation about going along and getting along. We have set up ‑‑ and again, we did this after World War II in order to efficiently deliver this growth machine that was America ‑‑ we said we’re going to have an Interstate Highway Act. We are going to connect all these cities. Then, of course, it got perverte –we’re going to run highways through the middle of cities too, and we’re going to do these other things.

But the basic consensus that we had was that we will have a national tax on gasoline that would go into a very large fund of money that would then get distributed, with standards and strings and ways to operate down through the system.

As Americans, that makes a lot of sense to us, especially when we realize that the local systems have planning, which is the MPO (metropolitan planning organizations). They’re supposed to take public input. There’s this two‑way kind of interaction that theoretically happens.

Then we realized that we were doing terrible environmental things, so we came up with NEPA [National Environmental Policy Act] and the whole environmental process in the 1970s to try to inject a little bit of sanity there. We kept the same system designed to efficiently deliver this over and over again.

What we lost, while we dot every “I” and cross every “t” and follow a very respectable process, we actually are getting very coarse feedback. We’re not getting good feedback from the systems we built.

What you see is that the system today has a huge emphasis on what I would call regional cooperation. This is looked at as altruistic. I’ll do something really destructive for me so that you can get what you need.

Real good adaptable systems don’t work that way. They’re more symbiotic. Again, when we look at own human bodies, we see that we are a collection of different things within us that need us to live but also we need them. We help each other.

Regionalism in the US has become a lot about who is going to be the loser.

OregonPEN
:  Who’s the sucker at the poker table.

Chuck
:  Yeah, who’s the sucker at the poker table as opposed to, “What is the thing that works for you? What is the thing that works for me, and then where is the overlap between those two?” I have become kind of like the anti‑regional planning person.

Not that I don’t think it’s a good idea for us to communicate regionally, and talk, and find areas of collaboration. I would rather that the money, and the origination of projects, and the impetus for how we act just start at a very block-neighborhood level and work up and that our regional cooperation was,

“Where do we find mutual places of interest to work together?” As opposed to, “How do we do regional things that then, hopefully, we can find a way to have it trickle down and make sense for us locally?”
 

“I think that efficiency is one of the worst goals that we can aspire to as a nation. Doing the wrong thing efficiently is really horrible.”

 [Scene change – looking at existing Willamette River Bridges in Salem.]

OregonPEN
:  The other thing about these bridges is they’re not, they haven’t been seismically retrofitted. Oregon Department of Transportation says when we have our Big One, that scale, the earthquake, they’re going to collapse. Nobody wants to put $100, $200 million into retrofitting these to survive the Big One, but they’re happy to put $500 million into a new bridge that would also not be rated for the Big One.

Chuck
:  Can I try an idea out on you that may just be patently offensive to everybody who has to live in a place like this?

In Memphis, Tennessee, they’re looking at, I want to say, it was $5 billion. It was a massive number, for a seismic bridge across the Mississippi. They have three, four bridges. None of them are seismically rated.

I said, “What could we do with five billion dollars?” You’re talking like a transformative amount of money. $5 billion sticks to my head. Maybe it was $1 billion. Whatever it was, it was a bizarrely huge number.

My contention was, you’re not going to tear down your other bridges, right? You’re going to keep your other bridges. What you’re working at, is not like when the Big One happens, there will be people on the bridges that will fall. You’re not worried about that because you’re going to keep those bridges, anyway. This new bridge is not about alleviating that.

The new bridge is just about having a route in and out when your big earthquake happens. OK, I’m with you there. Could we go to the US Army Corps of Engineers and say, “What would it take to have a temporary bridge here…”

OregonPEN
:  A pontoon bridge.

Chuck
:  A pontoon bridge if we needed it? Then let’s get all those materials and have that on hand, set that over here, and keep it all safe. We’ll practice it once every two or three years. Let’s be really ready. We’ll spend fifty million dollars doing this. We will be ready, right? Then let’s take our $950 million or whatever and actually make life better for people.

OregonPEN
: One of your sponsors is Salem Community Vision. I went to a meeting with them. I was saying, “You know, we should start a campaign, a billion better ways to use a billion bucks.”

When you pay off a five hundred million dollars bridge, it becomes a billion by the time it’s paid off. We’re talking about throwing a billion at a non‑problem. There’s got to be a billion better things you could do with that.

Chuck
:  We have this park in Minnesota, Jay Cooke Park. It’s a great little state park. It’s got a rocking bridge that goes over across the river. Suspension bridge. It’s got abutments on both sides. It hangs on its rope and all that. It’s great. It’s really wonderful. It’s kind of iconic.

Well, they had a big flood. It took out the abutments and knocked this bridge down. This is the third time that this has happened. They had a little display up when they were fixing the bridge that went through the history of the bridge.
Here is what it was originally, and then here’s a second iteration, and then third iteration is the one that just came down, and now we’re building this one.

The thing is that the new bridge, which was $5 million or some huge amount of money, you could see where the engineers . . . . You had a little bridge that went over and it got knocked over and they were like, “We’re not going to let that happen again.” Then it was like, “What? It happened again? We’re going to do it even bigger.”

To me, the insanity of it is that we could actually probably have gone out and strung up the original bridge for a couple hundred thousand dollars. Then if it got knocked down next year, who cares? Go through it again. It’s a rope bridge across the river. Who really cares?

We’re so obsessive with defeating nature like, “We must not let this happen again,” and “We’re building infrastructure to last.” I’m like, “No, you’re not. Your machismo is getting the best of you.”

“Regionalism in the US has become a lot about who is going to be the loser.”

OregonPEN: Yeah, this intersection cost ten million dollars. They widened this thing and we’re killing pedestrians left and right in Salem.

Chuck:  Yeah, you are.

OregonPEN: We really have a problem and so we make everything wider because the cars might miss one now and then, so we need to really widen things.

Chuck: [Pointing at a painted pedestrian crossing] You can see how here, you’ve acquiesced. The designers have said, “We might have people who walk through here sometimes, so we’ll put a little place for them,” but then they put a ramp, a speeding ramp, so that you have to cross through the middle of it.

I used to bristle at the notion that if you’re going to design bike infrastructure, you should ride a bike. But now I think that if you’re going to design something like this you should have to take your five‑year‑old, four‑year‑old for a walk through it.

Community Bikeways Advocate
: I’d like to point out right here, we’re actually going over what was a railroad track coming off the Union Street Bridge. Now it’s a pedestrian walk that stops there. The city has been working with businesses on this side and asking, “What do you need?”

What the business have said is, “We need access for people to get to us.” The city actually brought in a group of university students to look at the problem and throw out some ideas. They came up with some beautiful designs for getting pedestrians across that bridge to actually then be able to get into the commercial district that’s on that other side.

They came up with some — they used a word like boulevard. They finally came up with a plan for an underpass, it’s underneath all this so that you don’t have to cross that road, and started talking with people, who said “Since we’re doing it, why don’t we go ahead and add car access?” So now it’s a car, bike and pedestrian access. Then local business said, “Why don’t you put an off‑ramp off to the…off bridge so…”

Chuck
:  Why don’t we see if Seattle is done with their boring machine? We’ll just bring that . . . .

Bikeways Advocate
: Their latest plan created is an underpass, that was originally designed for bikes and walkers, at the cost of four million dollars, but now has a 17‑foot lane for cars to come off the bridge and quickly get into the business district.

The project has, it’s gone from four to five million dollars for a bike‑ped underpass to thirty million dollars for a road underpass and an off‑ramp that would dump cars quicker.

What I see is that it’s good intentions, it’s good ideas, great conversations that enters into a bureaucracy that is used to moving as many cars as fast as they can. They lose sight of their original goal and therefore will not serve the very people who originally were targeted.

OregonPEN
: To your left here is the city hall, which is brutalism architecture. Built in the 1970s.

Chuck
:  Wow, that’s unfortunate.

Chuck
:  Even the tunnel underneath the roadway, I look at that situation, I’m not going to say a tunnel is a bad idea and it’s cool to get a bunch of students out talking about this. But the fundamental problem with that neighborhood was that you have a place where the buildings, the street, the interface, everything assumed that everybody was travelling by car at 60 miles an hour, and so you’re trying to retrofit into that, an environment that is slightly less despotic for someone outside of a car than what you have. The same thing goes with environment here.

You cannot have a place where you’re expecting to have commerce, and people walking around, and spending money, and interaction and 45‑mile‑an‑hour traffic.

 
[Scene change – driving through South Salem.]

Chuck: This is stroad land. You have people walking along here in the vehicle recovery area, where we put breakaway light posts because we know cars go off the road, but we line them with sidewalks and people.

We have to start talking about how we build auto environments and human environments and not that they are mutually exclusive. You can have human in auto environments but you can’t have cars in human environments. You have different design ethics that you bring to them.

You cannot have a place where you’re expecting to have commerce, and people walking around, and spending money, and interaction and 45‑mile‑an‑hour traffic. It does not work.

There’s two things that I love to do on my Facebook page. The one is to take photos in these kind of things, where it’s like, “We’re going to create, like the French cafe out on the Strode, and then just sit there, have the close‑up where you’re sipping your nice drink and then turn and pan and get the [makes sounds of heavy traffic].”

The other one is, I love when the churches put up the “No parking, except parishioners” signs. The churches tear down the neighborhood, and they have the big parking lot. Then, they put up the “Church parking only.” I always post those and put, “What would Jesus do?” He would tow your ass. Because this is church parking only.

OregonPEN: This stroad, believe it or not, we’re not even a third of the way down this Stroad. Yes, we have had such a boom, literally a financial goldmine, of turning really nice farmland into this.

Chuck: This is very sad, and it’s very sad because, like you say… Visually, it’s not great, but I think people who like this stuff would say, “I like to able to go to Pizza Hut. I like to be able to get my Dominoes,” and yeah, this is what the market wants. Taco Bell drive‑through is great. I can run here during lunch.

For me, this makes me sick to my stomach because of the enormous amount of wealth that we have blown in this bonanza of one generation.

You can see some of the places. . . I’m guessing the evolution of this thing is that it was a smaller road at one point, and then got expanded, because you can see the little glimpses of stuff that’s been here for longer than two decades, stuff that’s been here 30, 40 years, and it’s not aged well. But we’ve just skipped past it because that’s what you do. There’s no natural renewal mechanism to actually have these places avoid decline and stagnation.

OregonPEN: No one cares about these places.

Chuck: They’re built to be disposable. But in a functioning market, what would happen is that there would be so much value created that, as one of the places went into decline — so the roof goes bad, the parking lot goes bad, the sidewalk gets old, and the person who owns it did a poor job running their business. They’re at the point in their life where they’re done. Those things happen. Those are just human things. They happen in Venice, they happen everywhere.

In a functioning environment, there’s actually a cycle where people will come in and buy that, and then improve it up to the next thing. When you have a Taco Bell drive‑through, and it doesn’t work or it goes into decline or it’s not the thing, when you have a gas station like this, what is the next use for that? It is exactly what is there.

OregonPEN:  Tattoo parlors, mostly.

Chuck: Or something really, really low on the economic spectrum. A tattoo parlor, a pawn shop. Then that just has this visual cue like, “Now we’ve reached the decline phase. Flee.” It is sad . . . America has spent trillions on stuff that is like throwing the wedding party, throwing the big birthday party.

OregonPEN: If growth made wealth then Salem should be wealthy as hell. Boy, look at all this growth we’ve enjoyed.

Bikeways Advocate: I would argue, as well, that you’re saying that the market wants this, I think there’s a large part of the market that doesn’t know that there’s any other option.

Chuck: The crazy thing is, when other options are presented, they become so vastly expensive that no one else can afford them. I’ll go back to Disney World. An American family will spend $5,000, $6,000 going to Disney World on spring break to live in what, essentially, is high-end mixed‑use housing, and take transit to a walkable downtown.

OregonPEN: A pseudo downtown.

Chuck:  The enjoyment of it — they don’t do this to go to Six Flags. They do this to go to Disney World because the difference between Six Flags and Disney World is the ambience of the place, not just the rides that you do.

You have this thing where that’s what we pay premium dollars for. Then we come back home. And we could actually live in that type of environment far cheaper than we could live in this environment, but we prefer this environment. Why?

OregonPEN:  We can get it funded. We can get a loan.

Chuck:  Yes. It is not because of our consumer preferences, like, “This is what the market wants.” It’s that the system we have set up to finance it, to insure it, to zone it, to permit it, to build it. All of that delivers this. Again, we get back to that word efficiency.

If you were Paul Samuelson in the 1930s and 1940s, one of the chief economic advisers to FDR, and you were envisioning a way to avoid going back into the Great Depression, you would have envisioned a system where we would go out and, from the top down, have a big national works project that would create these systems all the way down, so that we could just employ people to continue to build, like Lego pieces, of this cookie cutter, this cookie cutter, and just keep doing, doing, doing it.

That was what we did. The problem is we solved the depression problem, right? We got into it, and we never were able to…

OregonPEN:  Turn off the machine. The Sorcerer’s Apprentice.

Chuck:  Exactly. We were never able to dial it back, or redirect it, or have it function differently. We’re trapped.

The best economic minds in our country today say things like, “We need a trillion dollar surge in infrastructure spending.” I don’t know if they envision, when they say those things, more of this. But if they do, that scares the heck out of me, because this is what is bankrupting our cities.

OregonPEN:  This was farm country. Again, it keeps getting wider, and wider, and wider, and higher speed. Now, they want to put … they want to put another power center mall, the big boxes out here.

Chuck:  What? [laughs]

OregonPEN: [mimicking developers]: “Downtown isn’t fully dead yet. We actually have a Nordstrom, and a Macy’s, and a Penney’s downtown. We need to kill those. There’s a guy who owns this property out here who can make a lot of money if we widen this. He’s going to be right in the intersection of I‑5 and Kuebler and there’s going to be a power center there. Wouldn’t that be great? We can finish off downtown for good and not have to worry about those whiny people who want things downtown.”

Chuck: Here’s the fascinating thing about it. I think we all can step back. Americans in general can step back and acknowledge that we have an economy way too dependent on consumption. It has been bad for families. These are just gluttonous bad habits, and I think we step back, and we realize that, right?

Shopping is the number one recreational activity in America. That’s more than walking, more than biking. Shopping is the number one recreational activity. You look at a country where it’s like 55 percent, I think, was the status, have a net worth less than $10,000. How is that possible in the richest country in the world?

When we look at it from a city standpoint, and we divorce ourselves from the notion that this approach, that we are dependent on this revenue, is actually bankrupting our own citizens, our own neighbors, we have to step back and realize that, if we build a mall here, people are not consuming more. We’re already consuming the maximum.

We’re consuming beyond the maximum. It’s not like when we get another clothier, that all of a sudden I increase my wardrobe size by 10 or 15 percent. In America, we’re already spending the max on consumer spending. It’s not like there is more to squeeze out of that rock.

OregonPEN: Did you read “Fast Food Nation?” It’s an interesting book. He talks about how Taco Bell, or Yum! Brands, or whatever behind them, tried to create this thing called Fourthmeal. They were pushing Fourthmeal.

Chuck: Yeah, Fourthmeal. I remember Fourthmeal. The thing is, I kind of like Taco Bell Taco Bell at times. I’m going to acknowledge that. I remember the whole Fourthmeal thing.

OregonPEN:  Fourthmeal was insane. They’re already saturated. They’re having users that are already eating at their places so many times a week, that the only opportunity for growth…

Chuck:  Is a Fourthmeal. I had second breakfast. [laughs]

OregonPEN: We need people to eat more. Yeah, we need more retail, more retail space, like we need more rain.

Chuck: Let’s talk about that transaction because it takes it from a place where you actually already have infrastructure built, you already have all the stuff you’re committed to maintaining, you already have buildings that are tax‑payers‑paying‑tax space.

It moves it to a place where you have to create all of that from scratch. It’s almost like if government were actually a business — I don’t like that analogy, but hang with me for a second — It would be as if we step back and said we have five divisions. One of them is profitable and four of them are losing money. Our solution is to start a sixth division that competes with the one profitable one.

That is a dumb strategy. That is a really, really, really bad strategy. That is what this continual retail is. The people who advocate for it will say, “Chuck, it’ll be a regional draw. So we won’t just be cannibalizing ourselves, we’ll also be cannibalizing everybody else.” As if the other towns… As if no other city has ever had that idea. Like, “Oh, wow. Why didn’t I think of that?” Exactly.

The cities that do really well with retail are not in the mall game. They’re not chasing the next big‑box store. They’re the ones that actually create ecosystems.

OregonPEN:  Places you want to be.

Chuck: Places people want to be, with actual ecosystems of people who live near them interacting. Those places are beautiful. They’re high‑demand. People will move there and pay premium dollar. Then they’ll pay premium dollar to visit them. They’ll pay the park. Imagine that.

It would be as if we step back and said we have five divisions. One of them is profitable and four of them are losing money. Our solution is to start a sixth division that competes with the one profitable one.

Chuck:  I love the . . . Is this the State Highway Patrol?

OregonPEN:  It’s the State Police Headquarters.

Chuck: With your City Hall, and your library and your new police building, it’s important to draw a distinction between public buildings today and public buildings of 100 years ago.

When we would, a hundred years ago, collectively pool our money to build a public building, that was going to serve multiple purposes. It was going to serve the utilitarian purpose of the function it was trying to do. We’ve got to have a place for police. It will have offices. It will do that.

But it was also going to make a statement about who we were and what we valued. In doing that it was going to, in a sense, radiate like a fire. Like a burning fire it was going to radiate economic success to other places. You go to even small towns, and you’ll see that…

OregonPEN:  Beautiful post office.

Chuck: Yeah. They’ll have the old…You go to their museum and there you’ll see, here’s the old post office, and the old City Hall, or the old County Seat.

OregonPEN:  Carnegie Library.

Chuck: The first ones are small. What they were doing is, they said, “We’re just going to get by until we can build the thing.” Then you have the big post office, the big County Court House. These tiny little towns with 6,000 people have Roman columns and ornate things with domes on it. They’ll be at the end of a street.

You’ll say, “Why? Were they that vain?” No. They were really smart. They said, “If we’re all going to put in together on this, we’re going to put it in a place of such prominence and use architecture of such timelessness that it is going to make everything else around it valuable.”

Now we say, “Let’s do something that works for whatever single purpose we’re going to do.” We’ve got a police station out here, so we get on the road quick, and start writing tickets to people and getting in and out quickly.

Bikeways Advocate: This is an industrial park. There’s huge warehouses. But in the last maybe 10 years the state has rented — The state has moved a lot of its state workers away from the downtown core, and out to here in cubicle land. Including my husband, who used to bike five minutes to work and now bike 25 minutes to work. Because per square foot was cheaper.

Chuck:  It’s more efficient.

Bikeways Advocate: These individuals have nowhere to go out for lunch. If they have doctor’s appointments, they have to get in their car and get back downtown. There is nothing out here besides industry, and so many state workers, who have their cubicles but are disconnected from the urban life that they used to have downtown.

Chuck: It’s amazing too that we tolerate that. As tax payers, we turn these decisions over to facilities people whose job is to, essentially, optimize — get the most amount of building for the cheapest price. As opposed to actual designers or people who are going to look at multiple things, such as why are these huge businesses all over the country locating in core downtowns? It’s not because the land is cheaper there. It’s not.

It’s because they realize that to get the employees they want, to attract them, they’ve got to be in high‑quality cities, with amenities, interesting things to do.

Bikeways Advocate: And access.

Chuck: People want to be able to get to work by bike, by what…That is what high‑end employees and high‑end cities want.

Nothing says fish and wildlife like a big drainage ditch. At least they have trees in their parking lot median, right? Gosh, give me a break. Yeah. Government is one of the worst defenders of this. It’s really crazy.

OregonPEN: The school systems are exempt from all planning participation. They build schools where ever they want. Government is doing the same thing. We’re hollowing out. Salem historic downtown was the seat of government. It’s in the constitution that the government has to be in Marion County and that meant Salem. Instead, we’re hallowing it out and sending people down here where they have to drive because they can’t get here on the bus.

Chuck: The odd juxtaposition with that is, we’ve told ourselves from a propaganda standpoint that we’re going to have cheap gasoline forever now, because we’ve figured out how to frack North Dakota to bits and extract this oil.

And the funny thing is, is that we can look back at the history of oil and of those types of proclamations, and what you see is that gas prices have steadily done this [points arm upward] on an upward trend. In 2008, we had four‑dollar gasoline in Minnesota. I don’t know what it was here but I’m assuming it was around there.

The school district, for example, was in abject panic. They were like, “Oh my gosh! Is this the new normal?”

Four‑dollar gasoline, it’s not like you as a family can choose to drive to town one fewer time. The school has to go and pick up all these kids on a bus. They’ve got a 30‑year bond on this building up the middle of nowhere, they’re not moving out anytime soon.

What we do is, it goes without saying, very short‑term thinking with some every narrow metrics, and wind up in a place where we’re not very resilient, were not very adaptable. We can’t survive high gas prices.

When you step back and you hear someone like George W. Bush, when he was president say, “We’re addicted to oil,” it is a statement of the advocate, right? We can ignore it because we see crazy people out saying things like that.

That’s what we mean by addicted to oil. We must have cheap gas or people can’t get to work out at the government building four miles out of town. That is a crazy addiction.

OregonPEN: As if only people well‑off enough to have a car deserve a job. If you are not well‑off enough to have a car, you really shouldn’t expect to be employable.

Chuck: Now we have a system where, when gas does get expensive again — and it cycles, it will at some point, it is a market — when it gets expensive again, you’re going to have to pay more to your employees or else you’re not going to have employees, and those employees work for us.

We have in the short term made no sacrifice. We’ve chosen the building, and we’ve sacrificed our long term resiliency. It is silly.

In a well‑functioning housing market, in a well‑functioning system, in traditional development patterns, you never walked away from a neighborhood.

 [Scene changes to 1950s neighborhood]

Chuck: We drove through the brand new auto‑oriented, spread everything out land. Now we are in some of the older neighborhoods. The sad thing about these neighborhoods is that at one point these were the new things.

What they really need now is some love. There is nothing wrong with these homes. They are nice homes. They are a decent size. They could be expanded upon, improved, modernized, but they won’t be because there’s no mechanism to do it. There’s no financial mechanism to do it. There’s no regulatory mechanism to do it. Your urban growth boundary does nothing to revitalize these neighborhoods.

In a well‑functioning housing market, in a well‑functioning system, in traditional development patterns, you never walked away from a neighborhood. Neighborhoods renewed themselves as they went into decline. It’s only post World War II development where we use up a neighborhood and then move on to the next one as if it’s slash and burn agriculture.

OregonPEN: They made Americans get rid of the racial zoning, what happens is you zone economically to achieve the same result and we’ve built neighborhoods where everyone is segregated by class. If you’re old, or you’re poor or you’re disabled, you can’t stay here.
If you can’t drive, you can’t live here. There is no that constant cycle of renewal because we have single use zoning so that we don’t allow the accessory dwelling units.

Chuck: You can’t move your single family home into a duplex. The only thing you could do is, if the neighborhood gets really bad, you could go down to the city hall and work with the bureaucracy to get a TIF (tax increment financing) project to build a four story apartment near the bus stop.

Everybody in the system would cheer that because now you’re getting density and now you’re getting – When really what needs to happen is that the neighborhoods need to thicken up over a broad area. You don’t need these pockets of intensity. You need broad investments.

The whole insolvency problem of these neighborhoods is what is coming to bear out. That’s the thing that is ultimately pushing us. You don’t feel it here as acutely, yet, or as obviously like a place like Detroit or Memphis feels it, but the dynamics are the same. If you think that this looks different than suburban Detroit you’re kidding yourself. It’s the same thing.

Everybody has as an excuse to explain Detroit. It’s the greedy auto companies that ship the jobs away, or greedy unions, or corrupt politicians and what have you.

No, Detroit just got started doing all of this about 20 or 30 years before everybody else. They did it really aggressively, and they arrived at the destination earlier than the rest of us. We’re all in the same exact trajectory.

You can see it in your neighborhood where you have things that go into decline and aren’t maintained, that’s Detroit of 1980s and 1990s. We think it won’t happen to us.

OregonPEN: Instead of reinvesting in neighborhoods, we say, “Oh! The solution is a new power center to the south.” It’s more growth, more retail.

Chuck: It’s Eight Mile. The salvation of Detroit was always like the next ring. It’s like, “The next ring will get it right, and that will trickle down to somehow help these neighborhoods.”

OregonPEN: Anything rather than focus on what you’re calling the fine grain. Fine grain is hard, you have to make the exact same number of decisions and you get a much smaller effect. If I can make the same number of decisions and have a huge project with a huge budget, that makes my status go up.

Chuck: Let me defend the bureaucracy a little bit, too. When I’m working at the fine grain, not only is it difficult and tough, but I’m going to fail a lot. I’m going to try a lot of little things and they’re not all going to work. What happens is that when you’re out doing fine‑grain type of work, the public shows up and says, “I’m wasting my tax dollars. Why are you bothering with this little thing? Why are you planting trees? There’s huge problems out here.”

The public has almost pushed us to do things that won’t fail. What that does is — it doesn’t make us do things that won’t fail. It makes us do things that are so big that the failure becomes our failure, not one person or one department’s failure.

OregonPEN:  Nobody ever got fired for buying IBM, even when it was the wrong thing.

Chuck: If you’ve build a brand new bridge, what person do you pin that responsibility on? It would be five different agencies, four different commissions. No one will be responsible for it ultimately. Our unwillingness as public to accept a beta version of something  – the way we accept the beta version of that Apple iPhone — we can’t accept the beta version of a new street design with cones and paint to see how it works.

We flip out. We can’t accept accessory dwelling because, “Oh my gosh! That could be some chaos in my neighborhood, and those people might move in.” What it does is that it actually forces our systems, our systems of governments, our systems of regulation into a very defensive big mode.

OregonPEN:  A defensive crouch that says, “This may not be worth anything. It may not be any good but at least I can’t be blamed.”

Chuck:  Right, again that’s not a failing of bureaucracies. It’s human nature. We would all be in a sense the same in that kind of a system.

Would a wounded Trump bring down the whole show rather than lose bigly?

The story goes that, when the aged and failing Franklin doddered out of the Convention in Philadelphia after it finished its work — of greatly exceeding its charter and proposing a whole new form of government rather than modifications to the existing Articles of Confederation — a woman asked him what kind of government the Framers had proposed (as if it was common knowledge that the Convention had slipped its bounds). Franklin, so the story goes, supposedly replied “A Republic, madam — if you can keep it.”

As the story of Trump’s hidden debts and obligations to foreign interests unfolds, the real worry is that his sociopathic tendencies and narcissism will lead him to ignore the example of Richard Nixon, who resigned when he saw the jig was up rather than put the country through an impeachment almost certain to result in conviction by the Senate. The perfect vehicle for a sensation-seeking sociopath like Trump to “bet the house” would be for him to throw all his weight behind the push — already fueled by wealthy interests — for a new Constitutional Convention (“ConCon”).

Thus, this issue of OregonPEN considers the ConCon.

First is an analysis by the Center for Budget and Policy Priorities, which has sussed out that the plan of those arguing for a new ConCon is to use a proposed “Balanced Budget Amendment” — the single stupidest economic idea since the Gold Standard — as a stalking horse to get a ConCon going, in hopes of being able to stampede the ConCon towards the laundry list of ideas from the fever swamps, such as abolition of citizenship by birth within the United States.

The ConCon notion is gaining steam because, for all its manifest flaws — lack of any constitutional entitlement to a right to vote first among them — the present Constitution does retain some vestiges of the character of the Framers, who greatly feared the idea of characters such as Donald Trump. They even cooked up an Electoral College in hopes that it would prevent someone like Trump from being able to win the Presidency . . . oops.

Thus, as the steady drip, drip, drip of revelations about Trump’s dealings and doings continue, we can expect to face a most dangerous moment, when a wounded Trump decides he has nothing to lose by putting the whole Country through the equivalency of “reorganization,” as the various Trump schemes have been reorganized so often.

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 States Likely Could Not Control Constitutional Convention on Balanced Budget Amendment or Other Issues

  By Michael Leachman and David A. Super 1
 

In the coming months, a number of states are likely to consider resolutions that call for a convention to propose amendments to the U.S. Constitution to require a balanced federal budget, and possibly to shrink federal authority in other, often unspecified, ways. Proponents of these resolutions claim that 28 of the 34 states required to call a constitutional convention already have passed such resolutions.
 
State lawmakers considering such resolutions should be skeptical of claims being made by groups promoting the resolutions (such as the American Legislative Exchange Council, or ALEC) that states could control the actions or outcomes of a constitutional convention. A convention likely would be extremely contentious and highly politicized, and its results impossible to predict.
 
A number of prominent jurists and legal scholars have warned that a constitutional convention could open up the Constitution to radical and harmful changes. For instance, the late Justice Antonin Scalia said in 2014, “I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?” 2

Similarly, former Chief Justice of the United States Warren Burger wrote in 1988:
 
[T]here is no way to effectively limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda. Congress might try to limit the Convention to one amendment or one issue, but there is no way to assure that the Convention would obey. After a Convention is convened, it will be too late to stop the Convention if we don’t like its agenda. 3
 
Such serious concerns are justified, for several reasons:
 
A convention could write its own rules.

The Constitution provides no guidance whatsoever on the ground rules for a convention. This leaves wide open to political considerations and pressures such fundamental questions as how the delegates would be chosen, how many delegates each state would have, and whether a supermajority vote would be required to approve amendments. To illustrate the importance of these issues, consider that if every state had one vote in the convention and the convention could approve amendments with a simple majority vote, the 26 least populous states — which contain less than 18 percent of the nation’s people — could approve an amendment for ratification.

A convention could set its own agenda, possibly influenced by powerful interest groups.

The only constitutional convention in U.S. history, in 1787, went far beyond its mandate. Charged with amending the Articles of Confederation to promote trade among the states, the convention instead wrote an entirely new governing document. A convention held today could set its own agenda, too. There is no guarantee that a convention could be limited to a particular set of issues, such as those related to balancing the federal budget.

As a result, powerful, well-funded interest groups would surely seek to influence the process and press for changes to the agenda, seeing a constitutional convention as an opportunity to enact major policy changes. As former Chief Justice Burger wrote, a “Constitutional Convention today would be a free-for-all for special interest groups.” Further, the broad language contained in many of the resolutions that states have passed recently might increase the likelihood of a convention enacting changes that are far more sweeping than many legislators supporting these resolutions envision.

A convention could choose a new ratification process.

The 1787 convention ignored the ratification process under which it was established and created a new process, lowering the number of states needed to approve the new Constitution and removing Congress from the approval process.  The states then ignored the pre-existing ratification procedures and adopted the Constitution under the new ratification procedures that the convention proposed. Given these facts, it would be unwise to assume that ratification of the convention’s proposals would necessarily require the approval of 38 states, as the Constitution currently specifies.

For example, a convention might remove the states from the approval process entirely and propose a national referendum instead.  Or it could follow the example of the 1787 convention and lower the required fraction of the states needed to approve its proposals from three-quarters to two-thirds.

No other body, including the courts, has clear authority over a convention.

The Constitution provides for no authority above that of a constitutional convention, so it is not clear that the courts –  or any other institution could intervene if a convention did not limit itself to the language of the state resolutions calling for a convention.

Article V contains no restrictions on the scope of constitutional amendments (other than those denying states equal representation in the Senate), and the courts generally leave such “political questions” to the elected branches. Moreover, delegates to the 1787 convention ignored their state legislatures’ instructions. Thus, the courts likely would not intervene in a dispute between a state and a delegate and, if they did, they likely would not back state efforts to constrain delegates given that delegates to the 1787 convention ignored their state legislatures’ instructions.

The following sections of this report provide background on the current campaign to call a constitutional convention and examine in more detail the reasons why policymakers should be skeptical of any claims that the states could control a constitutional convention. In addition, Box 1 below examines the substantial economic risks that a constitutional balanced budget amendment would pose.
 
Background: Campaigns for a Constitutional Convention

Article V of the Constitution provides for two methods of enacting constitutional amendments.

Congress may, by a two-thirds vote in each chamber, propose a specific amendment; if at least three-fourths of the states (38 states) ratify it, the Constitution is amended. Alternatively, the states may call on Congress to form a constitutional convention to propose amendments. Congress must act on this call if at least two-thirds of the states (34 states) make the request. The convention would then propose constitutional amendments. Under the Constitution, such amendments would take effect if ratified by at least 38 states.

In part because the only constitutional convention in U.S. history the one in 1787 that produced the current Constitutionwent far beyond its mandate, Congress and the states have never called another one. Every amendment to the Constitution since 1787 has resulted from the first process: Congress has proposed specific amendments to the states, which have ratified them by the necessary three-quarters majority (or turned them down).

In the late 1970s and early 1980s, many states adopted resolutions calling for a constitutional convention to require the federal government to balance its budget every year. From the mid-1980s through 2010, no such new resolutions passed, and about half of the states that had adopted these resolutions rescinded them (in part due to fears that a convention, once called, could propose altering the Constitution in ways that the state resolutions did not envision).

Recently, though, additional states have called for such a convention, reflecting the efforts of a number of conservative advocacy organizations such as ALEC, which in 2011 released a handbook for state legislators that includes model state legislation calling for a constitutional
convention. 4

Since 2010, 12 states have adopted such resolutions. According to some proponents of such a convention, a total of 28 states have now adopted resolutions (and not rescinded them). Proponents have targeted another 11 states for action this year and next. 5   (See Figure 1.)

Most of the recent resolutions closely follow ALEC’s model legislation, the key sentence of which reads:

The legislature of the State of             hereby applies to Congress, under the provisions of Article V of the Constitution of the United States, for the calling of a convention of the states limited to proposing an amendment to the Constitution of the United States requiring that in the absence of a national emergency the total of all Federal outlays for any fiscal year may not exceed the total of all estimated Federal revenues for that fiscal year.

Most of the resolutions enacted in the last three years add a final clause: “together with any related and appropriate fiscal constraints.” That language opens the door to any constitutional amendments that a convention might decide fit under this broad rubric, including placing a rigid ceiling on federal spending so that all (or virtually all) deficit reduction has to come from cutting federal programs such as Social Security or Medicare, with little or none coming from revenue- raising measures. Such a ceiling would reduce or eliminate any pressure to produce deficit reduction packages that pair spending reductions with increased revenue from closing unproductive special- interest tax loopholes or from combatting tax avoidance by powerful corporations. ALEC’s most recent version of the model legislation specifically includes this additional clause. 6

As ALEC recommends, each recent state-passed resolution also says that it should be aggregated with the balanced budget amendment resolutions that other states have approved (and not subsequently rescinded), even though those other resolutions are not identical and most are over 30 years old. Whether Congress would agree to count all such other state resolutions is unknown. The question is important, because the Constitution grants solely to Congress the power to determine whether the 34-state threshold has been met.  The Constitution makes no provision for a presidential veto of a congressional resolution calling a constitutional convention; and such a resolution consequently appears not to require a Presidential signature. In other words, if enough additional states adopt resolutions calling for a constitutional convention and Congress rules that the 34-state threshold has been met, a convention must be held.

Besides the “balanced budget amendment” resolutions, some states have enacted or are considering related resolutions seeking a constitutional convention to impose broader restrictions on federal power.  Eight states — Alabama, Alaska, Florida, Georgia, Indiana, Louisiana, Oklahoma, and Tennessee — have all enacted resolutions in recent years that call for a convention to propose amendments to “impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress.” 7

States’ Ability to Control a Convention Is Highly Questionable

ALEC and its allies assert that states can control the operations and agenda of a convention and sharply limit the actions of their delegates. But there is no consensus on this question among constitutional scholars or others who have studied the question carefully; the selective quotations that convention proponents cite from the 1780s do not reflect a consensus among the Framers of the Constitution and do not have the force of law. Even more importantly, no court or other body exists with the authority to enforce any such rules and to override the decisions of a constitutional convention.

A number of prominent constitutional experts have warned of the dangers of calling a new constitutional convention (see Box 2).  These concerns are justified, for several reasons:

Once Called, Convention Could Write Its Own Rules

Because a constitutional convention has not been held since 1787, the nation has established no orderly procedures for the formation and operation of one. While the Congress that calls a constitutional convention in response to states’ petitions likely would propose certain ground rules, debate among constitutional scholars is contentious on what those rules might be. As a result, many fundamental questions remain unanswered.

For example, would votes in the convention be allocated among states according to population or would every state have one vote? The original Continental Congress operated on a one-state, one- vote basis, and every state has equal weight under Article V’s ratification procedures. If every state likewise has one vote in a new convention, small states with a minority of the country’s population could control the amendment-writing process. The 26 least populous states contain less than 18 percent of the nation’s people.

Also unclear is whether the convention would need a supermajority (of states or delegates) to propose amendments. Congress may only propose constitutional amendments by a two-thirds vote in each chamber, but Article V is silent on whether a simple majority vote in a constitutional convention would suffice. With the country closely divided on many issues, a simple majority requirement could allow amendments to move forward despite opposition from many or even most voters, especially if all states had equal votes in the convention.

Another critical question is how states would choose their delegations. In today’s highly partisan environment, majorities in state legislatures may be tempted to select delegations that reflect only their views rather than a broader spectrum of opinion within the state.

Finally, even assuming Congress sets ground rules for a convention, the convention itself could disregard those instructions once it convened; after all, there is no enforcement mechanism. Even if Congress purported to make its instructions binding, the courts likely would refuse to enforce Congress’s instructions, both because Article V does not clearly grant Congress the power to make binding instructions and because the courts generally regard such matters as “political questions” that the judicial branch does not wade into.

Convention Could Set Its Own Agenda, Possibly Influenced by Powerful Interest Groups

The only national constitutional convention ever held — the 1787 assembly in Philadelphia that produced the current Constitution — disregarded its original charge, which was to amend the Articles of Confederation to promote trade among the states. Instead it wrote an entirely new governing document, effectively abolishing the Articles of Confederation and superseding them with a new design of government.  A convention held today could set its own agenda, too.

Further, the opportunity to bypass Congress and write major policy changes into the Constitution
— where they would be extremely difficult to remove — would likely tempt powerful, well-funded interest groups to influence the process and press for changes beyond those initially envisioned.
After all, there are no federal or state limits on spending to influence delegates to a constitutional convention. No one can predict with confidence what would happen, for example, if Wall Street concerns sought to ban the taxation of capital income or prohibit market regulations designed to prevent another financial crisis, or if energy companies sought to ban a carbon tax or a cap-and- trade system.

In such a highly contentious political environment, delegates could cut deals resulting in amendments covering multiple topics. Although most constitutional amendments have addressed only a single issue, nothing in Article V requires this. The Fifth, Sixth, Eighth, and Fourteenth Amendments all combined provisions on several different subjects.8   Provisions considered radical or damaging, at least in some states, could be attached to highly popular proposals in a single amendment, making their passage more likely.

Further, the broad language of several state resolutions enacted recently may increase the likelihood that a convention would enact sweeping and unforeseen changes. As noted above, most recent resolutions explicitly call for amendments imposing “any related and appropriate fiscal constraints” on the federal government — terms so broad that they could encompass an enormous range of changes in the government’s basic operations.

The resolutions that passed in recent years in Alabama, Alaska, Florida, Georgia, Indiana, Louisiana, Oklahoma, and Tennessee called for amendments to “impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress,” which envisions an even broader range of amendments. Even if Congress called a convention for the purpose of proposing a balanced budget amendment only, the convention once called could use the passage of these broader resolutions as justification to pursue a broader agenda, especially if more states have passed the more expansive resolution by the time a convention is called.

In sum, there is no way to predict what constitutional amendments the delegates to a convention might adopt.

Convention Could Change Ratification Process

The 1787 convention also completely rewrote the Articles of Confederation’s amendment procedures in a way that made it much easier to secure adoption of the convention’s changes. Under the Articles of Confederation, proposed amendments had to be approved by Congress and then ratified by all 13 states to take effect. Rhode Island, which opposed the kinds of changes that the 1787 convention was called to propose, declined to send delegates to the convention, apparently confident that the requirement for unanimous state approval meant it could block any resulting proposals that harmed its interests.

Instead, the other states’ delegates bypassed Rhode Island and created a new ratification process that made the new Constitution effective with the consent of only nine states and cut Congress out of the amendment process entirely. Rhode Island opposed the new Constitution and resisted ratifying for several years. Eventually, however, left only with the choice of seceding or going along, it was forced to succumb. The current three-quarters requirement was imposed only for later constitutional amendments.

This suggests that a new convention could propose to alter Article V of the Constitution, which requires three-quarters of the states to ratify proposed constitutional amendments emerging from a convention. A new convention could, for example, provide that its amendments be considered ratified if approved by two-thirds of the states, or even by a national referendum, citing the precedent of the 1787 convention. If the ratifying states went along, dissenters would have no recourse to enforce Article V’s three-quarters requirement and ultimately would face the same type of choice that Rhode Island did.

No Other Body — Including the Courts — Has Clear Authority Over a Convention

The Constitution provides for no authority above that of a constitutional convention.  This makes it unlikely that the courts or any other institution could intervene if a convention failed to limit itself to the language of state resolutions calling for a convention or to the congressional resolution establishing the convention.

Moreover, even if the courts determined that they had the authority to rule, they would be unlikely to intervene if a convention veered away from its original charge.  Article V contains only two limited restrictions on the scope of constitutional amendments (one of which expired two centuries ago). Absent guidance from the Constitution’s text, the Supreme Court likely would regard this as a “political question” inappropriate for judicial resolution (consistent with how the Court has treated other highly charged matters on which the Constitution provides no judicially enforceable standard). A court would have great difficulty explaining why a convention should be bound by state resolutions, given that the 1787 convention disregarded both its own stated purpose and the Articles of Confederation’s amendment procedures.

In addition, although some states’ resolutions seek to bar their convention delegates from voting for amendments outside the subject matter of the resolution the state has adopted, the courts likely would not intervene in a dispute between a state and a delegate, viewing it, too, as a “political question.” And if the courts did intervene, they likely would be unsympathetic to states’ efforts to constrain delegates, given that delegates to the 1787 convention ignored their state legislatures’ instructions.

Even if states could recall delegates, it likely would have no practical effect. Unlike a state legislature, a constitutional convention is a one-time body; once it has voted to propose a set of amendments to the Constitution, its work is over and it disbands. Recalling delegates at that point would be irrelevant.

Conclusion

States should be deeply skeptical of claims by ALEC and others that states will control the operations and outcome of a convention called under the Constitution’s Article V. Fundamental questions about how a convention would work remain unresolved. A convention likely would be extremely contentious and politicized, with results impossible to predict.

Further, nothing could prevent a convention from emulating the only previous convention — the one in 1787 — by going beyond its original mandate, proposing unforeseen changes to the Constitution, and even altering the ratification rules.  Some states might challenge the actions of their delegates, but with the courts unlikely to intervene, these efforts would likely fail.

States would be prudent to avoid these risks and reject resolutions calling for a constitutional convention.  States that have already approved such resolutions would be wise to rescind them.


Box 1:  Balanced Budget Amendment Likely to Harm the Economy

Even if a constitutional convention could be limited to proposing a single amendment requiring the federal government to spend no more than it receives in a given year, such an amendment alone would likely do substantial damage.a It would threaten significant economic harm. It also would raise significant problems for the operation of Social Security and certain other key federal functions.

By requiring a balanced budget every year, no matter the state of the economy, such an amendment would risk tipping weak economies into recession and making recessions longer and deeper, causing very large job losses. Rather than allowing the “automatic stabilizers” of lower tax collections and higher unemployment and other benefits to cushion a weak economy, as they now do automatically, it would force policymakers to cut spending, raise taxes, or both when the economy turns down — the exact opposite of what sound economic policy would advise. Such actions would launch a vicious spiral: budget cuts or tax increases in a recession would cause the economy to contract further, triggering still higher deficits and thereby forcing policymakers to institute additional austerity measures, which in turn, would cause still greater economic contraction.

The private economic forecasting firm Macroeconomic Advisors (MA) found in 2011 that “recessions would be deeper and longer” under a constitutional balanced budget amendment. If such an amendment had been ratified in 2011 and were being enforced for fiscal year 2012, “the effect on the economy would be catastrophic,” MA concluded, and would double the unemployment rate.

Most recent proposals to write a balanced budget requirement into the U.S. Constitution would allow Congress to waive the balanced budget stricture if a supermajority of both chambers voted to do so. However, data showing that the economy is in recession do not become available until months after the economy has begun to weaken and recession has set in. It could take many months before sufficient data are available to convince a congressional supermajority to waive the balanced-budget requirement, if they ever would. In the meantime, substantial economic damage — and much larger job losses — would have resulted from the fiscal austerity measures the balanced-budget mandate would have forced.

Requiring that federal spending in any year be offset by revenues collected in that same year would also cause other problems. Social Security would effectively be prevented from drawing down its reserves from previous years to pay benefits in a later year and, instead, could be forced to cut benefits even if it had ample balances in its trust funds, as it does today. The same would be true for Medicare Part A and for military retirement and civil service retirement programs. Nor could the Federal Deposit Insurance Corporation or the Pension Benefit Guaranty Corporation respond quickly to bank or pension fund failures by using its assets to pay deposit or pension insurance, unless it could do so without causing the budget to slip out of balance.

Proponents of a constitutional balanced budget amendment often argue that states and families must balance their budgets each year and the federal government should do the same. Yet this is a false analogy. While states must balance their operating budgets, they can — and regularly do — borrow for capital projects such as roads, schools, and water treatment plants. And families borrow, as well, such as when they take out mortgages to buy homes or loans to send children to college. In contrast, the proposed constitutional amendment would bar the federal government from borrowing to make worthy investments even if they have substantial future pay-offs. And, as with Social Security, the amendment would prohibit using past savings for current purchases; if a family had to live under its strictures, not only would mortgages be prohibited, but so too would buying a house from years of prior savings.

a For more on the risks of a constitutional balanced budget amendment, see Richard Kogan, “Constitutional Balanced Budget Amendment Poses Serious Risks,” Center on Budget and Policy Priorities, updated January 18, 2017, http://www.cbpp.org/cms/index.cfm?fa=view&id=4166.

Box 2:  Constitutional Experts Warn That States Cannot Control a Convention

A number of prominent legal experts have warned that states cannot control a constitutional convention or that calling one could open up the Constitution to significant and unpredictable changes. For instance:
 
“I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?” a Former Supreme Court Justice Antonin Scalia
 
“[T]here is no way to effectively limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda. Congress might try to limit the Convention to one amendment or one issue, but there is no way to assure that the Convention would obey. After a Convention is convened, it will be too late to stop the Convention if we don’t like its agenda.” b Former Supreme Court Chief Justice Warren Burger
 
“There is no enforceable mechanism to prevent a convention from reporting out wholesale changes to our Constitution and Bill of Rights.” c Former Supreme Court Justice Arthur Goldberg
 
“First of all, we have developed orderly procedures over the past couple of centuries for resolving [some of the many] ambiguities [in the Constitution], but no comparable procedures for resolving [questions surrounding a convention]. Second, difficult interpretive questions about the Bill of Rights or the scope of the taxing power or the commerce power tend to arise one at a time, while questions surrounding the convention process would more or less need to be resolved all at once. And third, the stakes in this case in this instance are vastly greater, because what you’re doing is putting the whole Constitution up for grabs.” d  Professor Laurence Tribe, Harvard Law School
 
“[S]tate legislators do not have the right to dictate the terms of constitutional debate. On the contrary, they may be eliminated entirely if Congress decides that state conventions would be more appropriate vehicles for ratification. The states have the last say on amendments, but the Constitution permits them to consider only those proposals that emerge from a national institution free to consider all possible responses to an alleged constitutional deficiency. . . Nobody thinks we are now in the midst of constitutional crisis. Why, then, should we put the work of the first convention in jeopardy?” e Professor Bruce Ackerman, Yale Law School
 
Sources

a Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, http://www.nationallawjournal.com/legaltimes/id=1202651605161/Scalia,-Ginsburg-Offer-Amendments-to-the- Constitution?slreturn=20140421101513. In the 1970s, as a professor, Scalia argued that a convention was worth the risks he saw at the time.  By 2014, as a Justice, Scalia seemed to have grown much more worried about those risks.

b Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.

c Arthur Goldberg, “Steer clear of constitutional convention,” Miami Herald, September 14, 1986.

d Remarks as part of the Conference on the Constitutional Convention, Harvard Law School, September 24-25, 2011, Legal Panel, recording available at http://www.conconcon.org/archive.php.

e Bruce Ackerman, “Unconstitutional Convention: State legislatures can’t dictate the terms of constitutional amendment,” The New Republic, March 3, 1979.

Footnotes

1 Michael Leachman is Director of State Fiscal Research at the Center on Budget and Policy Priorities. David Super is Professor of Law at Georgetown University Law Center.

2 Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, http://www.nationallawjournal.com/legaltimes/id=1202651605161/Scalia,-Ginsburg-Offer-Amendments-to-the- Constitution?slreturn=20140421101513. 3 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.

3 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.
 
4 ALEC’s latest handbook is available here: https://www.alec.org/app/uploads/2016/06/2016-Article- V_FINAL_WEB.pdf.

5 For proponents’ latest description of their goals, see http://bba4usa.org/.

6 See p. 26 of ALEC’s handbook, here: https://www.alec.org/app/uploads/2016/06/2016-Article- V_FINAL_WEB.pdf.

7 A group called Citizens for Self-Governance is promoting this resolution. See the group’s “Convention of States Project” website at http://conventionofstates.com.

8 The Fourteenth Amendment gives U.S. citizenship to those born or naturalized in the United States, protects the privileges and immunities of U.S. citizens, requires states to afford people due process of law, and requires equal protection of law — and all of that is only in its first (of five) sections. Its remaining provisions address numerous controversies active in the post-Civil War era when it was proposed, including changes in electoral rules, eligibility of former confederates for federal office, and the treatment of war-related debts. The Fifth Amendment requires indictments prior to most major federal prosecutions, prohibits double jeopardy, establishes the right against self- incrimination, creates a general right to due process, and prohibits uncompensated government seizures of private property. The Sixth Amendment requires speedy and public trials, specifies the location for criminal trials, gives defendants the right to an impartial jury, establishes a right to counsel in criminal cases, provides for cross-examination of prosecution witnesses, allows defendants to subpoena their own witnesses, and mandates a clear statement of the charges. The Eighth Amendment prohibits cruel and unusual punishment, limits the amount of bail accused defendants may be required to post, and bars “excessive” fines. At various times, some of these rights have proven intensely controversial while others in the same amendment were widely accepted.

Unlike the inept founder of “Trump U,” the Kochs have both stamina and focus. Their “Koch University” will turn out shock troops for the Shock Doctrine – and delegates for a ConCon

Koch Kollege for Right-Wing Social Engineers

Breaking news: An amazing new school for political activists is training thousands of people to be community organizers. They’re using Saul Alinsky’s classic manual, Rules for Radicals.

The Grassroots Leadership Academy gives how-to lessons in everything from mounting successful protest actions to recruiting middle-of-the-road voters. But, wait — who’s that hiding behind Saul Alinsky?

Good grief, it’s the Koch brothers!

Yes, this “grassroots” outfit has been set up by the gabillionaires Charles and David Koch to train cadres of right-wing corporatists to spread their ideological laissez-fairydust across the land.
The academy is run through Americans for Prosperity, the Kochs’ political wing, which put up $3 million to get it going. About 10,000 people have gone through training sessions in three dozen states. The brothers’ grandiose scheme is to take over the Republican Party and use it as a tool to rebuild America itself into a Kochlandia, ruled by the superrich.

Even their money, however, can’t overcome one huge barrier: their message.

The academy’s curriculum, for example, is loaded with such corporate nonsense as a course titled “The Moral Case for Fossil Fuels.”

Attendees are indoctrinated with two overarching lessons: First, freewheeling corporate power — unrestrained by labor, environmental, or other public protections — GOOD. Second, Social Security, unemployment benefits, and other social programs — VERY BAD.

Koch Kollege for right-wing social engineers is peddling a status quo agenda of corporate elitism and trickle-down ideology, which the vast majority of Americans are now openly rebelling against. It’s like trying to sell chicken salad made out of chicken manure. There’s not enough sugar in the world to make people swallow that.

Republished with permission of Otherwords.org; OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. He’s the editor of the populist newsletter, The Hightower Lowdown.

Constitutional Rights and Public Interest Groups Oppose Calls for an Article V Constitutional Convention

Calling a new constitutional convention under Article V of the U.S. Constitution is a threat to every American’s constitutional rights and civil liberties.
 
Article V convention proponents and wealthy special interest groups are dangerously close to forcing the calling of a constitutional convention to enact a federal balanced budget amendment (BBA). This would be the first constitutional convention since the original convention in 1787 — all constitutional amendments since then have been passed first by Congress and then approved by three-fourths of the state legislatures. There are no rules and guidelines in the U.S. Constitution on how a convention would work, which creates an opportunity for a runaway convention that could rewrite any constitutional right or protection currently available to American citizens.
 
Under Article V of the U.S. Constitution, a convention can be called when two-thirds of the states (34) petition for a convention to enact amendments to the constitution. States can also rescind their calls by voting to rescind in the state legislature. Just a few states short of reaching the constitutionally-required 34 states to call a convention, Article V and BBA advocates have recently increased their efforts to call a new convention.
 
An Article V convention is a dangerous threat to the U.S. Constitution, our democracy, and our civil rights and liberties. There is no language in the U.S. Constitution to limit a convention to one issue and there is reason to fear that a convention once called will be able to consider any amendments to the constitution that the delegates want to consider. There are also no guidelines or rules to govern a convention. Due to the lack of provisions in the Constitution and lack of historical precedent, it is unknown how delegates to a convention would be picked, what rules would be in place, what would happen in the case of legal disputes, what issues would be raised, how the American people would be represented, and how to limit the influence of special interests in a convention.
 
Because there is no way to limit a convention’s focus, any constitutional issue could be brought up for revision by a convention. This includes civil rights and civil liberties, including freedom of speech, freedom of religion, privacy rights, the guarantee of equal protection under law, the right to vote, immigration issues, and the right to counsel and a jury trial, among others. Basic separation of executive, legislative, and judicial powers would be subject to revision as well. A convention might not preserve the role of the courts in protecting our constitutional rights. Even the supremacy of federal law and the Constitution over state laws could be called into doubt.
 
A 2016 USA Today editorial (FN1) correctly stated that calling for a constitutional convention is “an invitation to constitutional mayhem” and “could further poison our politics and hobble American leaders at moments of crisis.” Notable legal scholars across the political spectrum agree. One of the nation’s most esteemed constitutional law scholars, Professor Laurence Tribe of Harvard Law School, has said a constitutional convention would put “the whole Constitution up for grabs.” (FN2)
 
Georgetown University Law professor David Super wrote “a constitutional convention would circumvent one of the proudest democratic advances of the last century in America: one-person, one-vote. Without a precedent, no one really knows how a convention would unfold, but proponents predict that each state would have an equal vote in whatever they got up to.” (FN3)
 
Former Supreme Court Chief Justice Warren Burger shared similar concerns, writing, “[T]here is no way to effectively limit or muzzle the actions of a constitutional convention. The convention could make its own rules and set its own agenda. Congress might try to limit the convention to one amendment or one issue, but there is no way to assure that the convention would obey.” (FN4)
 
The late Supreme Court Justice Antonin Scalia also warned of the dangers of a constitutional convention. “I certainly would not want a constitutional convention. Whoa! Who knows what would come out of it?,” Scalia said in 2014. (FN5)
 
The undersigned organizations strongly urge state legislatures to oppose efforts to pass a resolution to call for a constitutional convention. We also strongly urge state legislatures to rescind any application for an Article V constitutional convention in order to protect all Americans’ constitutional rights and privileges from being put at risk and up for grabs.

National organizations:
African American Health Alliance
African American Ministers In Action
AFSCME Retirees
Alliance for Justice
American Federation of Labor and Congress of Industrial Organizations (AFL–CIO)
American Federation of State, County and Municipal Employees (AFSCME)
American-Arab Anti-Discrimination Committee
Americans for Democratic Action (ADA)
Asian and Pacific Islander American Vote
Bend the Arc
Jewish Action
Brennan Center for Justice Campaign Legal Center
Center for American Progress
Center for Community Change
Center for Law and Social Policy (CLASP)
Center for Media and Democracy
Center for Medicare Advocacy
Center for Popular Democracy
Center on Budget and Policy Priorities
Children’s Defense Fund
Citizens for Responsibility and Ethics in Washington (CREW)
Coalition on Human Needs
Common Cause
Communications Workers of America (CWA)
Community Advocates Public Policy Institute
Daily Kos
Democracy 21 Dream Defenders
Earthjustice
Eclectablog
Economic Policy Institute
EMILY’s List
Every Voice
Fair Elections Legal Network
Faith in Public Life
Family Values at Work
Food Research & Action Center (FRAC)
Franciscan Action Network
Greenpeace USA
International Association of Fire Fighters
Jobs With Justice
League of Women Voters of the United States
Main Street Alliance
Mi Familia Vota
NAACP
National Asian Pacific American
Families Against Substance Abuse
National Association of Social Workers
National Council of Asian Pacific Americans (NCAPA)
National Council of Jewish Women
National Council of La Raza Action Fund
National Disability Institute
National Disability Rights Network
National Education Association (NEA)
National Employment Law Project (NELP)
National Fair Housing Alliance
National Korean American Service & Education Consortium (NAKASEC)
National Partnership for Women & Families
National WIC Association
National Women’s Law Center
People Demanding Action
People For the American Way
ProgressNow
Service Employees International Union (SEIU)
Sierra Club
Sisters of Charity of Nazareth Congregational Leadership
Social Security Works
State Innovation Exchange
The Arc of the United States
The Forum for Youth Investment
The Public Interest
The Voting Rights Institute
UNITE HERE
United Food and Commercial Workers (UFCW)
Voice for Adoption
VoteVets Action Fund
Women’s Voices
Women Vote Action Fund
Working America
State and local organizations:
Alabama
Fair Housing Center of Northern Alabama
 
Alaska
Alaska AFL-CIO
 
Arkansas
OMNI Center for Peace, Justice & Ecology
 
Arizona
AFSCME 2960
AFSCME Retirees Chapter 97
Arizona Advocacy Network Phoenix Day
Southwest Fair Housing Council
 
California
California Common Cause
City of Chino Housing Division Courage Campaign
Fair Housing Advocates of Northern California
 
Colorado
ACLU of Colorado
America Votes Colorado
Colorado AFL-CIO
Colorado Common Cause
Colorado Ethics Watch
Colorado Fiscal Institute
Colorado Sierra Club
Colorado WINS
New Era Colorado
League of Women Voters of Colorado
Progress Colorado
SEIU Colorado
 
Connecticut
Common Cause Connecticut
Connecticut Fair Housing Center, Inc.
Planned Parenthood of Southern New England
Holy Family Home and Shelter, Inc
 
Delaware
Common Cause Delaware
 
Florida
Common Cause Florida Faith in Florida
Florida Consumer Action Network Progress Florida
 
Georgia
Common Cause Georgia
 
Hawaii
Common Cause Hawaii
 
Idaho
Better Idaho Idaho AFL-CIO
 
Illinois
Common Cause Illinois
Oak Park River Forest Food Pantry Project IRENE
 
Indiana
Common Cause Indiana
Fair Housing Center of Central Indiana
 
Iowa
AFSCME Iowa Council 61
Congregation of the Humility of Mary
Iowa AFL-CIO

Kansas
Kansas AFL-CIO
 
Kentucky
Common Cause Kentucky Kentucky AFL-CIO
 
Louisiana
Greater New Orleans Fair Housing Action Center
 
Maine
Disability Rights Maine Maine AFL-CIO
 
Maryland
ACE-AFSCME Local 2250
AFSCME Council 3
AFSCME Council 67
Baltimore Neighborhoods, Inc.
Benedictine Sisters of Baltimore
Common Cause Maryland
Disability Rights Maryland
Maryland Center on Economic Policy
Public Justice Center
The Xaverian Brothers
 
Massachusetts
Massachusetts AFL-CIO
 
Michigan
Common Cause Michigan
Fair Housing Center of West Michigan
Progress Michigan
 
Minnesota
Common Cause Minnesota
League of Women Voters of Minnesota
Minnesota AFL-CIO
Minnesota Citizens for Clean Elections
 
Mississippi Mississippi AFL-CIO
 
Missouri
Vision for Children at Risk
 
Montana
Montana AFL-CIO
 
Nebraska
Common Cause Nebraska

Nebraskans for Civic Reform
 
New Hampshire
New Hampshire AFL-CIO
 
New  Jersey
CWA Local 1081
New Jersey Association of Mental Health and Addiction Agencies, Inc.
Monarch Housing Associates
 
New Mexico
Common Cause New Mexico
League of Women Voters of New Mexico
New Mexico Hospital Workers Union (1199NM)
 
New York
CNY Fair Housing, Inc
Common Cause New York
Disabled in Action of Greater Syracuse Inc.
Long Island Housing Services, Inc.
Schenectady Inner City Ministry
Solidarity Committee of the Capital District
 
Nevada AFSCME 4041
Culinary Union
 
North Carolina
Common Cause North Carolina
Disability Rights North Carolina
Independent Living Resources (Durham, NC)
 
North Dakota
North Dakota AFL-CIO
 
Ohio
Cleveland Nonviolence Network
Common Cause Ohio
Equality Ohio Ohio Voice
ProgressOhio
Toledo Fair Housing Center
Toledo Area Jobs with Justice
 
Oklahoma Oklahoma AFL-CIO
 
Oregon
Common Cause Oregon Disability Rights Oregon

Pennsylvania
Bhutanese Community Association of Pittsburgh
Common Cause Pennsylvania
Community at Holy Family Manor (Pittsburgh, PA)
Just Harvest (Pittsburgh, PA)
 
Rhode Island
Common Cause Rhode Island
 
South Carolina
South Carolina AFL-CIO
 
South Dakota
South Dakota AFL-CIO
 
Tennessee Nashville CARES
 
Texas
Clean Elections Texas
Common Cause Texas
Harlingen Community Development Corporation
 
Utah
Tabitha’s Way
 
Vermont
Downstreet Housing & Community Development P.S., A Partnership
 
Virginia
Virginia AFL-CIO
Virginia Civic Engagement Table
 
Washington
Conscious Talk Radio
Washington AFL-CIO
Washington Community Action Network
Fuse Washington

Wisconsin
Access to Independence, Inc. (Madison, WI)
AFSCME Council 32
AFSCME Retirees Chapter 32
Citizen Action of Wisconsin
Common Cause Wisconsin
End Domestic Abuse Wisconsin
Grandparents United for Madison Public Schools
Independence First
League of Women Voters of Wisconsin
Madison-area Urban Ministry
Metropolitan Milwaukee Fair Housing Council
Midstate Independent Living Consultants
One Wisconsin Now
Options for Independent Living Inc.(Green Bay, WI) School
Sisters of Saint Francis (Milwaukee, WI)
Survival Coalition of Disability Organization of Wisconsin
The Arc Wisconsin
The Wisconsin Democracy Campaign
Wisconsin AFL-CIO
Wisconsin Aging Advocacy Network
Wisconsin Coalition of Independent Living Centers
Wisconsin Community Action Program Association (WISCAP)
Wisconsin Council on Children and Families Wisconsin Democracy Campaign
Wisconsin Faith Voices for Justice Wisconsin Voices
National Association of Social Workers, Wisconsin Chapter
Dominicans of Sinsinawa – Leadership Council
 
West Virginia
West Virginia Citizen Action Group
 
Wyoming Wyoming AFL-CIO

FN1 USA Today, “Marco Rubio’s very bad idea: Our view,” January 6, 2016, available at http://www.usatoday.com/story/opinion/2016/01/06/marco-rubio- constitutional-convention-balanced-budget-editorials-debates/78328702/

FN2 Michael Leachman & David A. Super, “States Likely Could Not Control Constitutional Convention on Balanced Budget Amendment and Other Issues,” Center for Budget and Policy Priorities, July 6, 2014, available at http://www.cbpp.org/sites/default/files/atoms/files/7-16-14sfp.pdf.

FN3 David Super in The Chicago Tribune, “Don’t even think about ‘updating’ the Constitution,” March 19, 2017, available at
http://www.chicagotribune.com/news/opinion/commentary/ct-constitutional-convention-amendments-20170319-story.html

FN4 Letter from Chief Justice Warren Burger to Phyllis Schlafly, June 22, 1988, available at http://constitution.i2i.org/files/2013/11/Burger-letter2.pdf.

FN5 Marcia Coyle, “Scalia, Ginsberg Offer Amendments to the Constitution,” Legal Times, April 17, 2014, available
at  http://www.nationallawjournal.com/legaltimes/id=1202651605161/Scalia,-Ginsburg-Offer-Amendments-to-the-Constitution?slreturn=20140421101513.

Chuck Marohn, founder and President of Strong Towns came to Oregon for the first time last October, touring and presenting in Portland, Salem, Newberg, and Independence, and surveying the sites in between.

The following discussion took place during a tour of Salem, where Marohn’s local guides took him through the town, starting in downtown Salem and proceeding to a spot in West Salem, across the Willamette in Polk County, where the local planning authority hopes to build the west side landing for a $500 million dollar freeway bridge they call the “Salem River Crossing.” If it could be funded and constructed, the “Salem River Crossing” would be among the longest, if not the longest, elevated structures in Oregon.

Joining Marohn on the tour were OregonPEN, a safer bicycling advocate, Jim, a leader of a group opposing the Salem River Crossing, and Tom Andersen, a Salem City Council member. Discussion lightly edited for clarity only.

OregonPEN:  This bridge would be $500 million, in a city where we have unmanned fire stations because we can’t afford to staff them, and we have hundreds of miles of sidewalks that are in terrible disrepair.

Councilmember Andersen:  This is exactly [the kind of thing] I was reading last night in your website. I campaigned against [the bridge idea], and I beat the Chamber of Commerce opponent who was all in on it. The three progressives [just elected] are against it too. There’s no way to pay for it and it doesn’t even address the problem.

It will also involve an expansion of the urban growth boundary, which will ultimately lead to development of prime farmland for homes.

Chuck Marohn, Strong Towns: The perverse thing, often, about those projects is that the money, some of it will come from you, and some of it will come from ODOT, but some of it would also come through the transportation slush fund things.

Right now, at the national level, we’re talking about doing a surge in infrastructure spending. Both of our presidential candidates, for what it’s worth, have subscribed to that. There really isn’t anyone who is against it. The big issue is always how to pay for it.

Let’s say that they magically figure that out and come up with the money. Then what happens is that they go looking for shovel-ready projects. The DOTs will have things like this all ready to go. “We have this huge project all ready to go,” – and then you’ll be faced with, “Do you turn down $400 million of …”

OregonPEN: Free money.

Chuck Marohn: Yeah, “free money.” [Because] if you do, it will just go someplace else. Now, it’s no longer an issue of do we spend our money to do this, does it make sense; [now it’s] does it make sense to give away, or not accept, free money.

The problem, of course – we see this all over the place – [occurs even] where a state department of transportation, or a regional office, will be very committed to maintaining things. They’ll have a certain budget and they’ll have it scheduled out, and they’ll say, “We’re going to be very prudent about taking care of the stuff we’ve built.”

Then the free money comes in. You can’t say no to it, because the politicians have lined it up. How can you say no to this [through the] political process? That, literally, is where your salary and your budget comes from.

What they’ll say is “You just need to take 20 percent – 30 percent, 50 percent, all of –your maintenance budget for this year, to do this matching dollars on this project.”

Not only do you then put off maintenance, but you also add to your inventory of stuff you have to maintain. It’s a double‑edged sword, because we see [this with] DOTs all over. Even the ones that are trying to be very prudent, it’s nearly impossible in a political situation to say no to that [free money].

Andersen: In this particular situation, there really isn’t any DOT money, nor is there any federal money. The proposal to pay for it is an increase in gas tax, an increase in property tax, and tolling, both ways, for $1.50 on the new bridge, as well as the bridges we’re going over [right] here.
Chuck Marohn: All local.

Andersen:  All local.

OregonPEN: 95 percent of the funding plan, which isn’t actually a plan, yet, but is a memo, 95 percent of the funding would be locally generated. DOT said that the federal money and the state money would be about 5 percent, about $50 million, I guess – it’s about 10 percent.

Andersen: 10 percent.

OregonPEN: 10 percent would be about $50 million in state and federal funding. The rest would be us.

Andersen: Tolling this bridge.

Chuck Marohn: Yeah.

I’m not adverse to tolls. Tolls area more refined way to actually [balance] supply and demand than just the gas tax. That being said, you have a situation then where you actually can step back and compare and say, “OK. Is the value and benefit for us here, locally, going to be so great for doing this? Or would that money be better spent on other things?”

As you said, you’ve got diminished firefighting capacity. Are you laying off police officers? Are you keeping your libraries open? Are you maintaining your parks? What we find, very clearly, is that the system of delivery of megaprojects, of these big projects, is [that it is] very convenient for staff, and it’s very convenient for the scale at which [planning bureaucracies] like to operate.

OregonPEN:  They know how to do that delivery.

Chuck Marohn:  They know how to deliver that, very easily. The problem is that those are – if not negative-returning investments, which they almost always are – they’re incredibly low-returning investments.

OregonPEN: The toll alone, the city’s own projection . . . the Metropolitan Planning Organization projection on tolls . . . is that it would devastate demand for the trip so greatly that we keep saying, “Why don’t you put the toll on now to solve the problem you claim to want to solve and build [up] some money to do maintenance?”

Andersen: There are two car bridges now across the river. We went over one of them. In order to make anybody want to use the [proposed] bridge in the far north, these two bridges are going to have to be tolled too. Otherwise, nobody will use the bridge.

Chuck Marohn:  There’ve been a couple studies. . . . I’m not like, huge, in [accepting] academic studies [uncritically], but this one goes to human behavior. It’s very fascinating, where people will do what, economists would say, would be irrational things to avoid paying tolls.

 OregonPEN: [Go miles out] of their way. Yeah, tolls are really hated.

Chuck Marohn:  Yeah. They would sacrifice [a lot]. To me, I think you’ve come up with the exact right answer. If you think that a toll on this bridge is warranted, then let’s go do the toll right now; let’s see what that does to actual demand.

You could do that. You don’t need half a billion dollars to do that. You do it very cheaply, see what it does to demand. From a price [or] market mechanism, you can get the result that you want in terms of traffic flow just by manipulating the price.

Quite frankly, if so many people are willing to pay high tolls to get to where you’re going, then maybe you do need a third bridge. I doubt that would be the case.
[laughter]

Chuck Marohn:  That’s a theory you can test out before you go half a billion dollars down the road.

OregonPEN:  We’re climbing up into West Salem. This was all orchards. Really recently, this was all farmland and orchards. We got sprawled out into Polk County, which is a much smaller county than Marion County. It is an agricultural county. Ag is still the number one or number two [Oregon] industry every year. Marion County is the number one Ag county. Polk is close behind. We are getting a bunch of vineyards out here. There’s really a boom in wine. You saw in Newberg and McMinnville, we are having a boom in wine out here. The developers are just furious that they can’t keep sprawling out to the west. That’s what the bridge is about.

Andersen:  In order to build the bridge, we have to expand the urban growth boundary. Doing that, they’ll open this all up for development. West Salem, even though it’s in another county, is still part of the City of Salem. The city spans the river.

Chuck Marohn:  The bridge is less about traffic demand than it is about inducing certain amount of growth.

OregonPEN:  Traffic is the excuse….

Andersen: This traffic is the excuse for development.

Chuck Marohn: I know that in Oregon, you’re very proud of the urban growth boundaries. It’s one of the things that, in planning circles, you’re known for. [laughs]

I’m not going to say that I’m not a fan – I think I get the theory, but—Really, your development is no different than anybody else’s.

Your style and your pattern . . . [pauses] This is Minnesota with topography. It’s the same thing. I saw this in Portland. Once you get out of what is a very spectacular kind of core and get out into things, it’s not only ordinary, it’s almost subpar-ordinary. It’s very blasé.

You’re seeing the [exact] same type of financial dynamics, in a place like this, where the developers can . . . . They have a market, they know they can serve; they have buildings they know they can get financed; the banks know that they can sell the stuff into a secondary market.
There’s a lot of cash that can flow these through these from a transaction standpoint. The urban design is horrible. These are not built to last multiple generations; we’re not making big investments – [instead] the city’s taking on enormous liabilities doing this.

Andersen: All big time.

Chuck Marohn:  Yeah. You’re going to have to come out. . . . In 25 years, every one of these roofs will go bad at the same time. At the same time, this road will fail. The sidewalks will be old and have weeds growing up through them. What will happen is that you will have to come out and spend money that is not generated here to actually fix this stuff.

What the future would be – if we continue in the same pattern as that – the people in this neighborhood that have affluence will see things declining and will leave. The people that will be left are the people that can’t afford to fix the roof, can’t afford to pay the maintenance on the road, and the neighborhood will get stuck in stagnation or decline.

That is – unfortunately – when we build things like this, all at once to a finished state—you wind up with that type of dynamic built in.

OregonPEN: Of course, there’s zero transit utility here. It’s impossible to serve this road network with a bus. When the decline hits, there’ll be people who are stranded out here.

Andersen:  It’s even worse, Chuck Marohn, because we only have bus service till nine p.m., Monday through Friday, and none on [weekends].

[We tried] to have a payroll tax that was infinitesimal. A million‑dollar payroll would pay $2,100 in tax. The business interests, including five city councilors who contributed money, put on a campaign of basically lies, and [we had a] major loss. We now have bus service only Monday through Friday early morning till nine o’clock. That’s it.

Chuck Marohn:  Functionally, it won’t work for employment. The benefit of transit is that. There are a lot of people who would like to serve places like this with transit and put tons of money into it. [But] you can’t do it effectively, unless you are willing to assume people are going to [take] the last mile or two of their trip by bike. This is not really well‑configured for that either.

Andersen:  No.

Chuck Marohn: Theoretically, there’s ways we could do it, but all of them would require a massive commitment to doing something differently, and like you said, I don’t see that happening, and I don’t know if that would be a really good use of resources anyway.

Andersen: This is where the bridge comes in.

Chuck Marohn: [Looks at houses] Really?

Andersen:  Yeah, the west end of the bridge….

Chuck Marohn: These houses would be gone…? [Looks around.] And the bridge would come through here?

OregonPEN:  Right.

Chuck Marohn: [Laughs]

OregonPEN: Massive. It’s a four‑lane bridge …

Jim: It’s a five‑lane bridge. It’s three quarters of a mile to the other bank.

Andersen:  It’s twice the span of the Brooklyn Bridge.

OregonPEN:  It would be the longest elevated structure in Oregon, because it goes over this liquefaction zone in the river. It …

Andersen: [Has to go over the] flood plain.

OregonPEN: It would be this tremendous behemoth, and the people who fought against the transit levy…

Andersen:  Are the people who are…

OregonPEN:  The ones who are saying we need this bridge, and we would be happy to pay taxes for that, but not a little tiny slice for transit.

Chuck Marohn: Like I said, let’s test that theory. You’ve got to split off the two components. If [the bridge] is about creating the platform where you’re going to have more of this kind of growth . . . . To me, I think the question then is “Does this kind of growth make any financial sense?”
When you start to run the numbers you see it works for the developer, it works in the short term for the city, it works in a very short term way, but the long term liabilities you create are enormous. As a taxpayer, someone who lives within these jurisdictions, I would not want to see this kind of thing perpetuated.

Andersen:  We hold our discussions with the staff, and in my discussions as a councilor, they talk to me. There is no plan to maintain it. They have no idea how they’re going to pay for the bridge and pay for its maintenance at all once it’s open.

Jim:  They haven’t even decided who owns it, if you read those reports. It might be owned by the city, or it might be owned by the state. We haven’t decided yet. We’re going to move forward with it even though we don’t even know who’s going to own it.

Andersen:  Are we right where the bride will come through?

Chuck Marohn:  Let me ask this. Just from a bureaucratic standpoint, where is a project like this initiated? I get that people coalesce around it and start to support it and it gains momentum, but where within the bureaucracy does it emerge from?

OregonPEN:  I would put that at Region Two of ODOT, which is the state agency. They dangle the money in front of a local MPO, or the Mid‑Willamette Valley Council of Governments, and their transportation subcommittee is called SKATS ‑‑ Salem‑Keizer Area Transportation Study.
Those people, the local mayors, the local councils ‑‑ the transit district is part of that ‑‑ they are the ones who see that dangling money. And they fixate on it like a dog fixates on a bone. They just can’t see anything else.

Andersen:  Chuck, for how this particular thing started was there was a perceived need generated for another bridge, or some way to fix what was perceived as a transportation across the river. The advisory taskforce committee was appointed, and looked at all the options.
Of the 22 members of the committee, only 10 voted for this bridge option. Seven voted for no-build. And of the 10 people that voted for this bridge, at least 6 of them were not appointed officials or elected officials. [They] were the administrative staff of the agencies that were going to have something to do when they built the bridge.

I talked about that, and this is the wrong way to make these decisions. The elected or appointed officials [are supposed] to make the policy decisions, but instead, the majority of the people that voted for this were people who earn their living from doing this exact sort of thing.

OregonPEN:  The taskforce, a minority or a plurality of the taskforce said we need a bridge, and then that’s been the excuse to say, “Well …”

Chuck Marohn:  Let’s find a bridge. [Laughs]

OregonPEN:  Yeah. Essentially, they went in knowing that the Right Answer was going to be, “We have to build a bridge.” That created a fig leaf for . . . .  In theory, it was going to be done by 2009 ‑‑ the planning and the EIS would be done by 2009.

Andersen:  None of them are done yet.

OregonPEN: None of it is done yet. One member of the local activists has this [saying]. He used to work for DOT. And he says, “If there was a funding plan, this would be done by now. The fact that you can’t do this suggests that it really is the wrong thing to do.”

Chuck Marohn:  Or that the funding streams are so tapped.

At the end of the day, I really feel like we’re at a [weird] moment in this country, and you see this in an insane way at the federal level in our political dialog. We’re actually at a point, at the very local level, where people who are classically identified as right of center, and who classically identified as left of center, have so much in common when it comes to this kind of things.
There’s a whole discussion of government waste and over taxation, and [asking] why are we just continuing to fund programs that are not delivering? Then there’s recognition that this type of development is really destructive.

These types of bureaucracies, [the ones] that birth and deliver this, actually need to be defunded and go away. They need to be changed, and changed to work at a very fine grained neighborhood level. That’s going to take not only a coalition of people saying, “No, we will not pay for this,” but simultaneously a group of people saying, “We actually need to see people who are going to obsess over neighborhood-level things in the same [way] that we have historically obsessed over big projects.

OregonPEN:  You know, the interesting thing is that change is possible. If you look at school districts, there’s a lot of creativity—with the homeschoolers, and there’s a lot of people who are trying alternative methods of delivery of education. That is driving some change.

But how do you do that in the transportation planning world? You can’t do [highway] homeschooling. You can’t withdraw your support from the machine that leads to this “progress.”

Chuck Marohn:  That that’s an interesting question. Because a lot times . . . . Let’s say that you realize – and in many ways this is self‑evident, but maybe not for everyone.

The greatest investments we can make in our cities today, the highest returning, [the ones where] we spend a dollar and we get two dollars/three dollars of cash back – are fine grained. They are biking, walking‑type of infrastructure, helping people get across the street, helping people get from the house here to the store there. Those fine-grain investments pay off huge, and we’re just not scaled to do them at all. We’re scaled to deliver large things on the theory that the small things will fill in after the fact.

OregonPEN:  The trickle‑down theory.

Chuck Marohn:  Yeah.

Andersen:  It doesn’t work any way you look at it in any system.

Chuck Marohn:  Exactly. A lot of times, the people who are advocates for the biking/ walking small grain investments, feel compelled to latch onto essentially the table scraps of the big system.

OregonPEN: And [so] they support it.

Chuck Marohn:  They’ll go to the Capitol and they’ll say, “OK, we’re going to raise taxes and get another $5 billion for transportation.”

Andersen: “One percent for bikes.”

Chuck Marohn: Yeah, and $50 million of that will go for bikes. They’ll say, “We’re used to getting $2 million for bikes, now we’re going to get $50 million. This is incredible, this is huge, we’re going to do this. Let’s support it.”

There’s a part of me that . . . . I’m sympathetic to that. I grasp what they’re doing.
There’s another part of me that says we need to change our cultural expectations. At the mega‑project level, go down to a maintenance level of funding, and allow local units of government to essentially engage in finer-grained things.
The push back I get is, “Well, they won’t do it.”

OK. I don’t know if they would in Year One, or Year Two, or Year Three, but what you would see is that successful places would be doing these things, and a body of knowledge would emerge on “Here are some best practices for cities that want to be really successful.”

Right now we are stunting that intellectual growth by putting all of our intellectual energy into these boondoggle projects.

There’s a great video clip you can find on the Internet showing how powerful our mental filters are, and how much they impair our perception, and how much important stuff we can miss while we are focusing on the chaos of the moment. That is one of the reasons OregonPEN is such a big fan of Gail (“Gail the Actuary”) Tverberg — she puts in the work to suss out the signal amidst the noise. It’s the signal that counts, that determines what the future will be like, not the static.

In this latest piece, she returns to one of the key issues of our time, the inability of economists to deal with the physical limits to “growth” that are increasingly shaping everyday reality throughout the world. Republished with kind permission of the author.

Why Energy-Economy Models Produce Overly Optimistic Indications

I was asked to give a talk to a committee of actuaries who are concerned about modeling the financial future of programs, such as pension plans, given the energy problems that are often discussed. They (and the consultants that they hire) have been using an approach that puts problems far off into the future. I was trying to explain why the approach that they were using didn’t really make sense.

Below are the slides I used, and a little explanation. A PDF of my presentation can be downloaded at this link: The Mirror Image Problem.

FCAS stands for “Fellow of the Casualty Actuarial Society”; MAAA stands for “Member of the American Academy of Actuaries.” Actuaries tend not to be interested in academic degrees.
I try to explain how a more complex situation can be hidden in plain sight.
It is not obvious that both the needs of energy producers and energy consumers should be considered.
If we look back at what the discussions of the time were, we can see when remarks were that prices were too high for consumers, and when they were too low for producers. See for example my article, Oil Supply Limits and the Continuing Financial Crisis and my post, Beginning of the End? Oil Companies Cut Back on Spending. This latter article shows that companies were already cutting back on spending in 2013, when prices appeared to be high, because even at a $100+ per barrel level, they still were not high enough for producers.
Oil companies tend to extract the cheapest and easiest to extract oil first. Eventually, they find that they need to move on to more expensive to extract fields–even with technology enhancements, costs are rising. There seems to have been a step up in costs starting about the year 2000. The above chart is by Steve Kopits. This EIA data (in Figure 10) also shows a pattern of sharply rising costs about the same time.

The problem, of course, is that wages have not been spiking in the same pattern. As a result, we encounter the problem of prices being either too high for consumers, or too low for producers, as we saw on Slide 4.

The economy is “built up” from many different parts. It includes governments, businesses, and consumers. It also includes people with jobs in the economy, and individuals and businesses making investments in the economy. It gradually changes over time, as new businesses and new laws are added, and as other changes are made. The wages that workers earn influence how much they can spend. The economy keeps re-optimizing, based on the goods and services available at a given time. Thus, slide rules are no longer commonly sold; it is not easy to buy horse-drawn carriages. This is why I show the economy as hollow.
Let’s talk a little about how economic growth occurs in a networked economy.
Clearly, tools and technology can be very helpful in creating economic growth. I am using the term “tools” very broadly, to include any kind of structure or device we build to aid the economy. This would even include roads.
Making tools clearly requires energy. Operating these tools very often requires energy as well, such as energy provided by diesel or electricity. With the use of tools, humans can more efficiently make goods and services. For example, if small parts need to be transported to a business, it is nearly always more efficient to transport them by truck than to deliver the parts by walking and carrying these parts in our hands. Clearly, tools such as trucks also allow us to do things that we could never do otherwise, such as deliver large and heavy parts to users.

Economists often talk about “rising worker productivity,” as if this rising productivity came about because of actions undertaken by the worker–perhaps attempting to work faster. Another possibility would seem to be taking a course on how to work more efficiently. We would expect that most of the time this rising productivity would come about as a result of the use of additional tools, or better tools. Thus, it is really the tools, and the energy that they use, that are acting to leverage worker productivity.

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Slide 10

It is not intuitive that adding tools requires debt, unless a person stops to realize that it generally takes quite a bit of resources to make a tool (human labor, plus metal ores and energy products). Using these tools will provide a benefit over quite a long period in the future. A business making these tools has a problem: it must buy the resources to make the tools and pay the workers, before the benefit of the tools actually comes into existence. It is necessary to have debt (or a debt-like financial instrument, such as shares of stock), to bridge this gap.

This same kind of mismatch occurs, even if goods being purchased with debt are not really tools. For example, a home purchased with debt and paid for with a mortgage is not really a tool. The buyer needs to pay interest to a bank or some other intermediary, in order to finance the home over a period of years. Thus, part of the worker’s wages is going to the financial system, rather than to obtain the goods and services he really wants. Financing the home with debt is generally more convenient than paying cash, however. Because of the convenience factor, debt is generally essential for most home purchases. If a new home is being purchased, the builder who builds the home will need to buy lumber and pay workers when the house is built, rather than over the lifetime of the house. Because of this, debt is necessary so that the builder will have the funds to buy lumber and pay the workers.

Analysts coming from engineering and other “hard sciences” often miss this need for debt. Since a person can’t see or touch it, it is easy to think it isn’t needed. Interest payments are important, because they transfer goods and services made by the economy away from workers to other sectors of the economy (such as the financial system, retirees, and pension programs). Thus, they represent a different use for energy products, other than making goods for the use of workers.

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Slide 11

Slide 11 shows how an economy produces a growing quantity of goods and services. The three types of inputs I show are

  • Energy products and other resources
  • Workers
  • Tools

I perhaps should include government services, such a roads, as well. If I did, I would show a fourth box down the side. Such a box didn’t fit easily on the slide, so I left it off.

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Slide 12

As I noted in Slide 10, it takes debt to be able to have enough funds to pay everyone who makes tools, and in fact, other goods (such as vehicles and homes) that we pay for over the life of the goods. In Figure 12, I show that at least some of those providing inputs to the process receive “Future goods and services, plus interest,” rather than goods that have already been made. In this way, the system distributes more goods and services than would be available through the barter system.

In my notes to Slide 11, I commented that I perhaps should have included a government sector, as a fourth box down the side. That comment is also true here. On Slide 12, we are distributing the benefit of goods and services created, so we probably need to add even more boxes down the side. One of them would be “Payments Under Funded Pension Programs.” Another box would represent payments to individuals who sell appreciated shares of stock and real estate, and hope to buy goods and services with the proceeds of these sales. In the government sector, we would need to be certain that the category is large enough to include goods and services distributed to retiring “Baby Boomers” under Social Security and similar unfunded retirement programs.

People who do modeling can easily lose sight of the fact that we really live in a “calendar year” world. Each year, we can extract only so much oil, coal, gas, and metal ores, and use those resources to make goods and services. These goods and services are generally available for sale the same year. It is easy to add layers and layers of promises of “future goods and services” to the system, without ever checking to see whether the resource base provides enough resources to make promised future distributions of goods and services possible.

Often, it is the owners of resources who are paid in stock or debt. Workers are paid in money (which is a form of debt), but they very often want to spend most of it on goods and services that they can use today.

We can think of debt (and balances in bank accounts) as promises for future energy, and the goods it makes possible. Of course, if that energy isn’t really available, the promise is an empty promise.

There are many kinds of debt, and reciprocal obligations. This is a chart I found recently, giving one person’s view of the amount outstanding today, including a very large amount of derivatives. All of these debts make the assumption that energy will be available in the future so that goods and services can be created to fulfill these various types of promises.
Debt becomes very important in the whole system, because the higher the debt level, the higher that wages can be. Also, with a higher debt level, commodity prices, such as oil prices, can also be higher. Because more debt seems to make almost everyone richer, governments go out of their way to encourage additional debt, and more debt-like instruments. Of course, if interest rates go up, rather than down, interest on this debt becomes a big burden for borrowers. On Slide 12, the higher interest rates transfer a larger share of goods and services away from workers to other sectors of the economy (such as pensions).
Shrinking debt levels are similar to governmental cutbacks for programs. (In fact, governmental cutbacks in programs often result from shrinking debt levels.) Then fewer workers can be hired, and fewer goods and services can be purchased. The economy tends to shrink–similar to what happened during the 2008-2009 recession.
We often hear about “Supply and Demand.” A better name for “demand” might be “amount affordable.”

I mentioned in previous slides that wages and the amount of debt increase are important in determining the amount affordable. Other items that have a bearing are Item (3) the level of the dollar relative to other currencies, and Item (4) the extent to which productivity is rising. If the dollar is high relative to other currencies, the price of oil tends to be low, because those buying goods made with oil in non-US dollar currencies find the goods expensive.

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Slide 18

Slide 18 illustrates the very significant impact that changing interest/debt levels can have on oil prices. Although I don’t mark the point on the graph, the peak in oil prices in 2008 came when US debt levels on consumer loans and mortgages started to fall. (See Oil Supply Limits and the Continuing Financial Crisis for details.) The US began Quantitative Easing (QE) in late 2008, with the intent of lowering interest rates and making debt more available. It was not long after it began that oil prices began to rise. Once QE was discontinued in 2014, other currencies fell relative to the US dollar, and the price of oil again fell.

The situation we have now is very much like a Ponzi Scheme.
We need to keep adding more debt to keep wages and commodity prices high enough. At the same time, interest rates need to stay very low, to keep payments manageable, and keep the whole system from collapsing.

The balance sheets of insurance companies, banks, and pension plans include much debt. If these institutions are to make good on their promises to those with bank accounts, insurance policies, and pension plans, it is necessary for this debt to be repaid with interest. Back many years ago, debt jubilees were often given to selected debtors. These are out of the question now, because banks, insurance companies, and pension plans depend upon the future payments that this debt represents.

We like to think that improved technology can add more and more benefit. In fact, technology seems to reach diminishing returns, just as almost any other type of investment does. We make the easy changes (smaller cars, for example) first. Later changes tend to be more incremental. Because of this pattern, we can’t count on huge future changes in technology saving us.
Most people do not realize that the laws of physics determine the way that markets work–for example, the prices at which sales take place, and whether or not there are enough suppliers of a given product in the market place. They assume that as we reach limits, markets will always work as they have in the past. This seems unlikely.
Physics is often taught in terms of what actions are expected in an “isolated” or a “closed” system. In fact, the earth receives energy from the sun. The economy also obtains energy from stored fossil fuels and from uranium. Because of these energy flows, the rules of an “open” system are more appropriate. These have only been studied in recent years. Ilya Prigogine received a Nobel Prize in 1977 for his work on dissipative structures.

What is surprising is that dissipative structures are always temporary. They grow for a time, but eventually collapse. We know that plants and animals have finite lifespans; generally new similar plants and animals replace them. It is less obvious that systems such as ecosystems and economies have finite lifetimes.

Figure 23 shows my idea of how the dissipative structure of an ecosystem might be represented. Its inputs include solar energy, water, air, minerals from the soil, and recycled waste products from plants and animals. There are no real waste products from the system, because waste products are recycled. Ecosystems tend to collapse, when very sharp fluctuations occur. For example, forest fires tend to occur when a large amount of waste wood has accumulated and weather conditions are dry. (Perhaps dry wood and leaves, if they do not degrade rapidly enough, might be considered a temporary waste output that can lead to the demise of the ecosystem through fire, when conditions are right.)
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Slide 24

Figure 24 shows my idea of how the economy might be represented as a dissipative structure. One critical part is “other energy,” which makes the economy act much like a rocket. Another critical part of the economy is “tools and technology.” Tools and technology allow the various inputs to be used, and the economy to grow. In a way, they are parallel to the biological systems that allow plants and animals to grow in ecosystems.

With human economies, we have multiple problems that can occur:

[1] Quantity of resources needed for inputs falls short

[2] Population of humans rises disproportionately to inputs of energy and other resources

[3] Waste outputs of various types become a problem

Growing debt is one of the waste outputs. Since we voluntarily seek out debt, we think of debt as an input. But if we think about the situation, debt is really an adverse output. Required interest payments tend to pull funds out of the system that could otherwise be used to pay workers. Also, the rising use of debt tends to concentrate the ownership of “tools” among the already wealthy. Debt can grow for a while, but it has limits, because of the adverse impacts it creates for the economy.

Growing wage disparity occurs because of the increased specialization required by ever-rising use of tools and technology. Some people receive the benefit of advanced education and learning to use tools such as computers; others receive much less benefit. As a result, their wages lag behind. Wage disparity is another limit of the system. If a large share of the workers cannot afford to buy the output of the economy, “demand” falls too low, and commodity prices tend to fall.

Distorted prices (shown on Slide 24) have to do with the changes to prices that occur, both because of added debt, and because we are reaching limits. Prices are not the same as they would be in a pure barter economy. Added debt allows prices to be much higher. As we reach limits, prices can fall below the cost of production. Suppliers continue to produce energy products, at least for a time, until the low prices become a real problem.

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Slide 25

There are many reasons why an economy, which acts like a rocket, cannot continue forever.

Many readers have heard of “Energy Returned on Energy Invested” (EROEI). This is a favorite metric of many energy researchers. It is calculated by dividing Energy Out of a system by required Energy Inputs. As I show on Slide 25, EROEI looks at one part of one problem that economies encounter. There are many other problems and parts of problems that EROEI doesn’t consider.

Many believe that renewables can replace “Other Energy.” One reason for this belief is the fanciful claims by some researchers. Another reason for this belief is the apparently fairly favorable EROEI calculations that seem to occur when these devices are examined. These calculations are very limited. They don’t examine the many adverse impacts of adding tools and technology, and the rapid rise in debt that would be required.
Trying to run the economy on solar electricity alone (or solar plus wind plus water) is a futile exercise. One reason is that it would require massive changes to allow long-haul trucks and airplanes to operate on electricity.

Also, electricity is a high-cost energy product. Today, our economy operates on a mix of high and low cost energy products, with low cost energy products keeping the average cost down. Trying to run the economy on electricity alone is a bit like trying to run the economy using only PhDs. In theory it could be done, but it would be expensive to have PhDs waiting on tables in restaurants and delivering mail.

Too often, researchers make models without determining the details of how the system would really need to operate and what the cost would be.

There are many different limits for any kind of system. For example, one limit for humans is having enough oxygen. Another limit for humans is having enough water. A third limit is having enough food. Any of these things are limits. The trick is trying to figure out which one is the first limit, in a particular situation.

EROEI based on fossil fuel inputs was developed when it looked like there would be a shortfall of fossil fuels. If, in fact, our problem is not being able to get the price of fossil fuels high enough, this is a different, more complex, problem.

I think of the ratio that is popularly computed as EROEI as “Fossil Fuel EROEI.” Fossil Fuel EROEI is popularly believed to be a limit, but it is not at all clear to me that it is the first limit. It is also not clear that the limit is any particular number (such as EROEI=1, or EROEI=10).

There is a different kind of EROEI that seems to me to be at least as likely, or more likely, to be the first limit that we will reach. That is the return that workers who are selling their labor simply as labor (without advanced education or supervisory responsibility) obtain. If these workers find that their wages drop too low, this will be a limit on the operation of the economy. Low wages will prevent these workers from buying houses and cars. If the wages of the large number of non-elite workers fall too low, commodity prices will tend to fall, and the system will tend to collapse because producers cannot make a profit at such a low price.

Biologists have been studying the return on the labor of animals for many years, because their populations tend to collapse, when animals are forced to expend too much labor in finding food. EROEI based on wages of non-elite workers would seem to be a closer parallel to the animal return on labor than fossil fuel EROEI.

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Slide 29

I have laid out a few of the issues I see with EROEI of intermittent renewables on Slide 29. There are other issues as well. For example, because it is a prospective calculation, it is very easy for wishful thinking to lead to optimistic estimates of future energy production and expected lifetimes of the devices.
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Slide 30

Energy researchers have defined “net energy” to be any energy in excess of EROEI = 1. There is a common misbelief that if the economy can continue to produce energy products with an EROEI above 1, everything should be fine. In fact, some studies commissioned by actuaries regarding whether the economy is reaching energy limits seem to be based on an assumption that producing energy products with an EROEI > 1 is sufficient to prevent energy problems in the future. This is not a high threshold. Given such an assumption, our problems with energy seem to be far, far in the future. Pensions can continue to be paid as planned.

On Slide 30, Ugo Bardi is saying that this assumption is not correct. It is not true that the system will crash when the net energy of a particular fuel (here oil) becomes negative. We cannot understand the behavior of a complex adaptive system such as the economy in terms of mere energy return considerations. Clearly, I am not the only one looking at the economy in broader terms than an EROEI ratio.

It is hard to see any good fixes. Technology reaches diminishing returns. Neither renewables nor nuclear is really working well now.
The standard forecasts seem to be based on the assumption that the economy can grow forever.
We have many problems that have been missed by recent economic modeling, including models commissioned by actuaries.
Actuaries are involved primarily with insurance companies and pension plans. My concern is that the financial system will be the center of the storm, as we hit limits this time. This will affect actuaries and their work.

Whether or not a new economic system can arise to take the place of our existing system remains to be seen. It certainly is a concern.

Two Observations

  1. My write-up is probably more complete than the actual one-hour talk was.
  2. I don’t think that anyone can be “blamed” for the confusion about what EROEI means. Our understanding of how the economy works is gradually evolving. Written documentation about EROEI is found in a myriad of academic papers. The name “Net Energy” seems to give energy in excess of EROEI=1 more importance than it really has.