Where Wall Street Drains into the Bay

February 4, 2009

WHERE “WALL STREET” DRAINS INTO THE BAY

Dear Citizens and Elected Officials:

This posting is brought to you in three parts. Part I is an abbreviated version of the by now traditional financial update, with a brief Action Section for our new President, Barack Obama. Readers shouldn’t be alarmed - (or relieved?) - at its brevity. My financial crisis folder is bulging with newspaper articles, printouts and downloads, and the crisis is accelerating as I write. There is no shortage of material, and no shortage of confusion among policy makers on the banking crisis, the stimulus bill, the mortgage situation – and many other things. There will be much to write about in the coming months.

Part II (p.10) and III (p. 20), though, are going to explore a little different terrain than the usual writings. We are going to review two books, and explore the boundaries where the environment meets the economy.

The first, written by long-time, consummate environmental insider James Gustave Speth, is simply breathtaking in terms of scope, as you can glimpse from the title: The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability (Yale University Press, 2008). Speth, Dean of the School of Forestry and Environmental Studies at Yale, has served US presidents, the UN, helped found and govern two famous environmental organizations/think tanks, and, when you add the resume up, his career has been a measuring rod for the best of mainstream environmental leadership. There’s just a little problem here with Gus, though: it seems he’s gone off the reservation a bit. Now when someone like Dr. Speth cuts loose, it’s not exactly like unleashing an environmental Rambo. As far as I know, Dr. Speth hasn’t taken anyone hostage, and doesn’t need a course in anger management, although a couple of the passages we’re going to cite will make some of our elected officials shift a bit in their chairs. No, it’s more along the lines suggested by one of the commentators on an inside page of tributes: “‘The steady transformation of a solid, pragmatic, progressive negotiator into a ‘radical and unrealistic’ oracle concerned with the fundamental nature of modern economies is an important event.’” Pay attention here also to the fact that the back jacket tributes bear out the same warning: Bill McKibben’s, Juliet Schor’s, William Greider’s and Robert F. Kennedy, Jr.’s own areas of expertise tell you that this is a book that will break down traditional boundaries for social and community activists, environmentalists, and economists. The fact that John Kerry, Hilary Clinton, Barbara Boxer, John McCain and Barack Obama can’t be found in the vicinity – or any other elected official - tells you something else about our situation. So no matter how “mild-mannered” Gus Speth remains, even in wandering “off the reservation,” he’s still exploring such potentially “dangerous” ground here that the possible endorsers from officialdom have all stayed away. All the more reason for us to see what he is up to.

As Gus Speth unfolded his tale of the power of contemporary, globalizing capitalism to overwhelm all our green reformist hopes and processes, and as he spelled out why mainstream environmentalism is “winning battles…but losing the war,” I kept looking for those two, locally cherished words to appear. But they never did, except as I filled them in myself, time after time, on page after page: “Chesapeake Bay - he’s talking about the fate of the Bay - exactly, without ever naming it.” So in Part III (Page 20) author Howard R. Ernst does name the Bay, and describe its fate, in his excellent Chesapeake Bay Blues: Science, Politics, and the Struggle to Save the Bay (Rowman & Littlefield Publishers, Inc., 2003). In his own way, Professor Ernst has gone “off the reservation” just a bit too. I say that because despite the steady, competent, scholarly yet very readable tone and style, Dr. Ernst is poking into, rather directly, some very sensitive corners. As he tells us, straight from the hip in the Introduction, “…the political process is ultimately responsible for preventing environmental degradation in this country. It is not industry, development, or the nation’s growing population that poses the greatest threat to the environment; it is the shortcomings within the political process that perpetuate environmental degradation…this book asks the central question: why has governmental action not been more successful in restoring precious ecosystems like the Chesapeake Bay?” (My emphasis).

Surprisingly, he is an assistant professor of political science at the U.S. Naval Academy, as well as a senior scholar at the Univ. of Virginia’s Center for Politics. And his name is surfacing more and more frequently as the epitaphs for the Bay pour in, from The Baltimore Sun, and most recently, from The Washington Post, in its two part series (Dec. 27th & 28th, 2008), which led off with the title “Broken Promises on the Bay,” and which share’s Ernst’s focus on the failures of political leaders and processes.

The more I thought about these two books, the more it occurred to me that they fit very well within the themes I’ve been sharing with my readers, the fact that we are leaving one era behind and trying to enter another whose shape is yet unknown to us, triggered by the intensifying financial and economic crisis. One lesson being pounded into this writer’s brains, with the sledge hammer force of events since the November 28th posting – I’m thinking of the Madoff scandal and the continuing disgrace of the Securities and Exchange Commission – is the relationship between government regulators and private economic power. Although the tales told by these two fine books are very complex, and in no way can be reduced to “the regulatory dance” alone, there are striking parallels in the one-sided nature of that dance for both the failure to improve the Chesapeake Bay since 1980, and the nearly complete abdication of the public interest by those charged with regulating Wall Street. Is it entirely a coincidence that the failures have occurred over exactly the same decades?

As this writer said from the floor of a recent regulatory reform conference at the National Press Club, after listening to many fine specific proposals on how to reform the broken regulatory process: “Getting the structural and economic parameters of financial reform right is very important, but we shouldn’t forget a basic reality behind the manifest failures; it is lack of “standing,” in the moral and social sense, as well as the legal, on behalf of the broad public interest, that has to be corrected. Time and time again those charged with protecting the public didn’t act as if they felt they had the ‘standing’ to challenge even the most hair-brained of the schemes emanating from the high altar of the private sector. Has the magnitude of the calamity changed this imbalance in ‘standing’?” Let us hope so. The writing which follows is meant to help push in that direction.

Part One: Financial Update

Jump Start? Try a New Engine
I had felt no real rush to write again since the November 28, 2008 essay Making Sense of Economic Chaos – until the events of January 12-18, that is. The directions indicated in Chaos have held, and the ensuing numbers are grim, brought to you daily even in mainstream press accounts. The frame of reference for public action from the new Obama administration is to head off a Great Depression II, with economists from both sides of the political spectrum having conceded that, at best, we will have the worst recession since the Great Depression. Close observers are correct to call upon the new administration to stop using the term “jump start” in talking about the economy, because that clearly implies a lack of understanding about just what parts of the economic “engine” are in trouble: it’s far beyond just a low “battery” charge. We’re talking about bent valves and damaged pistons, and a worn-out transmission, and you can throw in an obsolete emission system too, for good measure. Wherever one looks at statistics they are alarming. Two in particular set the tone, from Japan, the world’s second largest economy. In November, machinery orders fell 16.2%, and exports plunged 26.7%. These are unheard of numbers, and are of depression scale magnitude, as were the declines in auto sales in the US of from 30-50% for December, 2008. There is rioting in some places, and political discontent is rising.

The financial system is still broken, and indeed, is getting worse: witness the new bail-out from Jan. 16th for Bank of America, supposedly one of the healthier of those left standing, but currently finding out that maybe it wasn’t such a good idea to gobble up Countrywide Financial and Merrill Lynch. The public relief for BOA: $20 billion in capital, $118 billion in backstopping: details a little murky. As we have repeatedly maintained in our writing, the losses from holding many of the new financial instruments are dynamic, not static, linked to the ongoing collapse of the real economy in other sectors of debt besides mortgage backed securities – which themselves are still plunging in value. Robert Rubin has left the wreckage of Citigroup, Inc. for others to deal with (primarily us, the taxpayers) and there has been some speculation at Bloomberg News that he may be formally joining the Obama administration. Although there haven’t been further reports about that possibility, it’s at least plausible because President Obama has been sending repeated signals about putting Social Security reform on the table right away, something this writer thinks is a terrible idea, tactically as well as strategically, and which flows right out of Rubin’s Hamilton Project.

These worries were conveyed directly to Robert Kuttner and Dean Baker at a conference on Financial Regulatory Reform held at the National Press Club on January 9. While we don’t know the details of what Obama intends on “entitlement reform,” or how much just might be a vague gesture of bi-partisanship to help move the stimulus package along, my sense is to take it very seriously. Progressives need to signal early and often.

Kuttner on the Stimulus Bill
Kuttner has posted a good Memo to Obama: Think Bigger on January 11, on the Huffington Post at http://www.huffingtonpost.com/robert-kuttner/memo-to-obama-think-bigge_b... which has some detailed suggestions about improving the content of the stimulus plan as well as the observation that Obama holds a stronger hand in Congress than he believes, and shouldn’t be signaling grand bargains right out of the gate. Kuttner thinks we need to spend $1 trillion each year for at least the next two years, and he says the first trillion for 2009 should be aimed directly at the burdens of state and local governments, and individuals – and he has some very creative ways to act quickly and decisively on Medicaid, Cobra benefits, school tuition and the employee share of Social Security payroll taxes, essentially granting a $450 billion holiday that the federal government will pay, not workers, through the worst of the crisis – the equivalent of “an immediate 6.2% raise for workers.”

Although events are moving quickly, and the House has passed the initial stimulus plan on January 28th by 244-188 vote, Kuttner’s piece is a good one to hold onto for several reasons. It anticipated many of the arguments on how to better structure the stimulus, remains skeptical about the fate of bipartisanship (no Republican votes for the bill, and how about Maryland’s new Democratic Congressman, Frank Kratovil over in the 1st District, voting “Republican…” and insisting on “Pay-go,” even under the immediate crisis?) and stresses the fact that whatever the final number which passes both the Senate and the House, it will be too small to meet the growing scope of the crisis. And it is fair warning to the President not to give away important ground to Republicans in the hope he’s going to get much compromise from them in return.

The full page ad taken out in the Thursday, January 29th, 2009 edition of The Washington Post (Page A15) by the Cato Institute is indicative of the unrepentant Republican Right’s (and Libertarian Right, also?) attitude towards government and spending, as expressed by some conservative economists. They stated that “more government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930’s…to improve the economy, policymakers should focus on reforms that remove impediments to work, saving investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.” In other words: just keep singing out of the Reagan/University of Chicago School hymnal. Of course, their ad failed to note the big government spending event that began in 1940 and which got an even bigger boost on Dec. 7th, 1941…what some call the Second World War, funded, they didn’t note either, by a massive increase in government debt, war bond sales not withstanding. Russell Baker, not exactly a trained economist, writing in the February 12, 2009 edition of the New York Review of Books, while reviewing four new books about FDR, didn’t miss the glaring fact that they did, that “of course World War II was, among other things, the biggest public works program in American history, which invites the inference that FDR was on the right track before the war, but simply failed to spend enough.” (“A Revolutionary President,” page 7). It is entirely fair for my readers to wonder what the civilian trigger might be for an adequate amount of spending today, for the implicit dilemma here is that only a war we didn’t design could lure an unwilling nation into the proper Keynesian frame of mind. Listening to Rep. Kratovil and the Blue Dog democrats call for Pay-Go rules leads me to ask them: what level of calamity would lead you to declare an economic “emergency” worthy of suspending Pay-Go? Apparently, we’re not there yet. Just give it a couple of months.

Russell Baker’s shrewd piece also points out that FDR had a brain trust of outsiders from academe for which Obama seems to have no equivalent. I was reminded of that while watching Nouriel Roubini and Robert Shiller being interviewed on a cold but sunny balcony at Davos on Bloomberg News recently. Neither are in the government, and their names don’t come up as being solicited for advice, but they have been on top of the scale of the disaster very early, and Roubini is declaring the banks “insolvent” and pushing their losses, along with the brokerages and the rest of the shadow banking system to $3.6 trillion, the highest figure yet, and he’s crunched his own numbers to get there. I think that although Roubini expresses confidence in Larry Summers and “the team,” (he worked under Geithner at one point in the 1990’s) they don’t share his ideas on “nationalizing” the banks. Roubini has sounded far more willing to push insolvent institutions under, and to clean house of the management that led us all to this disaster. President Obama is going to end up moving towards Roubini and Shiller eventually (and Kuttner and Greider), so it’s a good idea to hear what they say in this 10 minute video at http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/...

Take Social Security Off the Table
Dean Baker reads the riot act on the potential Social Security and Medicaid capitulation with his Guardian UK column called “Kicking retirees when they’re down” from January 12, at http://www.guardian.co.uk/commentisfree/cifamerica/2009/jan/12/us-econom... Progressives need to sit up and take notice and convey the sentiments to our new President. Here’s Dean’s opening salvo:

The classic definition of ‘chutzpah’ is the kid who kills both of his parents and then begs for mercy because he is an orphan. The Wall Street crew are out to top this. After wrecking the economy with their convoluted finances, and tapping the US treasury for trillions in bail-out bucks, they now want to cut Social Security and Medicare because we don’t have the money.

If there is any effort in Congress to follow-up on this talk about taking away people’s Social Security and Medicare, then their will have to be some very serious pain inflicted on the politicians in Washington. Let’s start with some facts.

Unlike Robert Rubin’s Citigroup, Social Security is solidly funded long into the future. According to the latest report from the Congressional Budget Office (PDF) {at http://www.cbo.gov/ftpdocs/96xx/doc9649/08-20-SocialSecurityUpdate.pdf }, it can pay all promised benefits through the year 2049, with no changes whatsoever…

So, the claim that Social Security is going broke is inaccurate, or in less polite circles, a lie. Workers in their 40s, 50s, and 60s have already paid for their Social Security benefits. (My emphasis).

(Dean also has a new book out which is, of course, recommended reading. It’s called Plunder and Blunder: The Rise and Fall of the Bubble Economy (Polipoint Press, 2009). It’s just $10.85 at Amazon.com and Thomas Frank wrote the forward.)

If our new President wants to combine progressivity with fiscal responsibility and regulatory reform, three benefits at once, he should be talking up a tax on financial-market transactions, pegged at between .025 and .5 percent rather than pursuing the dream of conservative Democrats and the far right on Social Security. Dean Baker’s call for it was given a great plug by NY Times columnist Bob Herbert on January 13, with his Where the Money Is piece at http://www.nytimes.com/2009/01/13/opinion/13herbert.html

A Financial Transaction Tax not only would discourage short term speculation in the markets, but it would also raise between $150-$300 billion per year. That’s no small change. Different versions of the same basic idea have been called for by Robert Kuttner and now Robert Pullin, who has a fine article about it and other Tools for a New Economy: Proposals for a financial regulatory system at the Boston Review, Jan/Feb. 2009 at http://bostonreview.net/BR34.1/pollin.php. He is an economics professor and Co-Director of the Political Economy Research Institute at the University of Massachusetts at Amherst.

His ideas for a more democratic, more representative structure for the Federal Reserve echo Robert Kuttner’s exploration of a new regulatory structure in an article he wrote for Demos called Financial Regulation: After the Fall at http://www.demos.org/publication.cfm?currentpublicationID=B8B65B84%2D3FF... It’s 31 pages, but very readable and thoroughly covers the range of progressive thinking on our proposals for a new regulatory structure.

But can we get there without the type of Congressional hearings that prefaced the regulatory reforms of the New Deal in the 1930’s? That’s the question posed by financial historian Ron Chernow in his January 6, Op-Ed in the New York Times, Where is Our Ferdinand Pecora? - referring to the “earthy populist…son of an immigrant cobbler,” and the counsel to the Senate Banking and Currency Committee which was trying to understand how the crash of 1929 had happened, at http://www.nytimes.com/2009/01/06/opinion/06chernow.html.

Chernow closes the piece with three sentences worth pondering by not only our new Congress, but our new President, who is sending signals that we shouldn’t look back too closely over what has happened during the past 8 years (in fact, we’ll need to look back at least as far as the Clinton years as well, for a complete picture of the costs of financial de-regulation): “Our current stock market slump and housing bust can seem like natural calamities without identifiable culprits, creating free-floating anger in the land. A public deeply disenchanted with our financial leadership is desperately searching for answers. The new Congress has a chance to lead the nation, step by step, through all the machinations that led to the present debacle and to shape wise legislation to prevent a recurrence.”

For a full accounting and to shape “wise legislation,” Congress is going to have to do far better than the disturbing, completely unsatisfactory hearings it has held so far on the Madoff scandal. Pam Martens’ blistering account of the opening House Financial Services Committee hearings on Jan. 5 is almost completely in synch with my reactions after watching some of the same proceedings on C-Span. Pam’s account of it at Counter Punch is none-too-subtly entitled It’s All One Big Lie, loaded with sarcasm and ridicule over the proceedings, as “Big spans of empty Congressional seats commanded the camera’s lens at this historic hearing while empty-headed questions filled a tortuous five hours with nothing to show for it at the end.” I too was struck by the “in over my head” look of H. David Kotz, the Inspector General of the SEC, on the job, as Martens tells us, for 13 months and with his prior experience coming from being the “Inspector General at the Peace Corps. (Yes, Peace Corps).” In a question that is very pertinent for getting at the full scope of the lost Madoff $50 billion, Martens’ wonders why “there was also nary a peep from anyone about the massive manpower and computer system required to generate fake trade confirmations, fake reporting of stock dividends, fake monthly statements, fake 1099s to thousands of clients…” Since not all readers are able to access articles at Counter Punch, I’ve given you at least the flavor of it, and hope you can read it just three pages at http://www.counterpunch.org/martens01062009.html

As we are about to go to press at the beginning of February, the dilemmas of the failed banking system are on many policy makers’ and citizens’ minds. Everyone is waiting for the details and strategy of Bailout, Part II. Paul Krugman’s Op-Ed from January 19, 2009, “Wall Street Voodoo,” reminded us of the policy makers’ great fear of facing the fact that we are talking about nationalization and elimination of the “zombie” banks that are really insolvent, still hoping that the grand purchase of toxic assets they have – declared and undeclared “off balance sheet” - and at a good price - will make everything ok. But that would be radically unfair to taxpayers. On Feb. 2nd, he’s still worried on the same themes with an Op-Ed called “Bailouts for Bunglers,” which has drawn more than seven hundred comments. At http://www.nytimes.com/2009/02/02/opinion/02krugman.html and http://www.nytimes.com/2009/01/19/opinion/19krugman.html

This writer sides with Krugman and Roubini (and William Greider) on the drastic measures necessary. The question is, can we find, among the 60,000 laid off Wall Streeters, a couple of thousand who would see the necessity of abandoning the old models and returning to “plain vanilla banking,” as Robert Kuttner has called it? Despite some very cynical things I’ve heard from Beltway folks, we have to believe that there are more disinterested, experienced hands than Robert Rubin, able to freshly imagine what the situation calls for. For example, William K. Black, a law professor at the Univ. of Missouri- Kansas, who was with the Federal Home Loan Bank of San Francisco and Office of Thrift Supervision, seems to have the right spirit: He says “…the Treasury could do better by assuming control of the companies and removing existing management altogether. By trying to avoid nationalizing the institutions, the government is wasting money… ‘It’s insane to leave it in the control of the people who have every incentive to cover up the scale of the losses…you’re deliberately negotiating a bad deal for the American people by not getting an appropriate return for the risk you’re taking.’” (“Citigroup, Bank of America May Look ‘Nationalized,’” by Ari Levy, January 23rd, 2009, Bloomberg News at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDusduyz6gRc

As we await the publication of William Greider’s new book, Come Home America: The Rise and Fall(and Redeeming Promise) of Our Country on March 17th, we can ponder a deeper set of questions he poses for our country’s, and the world’s, economic system, outlined in his brief article from The Nation on Feb. 2: “The Crisis is Global.’’ Bill cites the work being done at the Levy Economic Institute of Bard College on the scope of the stimulus necessary; the language and numbers are sure to give Blue Dog Democrats and the Republican Right fits. You can judge for yourself at http://www.levy.org/pubs/sa_dec_08.pdf ; Levy calls it a “crisis that conventional remedies cannot solve.” That points to the global aspects, the vast trade imbalances that have put the U.S. in a much more difficult situation that even FDR faced in the 1930’s. Bill puts it bluntly: “Obama’s stimulus program might restart factories in China while leaving U.S unemployment painfully high.” This writer sees a new Bretton Woods conference on the horizon, closer in time than many would think as we’re focused now on the domestic aspects of our troubles, which are challenging enough. But “staying home” is not going to be enough. http://www.thenation.com/doc/20090202/greider?rel=rightsideaccordian

It’s impossible, reviewing the situation in early February, 2009, not to take note of the tax tribulations of two of President Obama’s key policy appointees, Timothy Geithner at Treasury (confirmed) and former Senator Tom Daschle (withdrew) at Health and Human Services. Combined, they’ve paid well over $100,000 in back taxes. This comes at a very painful time for the average citizen, needless to say. This writer neither rushes to defend or condemn them (and I’m not a fan of either, frankly) because there is a more important point to be made about well- connected policy and political figures and the very wealthy in our society. It’s relevant now and will be even more so as Blue Dog Democrats and the Republican Right scream about deficits and more tax cuts for those upon whom “tax relief” has been lavished for almost three decades. We’ve written about it before, and we’re going to write about it once again.

According to Sam Pizzigati, the editor of the online weekly Too Much (http://www.toomuchonline.org/ ) and an associate fellow at the Institute for Policy Studies (and a resident of Kensington, MD), “back in 2005 IRS officials released a major new report o the ‘tax gap,’ the difference between what Americans owe in federal income tax and what they actually pay. The next year, an IRS update to the data in the original analysis put that gap at a stunning $345 billion a year.” We should thank Sam for this fine article which appeared at http://www.alternet.org/workplace/105085/cheating_uncle_sam/ . So who is doing all this underreporting? “Americans who make between $500,000 and $1 million a year underreport their incomes by a whopping 21 percent. That’s triple the 7 percent ‘misreport’ rate of taxpayers who make between $30,000 and $50,000 and well over double the 8 percent cheating rate by taxpayers between $50,000 and $100,000.”

Robert Kuttner picks up this astounding figure and says it should be one of the foundation stones of a more progressive tax structure and to help keep the budget deficit under reasonable terms – after we have successfully slowed the nosedive threatening to turn into Great Depression II. I’ve read a lot about the stimulus debate and the objections to it over the past ten days, but other than Kuttner and Pizzigati’s article from October, I don’t see these hundreds of billions in missing tax revenue brought up at all. Next time you hear a Democrat start to “triangulate,” as in the old Clinton days, on budget deficits and “entitlements,” I suggest you bring this up. As a matter of fact, maybe we ought to get the numbers printed on some old shoes, ones too gone to be recycled to the homeless. It seems that in many cases, what we’ve had between citizens and elected officials is a “failure to communicate.”

President Obama, if you please….
So here’s a bit of work for our readers. President Obama makes it pretty easy to communicate with him via http://www.whitehouse.gov/contact/ You’ll have just 500 characters, which doesn’t make “financial reform” easy to do. So go ahead and “itemize.”

1. Take Social Security cuts off the table;

2. Back a Financial Transactions Tax to raise between $150-$300 billion

3. We need a new “Pecora Hearing” to get to the bottom of the ongoing financial disaster
citing Ron Chernow’s column from Jan. 6th, NY Times

4. Nationalize the banks; if we take all their bad assets, declared and hidden, and put
them on the national credit card tab, the price is the end of the banks that were
insolvent before the surgery. The damaged banks will need new management, with a
“plain vanilla” attitude towards lending, as Robert Kuttner has said. Among 60,000
laid off from the Street, many with MBA’s, surely we can find a couple of thousand
who are repentant, and have strong allergic reactions to the word “derivatives.”

5. Insist that Congress and the SEC get to the bottom of the Madoff scandal and all its
ramifications, including heads rolling at the SEC - before the staff goes off to join
what’s left of Wall Street in that great revolving door “carry trade.” We don’t
recommend that they enlist in future efforts to clean up Chesapeake Bay.

Readers are welcome to “cut and paste” this section to make the action easier. As the crisis deepens, and our new President seems to rely even more heavily on those who presided over much of the process that created the crisis, he nonetheless invites our comments and suggests. Let’s take him up on the offer, and show that we’re not entirely delegating our financial futures to Robert Rubin, Larry Summers and Tim Geithner.

Part Two

The Bridge at the Edge of the World
James Gustave Speth’s The Bridge at the Edge of the World, even though it was written in 2007 and 2008, does not refer to the great economic crisis now unfolding. That’s a bit surprising, given the nature of the intellectual ground he covers, environmental and economic. Still, it is a book from “The End of an Era,” and marked forever in its own way by premonitions and indicators of pending crisis and disaster - his own and from the many books he covers. He notes them piled high in the corner of his study: from Richard Posner’s Catastrophe: Risk and Response, Jared Diamond’s famous Collapse to James Howard Kunstler’s The Long Emergency – to give you a taste. However, given Speth’s even temperament, it’s not surprising that he finds that there’s plenty of opportunity in a great crisis. He refers early on to Milton Friedman’s observation that big changes happen during great crises, and the direction of the change is guided by the “‘the ideas lying around,’” although Speth makes it clear he won’t be picking up many of the deceased conservative economist’s preferences. Instead, he takes us on a grand tour of a wide range of more progressive ones, and indeed they form a good part of the hopeful sections of the book. But before we cover some of these key ideas, let’s see what led our author to give his book such a dramatic title, one which I’ve caught myself mispronouncing as the Bridge at the End of the World rather than the Edge.

There are many notes in Speth’s long alarm call – and rallying cry. We’ll start with the two major ones that break through the prevailing policy fog. The crisis Speth sees - “the escalating processes of climate disruption, biotic impoverishment, and toxification…” - stems from the fact that the scope, dynamism and power of globalized capitalism is overwhelming both the environment - and the environmental movement. He dramatizes the situation by giving us a series of charts, labeled the Great Collision, 1750-2000, and they all have similar curves, rising dramatically from unremarkable earlier trends to alarming heights in the 20th century, and most steeply, since 1950. These charts of the collision, between population and economic growth and increased consumption of key resources: water, paper, fertilizer and the cost they impose: nitrogen loading in coastal zones and depleted fisheries, species extinctions, loss of tropical rain forests and woodlands…and much more…are meant to drive home the message: the modern economy is a rampaging growth machine with huge costs…unsustainable impacts for the environment. Behind the economic mechanisms lie crucial ideas and assumptions, none more powerful than what historian J.R. McNeill has identified in his environmental history of the 20th century, Something New Under the Sun as “ ‘…easily the most important idea of the twentieth century…the overarching priority of economic growth…’’’

Here’s how Speth assigns the responsibility for the crisis, to both the economic and political system:

A mutually reinforcing set of forces associated with today’s capitalism combines to yield economic activity inimical to environmental sustainability. This result is partly the consequence of an ongoing political default – a failed politics – that not only perpetuates widespread market failure – all the nonmarket environmental costs that no one is
paying – but exacerbates this market failure with deep and environmentally perverse subsidies. The result is that our market economy is operating on wildly wrong market signals, lacks other correcting mechanisms, and is thus out of control environmentally. (Page 8).

Transferring the Costs to You….
The news daily punctuates the points Speth is putting forth. Think of the coal ash and Chesapeake Bay stories of the past few months. Ripping the mountain tops off West Virginia to get at the coal seams below and throwing the massive debris into adjacent streams and valleys with legal impunity, despite the Clean Water Act, and common sense, and the shamefully unresolved issue of what to do with the mountains of toxic coal ash breaking through repeatedly fallible containment systems…all are blatant externalities imposed largely on the environment and nearby residents but not on the cost of coal or the companies themselves. Isn’t coal a great bargain? Not only is it one of the main culprits in over-heating the planet, it is literally burying us with its by-products while also creeping into our lungs. The Chesapeake is not recovering for many reasons, but one of the main ones is that it is carrying a nutrient load of nitrogen and phosphorous seven times greater than its pre-human development baseline. Some of the excess nutrients fall from the smokestacks of the great coal burning power plants that dominate the greater DC region. Some comes from auto emissions, municipal sewage treatment plants, 50,000 obsolete septic systems in Maryland alone, the completely unnecessary ladling out of suburban lawn fertilizers, and, the greatest contributor, the animal and poultry industries concentrated in the Shenandoah Valley of Virginia, Lancaster County, Pennsylvania, and the Big Chicken operations of Delaware, Maryland and Virginia, especially impacting water quality in the lower bay. Aside from improvements in water quality treatment at the vast chicken processing plants (slaughterhouses, that is) the problem of disposing of the vast amounts of chicken manure generated…is externalized largely to the subcontractors who raise the chickens and the farmer’s fields which receive most of the nutrient generating wastes. As we will see, the political system has simply not had the will to make either farmers or the chicken industry carry their fair burden of paying the costs of cleaning up the environmental abuses they “externalize.” Indeed, whenever government has moved in even the slightest way to tighten up on chicken wastes, it has been public tax dollars which have been picking up the vast majority, if not all, of the financial burden. (Much more on this to come…)

An Impoverished Nature
One passage on the loss of biological diversity, and I think it unfortunately applies all too well to the Chesapeake Bay too, struck me with overwhelming force – and bleakness. I think it’s enough to make some throw in the towel, which is certainly not the intent, in substance or tone, of Speth’s book, but I think he put it in for precisely the effect it had upon me. It comes from MIT professor Stephen Meyer. Here’s the blunt force trauma for you:

Over the next 100 years or so as many as half of the earth’s species, representing a quarter of the planet’s genetic stock, will functionally if not completely disappear. The land and the oceans will continue to teem with life, but it will be a peculiarly homogenized assemblage of organisms unnaturally selected for their compatibility with one fundamental force: us. Nothing – not national or international laws, global bioreserves, local sustainability schemes, or even ‘wildlands’ fantasies – can change the current course. The broad path for biological evolution is now set for the next several million years. And in this sense the extinction crisis – the race to save the composition, structure, and organization of biodiversity as it exists today – is over, and we have lost. (Page 36).

Well, should we be so surprised at the thrust of this spear of biological despair thrown by Meyers, if, as Speth maintains, “…the climate convention is not protecting climate, the biodiversity convention is not protecting biodiversity, the desertification convention is not preventing desertification, and even the older and stronger Convention on the Law of the Sea is not protecting fisheries?” (Page 72.) No, we should not be surprised, especially since “today’s mainstream environmentalism – has proven insufficient to deal with current challenges and is not up to coping with the larger challenges ahead.”

Now this is very sensitive ground Speth is venturing upon. Even as he correctly concedes that the current “movement” is not succeeding, he doesn’t want it to stop doing what it is now doing because it is the only “holding action” (my term) in town, and we don’t quite know what to shift our focus too. Except that it will be broadly more political and inclusive to be effective, reaching out to movements for social and economic justice in a way that we haven’t seen before – at least on any broad scale; we know there have been eddies and small currents in this general direction for some time: the new Apollo Alliance for green energy and jobs being the most prominent…and the important work in urban areas done by folks like Majora Carter.

Stop Being Predictable
When we said earlier that Speth had wandered “off the reservation” a bit, this is what we partially had in mind: “But it is time for the environmental community – indeed, everyone – to step outside the system and develop a deeper critique of what is going on…if we want to transform that system for the better, we should stop being predictable and become agents of change….George Bernard Shaw famously said that all progress depends in not being reasonable. It’s time for a large amount of civic unreasonableness.”” (Page xiii).

“Weak, Shallow, Dangerous & Corrupted…”
Before elected officials reading this become too worried about an “angry” Gus Speth, let me reassure them that he remains eminently reasonable and well tempered. And he remains a committed capitalist, although he is clearly heading towards what many in the center and on the right would call social democracy or perhaps even socialism, even though he explicitly rejects the “S” word as a model. The best way to demonstrate that is to show you a couple of powerful statements – Speth at his most forceful – I’m not sure angry is the proper term. He knows that government, properly understood, will be the institution through which we will attempt to change “the operating instructions” for the way capitalism currently behaves. But that government will have to be a very different one from the one he sees in Washington (and from the one being put together by the “change agent,” President Obama?), and will have to be informed and invigorated by powerful new citizen movements and energies. So here is our “fiery” Gus Speth:

In the United States today, the government in Washington is hobbled, corrupted by money, and typically at the service of economic interests, focused on the short-term horizons of election cycles, and poorly guided by an anemic environmental politics, a poorly informed public, and a pathetic level of public discourse on the environment.(Page 63)… Democracy in America today is in deep trouble. Weak, shallow, dangerous, and corrupted, it is the best democracy that money can by. The ascendancy of market fundamentalism and antiregulation, antigovernment ideology makes the current moment particularly frightening, but even the passing of these extreme ideas would leave deeper, longer-term deficiencies. It is unimaginable that American politics as we know it will deliver the transformative changes needed. (Page 217). (My emphasis.)

The Nightmare Ahead
In the very last chapter, which has the same title as the book itself, Speth takes on the psychological charge about gloom and doom, and what is sure to be the accusation that he is longing for a great crisis, prompted by such passages as this: “Unfortunately, the surest path to widespread cultural change is a cataclysmic event that profoundly affects shared values and delegitimizes the status quo and existing leadership. The Great Depression is a classic example.” He does this by properly wading into what passes for grand debate in the environmental movement, The Death of Environmentalism controversy with Michael Shellenberger and Ted Nordhaus, whom readers may recall chastised the mainstream environmentalists for not broadening the movement to counter the right, and for relying upon a threat-based psychology to mobilize folks. These two authors reminded their readers, in short, that “Martin Luther King, Jr., did not proclaim ‘I have a nightmare.’” Here’s how Speth deftly handles this important facet of policy shaping:

My reply to them was that he did not need to say it – his people were living a nightmare. They needed a dream. But we, I fear, are living a dream. We need to be reminded of the nightmare ahead. Here is the truth as I see it: we will never do the things that are needed unless we know the full extent of our predicament. (Page 234).

Let’s step back a bit and put Dean Speth’s thoughts into perspective, from where we are now, at the beginning of 2009. In many respects, the nightmare is here, but it is the great financial and economic crisis, not the global climate or environmental crisis that is washing over everyone. Yet it offers a grand opening for the optimistic and opportunistic side of his work, and ours, because the depth of this crisis is likely to do two major things he has cited as part of the recipe for great change: delegitimize the political and economic status quo, and jeopardize the role of unrestrained consumption as the driver of growth in the US and in the global economy. The deflation of the greatest credit, debt and speculative bubble in world economic history has traumatized not only the banking system, the credit system and Wall Street; it has also traumatized the consumer, who is in a state of shock, and make no mistake about it, that consumer and his/her old bad habits are very central to the diagnosis and “cure” in Speth’s book.

A Dangerous, Even-Tempered Man?
So what is Speth after, and why did prominent politicians avoid his jacket cover like the book carried the plague? Well, we’ve given you a couple of good reasons with those quotes on the temper of government – and they could apply equally well to Annapolis, Trenton or Albany – as to Washington, DC. But what makes Speth an especially dangerous “even tempered man” at this time is his call for “changing the operating instructions” for capitalism as we know it, and challenging the primacy of growth as the measure of all economic and social policy, a daring revival of the lost debate from the 1970’s which many readers may remember. We know that debate did not end happily for the environmental community and he does take note of that outcome.

By calling for changes to the current “operating system,” Speth is criticizing the Darwinian force of market fundamentalism at the core of capitalism, the ruthless drive to minimize costs, especially labor costs and “labor” itself if that is necessary, to maximize profits, to transfer every possible financial burden to external sources, like the common air, water and soil, (a really primitive and original form of “outsourcing,” don’t you think?) and to maximize the subsidies, tax breaks and other inducements from the various layers of the weak and broken governments…keeping them tame and “in line” by the much celebrated “mobility of capital” – in sum – by what Thomas Friedman famously called the rules of the “Golden Straightjacket”… and, especially, we might add, for matters at hand here, constructing an ideological system where the supposed regulators of private economic activity think first not of the common good, but of the bottom line and “push back” potential from those they are supposed to be regulating. (And their own future employment through the gates of the “revolving door.”)

MoCo as a “Little Nation-State”?
The threats and challenges of reformers and governments who want to alter this system are additionally kept in check by the great unifying and clarifying message: we need growth, endless growth, and this is the only formula by which to do it… anything else would threaten the entire system….And, I might add, from my own professional environmental career, and lest I make governments out to be too much the victim here, local, county and state governments, even the good reformist ones, mimic the worst aspects of this style of predatory capitalism by behaving as “little nation states,” ready to steal and hoard all the private sector growth generators they possibly can from their neighbors, to the vast detriment of effective regional environmental planning and regulation. The comic aspects of this for a home rule state like NJ, with 566 local governments, border on the ludicrous, and would make for a great documentary film entrant someday at the Sundance Festival, were not the negative environmental (and human) consequences so huge. When it has really done the environmental job, as in the Pinelands or the Hackensack Meadowlands, NJ has ditched this system for a vastly different one, tempering, in much the ways Speth recommends, the all-economic “drive” signals with a broader range of human, environmental and civic values. It’s not hard to imagine what the “findings” and “value” section of future land-use legislation to really protect the Chesapeake Bay would read like…I’ve written similar ones for a real NJ State Plan, not the paper tiger one that was on the books back in 2001. You can hear the Maryland County executives howling already.

Corporations: I Thought They Were Going Green
But what’s that you say: haven’t there been powerful counter trends to this Darwinian economic uber alles script? Rather prominent trends like the “Corporate Greening Movement, Green Building (LEED) and Corporate Social Responsibility” currents, and also broad recognition that as societies grow wealthier, they eventually respond to their “proudly won” higher levels of environmental destruction by reducing their pollution levels, trends held out by so many as their fondest hope for China and India in curbing green house gases, and also known technically as the environmental Kuznets curve?

Speth is on top of these trends, and addresses them all, and to show us his moderate bono fides, he notes that he can now in good conscience recommend corporate environmental careers to his students, something he didn’t do in the earlier decades. That’s not a trifling matter, given the thrust of the main theses of his book. But these are trends, not transformations at the core system we’ve sketched above, and many are driven by the newly won recognition of the future impacts of global warming on various corporate bottom lines, especially in the insurance industry/financial sectors. In his very good chapter 8 on “The Corporation: Changing the Fundamental Dynamics,” Speth cites two works, Berkeley business professor David Vogel’s The Market for Virtue and Resources for the Future’s Reality Check to the effect that no, these are not the fundamental changes we are looking for, welcome as some of the improvements they bring are. File them under the category, neatly put by political philosopher Richard Falk in the final chapter, as “‘a snapping at the heels of the system.’”

An Intellectual “Whole Earth Catalog”
So what does this Speth character want, if these trends are not good enough? In many ways, The Bridge at the Edge of the World is its own small version of an intellectual Whole Earth Catalog, briefly summarizing the explorations that have been ongoing yet virtually hidden from sight during the past 16 years or so. So we get many good book reviews, with generous quotes from the authors in our journey through 237 pages of text and then very substantial notes. He’s therefore covering environmental economics as well as the traditional version, sociology, religion, politics, psychology, anthropology…all the fields that would bear on the possibilities of major cultural and economic changes.

Yet my audience needs a short-hand version and a clearer sense of what he’s after than this description, and he provides it in the Introduction, and that should give some additional reassurance that indeed Speth wants to be more grounded than his former teacher Charles Reich may have been with his famous The Greening of America (1970).
So how does Paul Hawken, Amory and Hunter Lovins’ Natural Capitalism sound to you? Speth bullets the following “strategies for the new economy” from their book:

• Radically increased resource productivity in order to slow resource depletion at one end of the value chain and to lower pollution at the other end.
• Redesigned industrial systems that mimic biological ones so that even the concept of wastes is progressively eliminated. (This is what the new field of industrial ecology is all about.)
• An economy based on the provision of services rather than the purchase of goods.
• Reversal of worldwide resource deterioration and declines in ecosystem services through major new investments in regenerating natural capital. (Page 12).

Then, on the very same page, Speth begins his journey into those social and political realms that most “professional” environmental organizations and leaders have been reluctant to discuss, much less to champion, however they may feel about it personally. It is an American flavored journey towards European and Scandinavian social democracy, broadly defined: measures for more income security, health care, the rebuilding of a sense of community, more leisure and time for family, greater economic and political equality. He reminds us that “if you raise these social issues in the councils of our major environmental organizations, you might be told that ‘these are not environmental issues.’ But they are.”

Humanizing the Corporate Gyro
Because Speth presents the modern corporation as the dynamo of modern economies, he spends considerable time exploring how their increasingly narrow focus on growth and quarterly returns might be broadened to include environmental and social goals. This is an important section of the book, and what is presented may come as a surprise to those who are immersed in “inside” the Beltway politics, where such fundamental changes are more than off the table - they’re not even on the horizon. So Speth homes in to a particular compass reading that finds that “the major change in the nature of the corporation that is needed now, and that will be essential in the future, is to change the legal mandate that requires the corporation strictly to pursue its own self-interest and to give primacy to maximizing shareholder wealth…” (Page 180).

To give you a sense of the risks that Speth is taking in this discussion, I recommend that the next time you are at a political fundraiser, try bringing up anyone of the following items he lists as paths for governmental action to “humanize” the goals of the corporation (Pages 178-179):

• Revoke corporate charters
• Exclude or expel unwanted corporations
• Roll Back limited liability
• Eliminate corporate personhood
• Get corporations out of politics
• Reform Corporate lobbying

Merely listing these policy lines and comparing them to our everyday political experience shows how far we have to travel. Only the last item could really be considered as a “here now” issue. Speth does a particularly good job of filling in our blanks with the writings and discussions that are taking place in a “different” reality, one far-removed from the versions presented on CNN or in The Washington Post. Here are the titles that caught my attention from three chapters near the end of his book, from “Capitalism’s Core, A New Consciousness,” and A New Politics:”

Peter Barnes, Capitalism 3.0: A Guide to Reclaiming the Commons (Berret-Koehler, 2006); Robert Dahl, On Political Equality (Yale Univ. Press, 2007); Thomas Homer-Dixon, The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization (Island Press, 2006); William Greider, The Soul of Capitalism: Opening Paths to a Moral Economy (Simon and Schuster, 2003); Gar Alperovitz, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy (John Wiley and Sons, 2005); Kirkpatrick Sale, Dwellers in the Land: A Bioregional Vision (Univ. of Georgia Press, 2000); Benjamin R. Barber, Strong Democracy: Participatory Politics for a New Age (Univ. of Calif. Press, 2003); Paul Hawken, Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw it Coming (Viking, 2007).

As this is being written just in the afterglow of President Obama’s inauguration, it is clear to all that the crisis which lurks between the covers of The Bridge at the Edge of the World is here. The banking system is, as our good friend Nouriel Roubini declares, “effectively insolvent,” and the losses he is currently calculating come in at a catastrophic $3.6 trillion for U.S. institutions alone (see http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aS0yBnMR3USk )

The Financial Crisis as a Teachable Moment
Now it seems to this reviewer that the changes hoped for by Speth in capitalism’s “operating system” are not going to be ushered in tomorrow, or next year, despite a crisis that is likely to leave transformations at least as large as the New Deal did before we are through. And, as we indicated earlier, this is no mere “jump starting” with cables to bypass a weak economic battery. But because the crisis originated on Wall Street and in the financial system and the engine fires of bad debt continue to burn out of control, it is reform directed there first that we must look to begin the long process down Speth’s path. And that is a logical place to start, rather than in non-financial corporations that feel that they didn’t do anything wrong and are very happy to play by the old rules Speth says are leading to that great collision between market fundamentalism capitalism and a sustainable environment. One only has to read Esther Kaplan’s fine article in The Nation on how the business community is reacting to the threat of labor law reform presented by the Employee Free Choice Act to see that we are not going to leap into a better age easily or quickly. She quotes Bill Samuels of the AFL-CIO as saying “‘I get the sense that this is more important to them than even taxes or regulation…this is about power. And the business community is not going to give up power willingly.’” Wal-Mart CEO Lee Scott is quoted as summarizing the stakes this way: “‘We like driving the car, and we’re not going to give the steering wheel to anybody but us.’” From that, I would guess he’s even opposed to alternating drivers on long trips. One US Chamber of Commerce Official is quoted as saying “‘This will be Armageddon.’” (at http://www.thenation.com/doc/20090126/kaplan ).

Needless to say, the signals being sent haven’t been lost on our new President, and it will be fascinating to see how he handles his campaign promises for the bill against these barometers of business recalcitrance. Look for a major postponement, and major disappoint for labor. For a least a year, maybe longer.

Yet properly addressing the financial crisis could provide a major teaching moment for our new President. That’s why we’re supporting the calls for a new “Pecora Hearing” to get at the root causes, including all the regulatory failures. If conducted thoroughly, they will cover the interconnections between lop-sided Wall Street pay and short run incentives, the complete abdication of public responsibility by the for-profit “ratings agencies” and the entire tilting of American business pay and incentives towards the short-run, quarterly scoring system promoted and centered on the old Wall Street. These directions should not come as a surprise to any of readers who have been following up on our reading lists, especially the books by George Soros, Kevin Phillips and Robert Kuttner. This seems the best and most logical way to begin to get at the values in the corporation’s “operating system” that Speth says need reformation. And because the old business model at the major banks is completely broken, the nature and directions of where they invest under a yet-to-be articulated new one is the opening pathway to so much of the greener economy that we all long for. A very different investment model could be then both the lever and the teacher (because it conveys values) to get at a broader corporate universe.

A Dress Rehearsal for Cap-and-Trade Troubles?
But the grand opening wedge presented by the financial crisis is likely to have complex and perhaps not so positive ramifications for something close to most progressive hearts, including Speth’s: we’re thinking about the dramatic fall in world oil prices since their July of 2008 peak and the implications for passage of any type of sweeping cap-and-trade legislation. Because of the dramatic drop in world economic activity, energy prices have plunged, an amazing reversal of the market signal they were sending in July. “Follow the market’s signal” is no guide to energy reform under these circumstances. And the intensity of the broader economic crisis is likely to give every industry sector opposed to grand global warming relief a potent rallying cry for postponement, if not burial. In California, the construction industry says it can’t comply with the new engine standards placed on its heavy machinery by that state’s ahead-of-the-curve air quality regulations. Speth is a supporter of cap-and-trade in a way this writer is not. I’m skeptical based not only on that system’s troubles in Europe, but also on the complexity level and the evidence of fracturing coalitions in January of 2009, when the National Wildlife Federation (NWF) broke from Environmental Defense’s and World Resources Institute’s alliance with major companies like General Electric, DuPont and GM in the U.S. Climate Action Partnership. (See the Washington Post article at http://www.washingtonpost.com/wp-dyn/content/article/2009/01/14/AR200901... ) NWF is a good weathervane for this type of proposal; if they jump ship because a bill’s too weak – then it usually means it won’t come close to getting a given job done.

And interestingly enough, I think Speth undermines his own support for cap-and-trade with his walk-through of what it will take to achieve an 80% cut in CO2 levels by 2050. Here are some of the daunting numbers and questions he poses himself: It will require

the carbon dioxide intensity of the U.S. economy to decline by about 7 percent each year for the next forty years, using exponential rates of change. ..Can natural gas be substituted for coal and oil fast enough to reduce carbon dioxide emissions per British thermal unit (Btu) of fossil fuels used by 1 percent each year for forty years? Can a switch to renewable energy drive fossil fuels’ share of U.S. energy use down by 2 percent each year between 2010 and 2050? Can U.S. energy efficiency improve by 4 percent a year over this period?...Energy efficiency in the United Stated did improve by 3.5% a year for a short while in the early 1980’s when energy prices were high, but for the three decades from 1970 to 2000 as a whole, the rate has been about 2 percent a year…it is like running up a down escalator – a very fast down escalator. Perhaps it can be done. I am doubtful, but here is a key point: it is not being done today, and no government that I know of is systematically, adequately promoting the universal, rapid, and sustained penetration of green technology, at home and abroad, on the scale required. Governments are, however, profoundly committed to promoting growth. (Pages 114-115).

Speth tosses out another major obstacle to the fast and easy passage of a grand cap-and-trade bill, something he calls “the preemption of political space.” It is an accurate insight that government can only take on a limited number of major issues at one time before they push, or preempt other trying to crowd in. One can argue that given our circumstances and President Obama’s popularity, that we might expect another great “100 days” like in 1933. But I think that the economic crisis is going to preempt broad climate change bills for a while, perhaps quite a while. That doesn’t mean that green infrastructure and investment bills won’t form a good part of the short and medium term “stimulus package.” That seems to me the more likely path, given the banking crisis, the economic crisis and the Middle East crisis all sitting on Obama’s desk at 8:00 AM on Wednesday, January 21st. We’ll know more in the next 30-60 days.

Speth would undoubtedly be pleased to learn that progressives, including environmentalists, have been working together in Prince Georges and Montgomery Counties, Maryland, to meld their forces and develop an integrated umbrella agenda for the upcoming legislative session in Annapolis, under the title of The Progressive Working Group. One of the bills they’re supporting is Maryland’s own Global Warming Solutions Act, now renamed the Greenhouse Gas Reduction Act. It makes sense, in light of what we have just said, to keep pushing this at the state level, because we simply don’t know what is going to emerge from the hopeful, yet chaotic agenda “traffic jam” in Washington, DC.

And finally, there has been a great dress rehearsal of sorts for solving difficult environmental problems, conducted in our very own region since 1980; or at least, for “for attempting to solve them.” It involves the nation’s largest estuary, largest of some 850 or so, covering 64,000 square miles, six states and fed by 150 rivers, streams and creeks. In 1880, this great “protein factory,” as Baltimore’s H.L. Mencken called it, saw the harvest of 123 million pounds of its fabled oyster. By the early 1950’s that was down to 35 million pounds, and by the late 1990’s it was down to– 600,000. Since the oyster has been, and remains, far more than a tasty meal – it is a minor miracle of a water filtration plant in itself – losses of that scale mean that the Chesapeake Bay – our dress rehearsal case study – is in very deep trouble indeed, and still very much on the table alongside of, and competing with, the major crises now exploding in 2009.

Part III: Chesapeake Bay Blues

“‘Our Expectations have collapsed, along with the Chesapeake Bay.’”

In The Bridge at the Edge of the World, Dr. Speth took us to the core “operating systems” of the corporation and globalizing capitalism. In Chesapeake Bay Blues, published in 2003, Dr. Howard Ernst takes us for an exploration of how the American political system operates, especially as it works on one difficult environmental problem. In seeing how this has played out since 1980, when the non-regulatory Chesapeake Bay Commission was set up to give guidance to the states (MD and VA and later PA) and Congress in the execution of plans for the Bay, Ernst wants to get at “the forces that drive and constrain public policy” and to create an “environmental policy theory, rather than applying a general public policy explanation to environmental politics.” (Page 33). Of course, the driving force behind his work is the plunging health of the Bay itself, despite the increasingly detailed Bay restoration “Agreements” put forth in 1983, 1987 and 2000. As measured by the 13 parameter index developed by the well known non-profit Chesapeake Bay Foundation, with the health of the Bay in the “pristine” year 1600 given a score of 100, the Bay has shown marked decline since the 1950’s, falling to around 20 in the mid-1980’s and hovering in the 27-28 range over the past five years. Give credit to Ernst for bringing the reality of a faltering restoration plan to the public’s attention well in advance of the official recognition which came in early 2007 when the federal EPA said that the programs would not achieve their goals for reduction in nutrient levels of 40% by 2010. At the 25th anniversary mark in December of 2008, the political leaders of the efforts, and EPA, announced that they would not be setting any more explicit long term goals. Gerald Winegrad, a former state senator and one of the driving forces in the Maryland legislature for early efforts to save the Bay, summed it up pretty well when he said: “‘Our expectations have collapsed, along with the Chesapeake Bay…’” (“Scientists Urge More Aggressive Cleanup,” by David A. Fahrenhold, The Washington Post, Tuesday, Dec. 9, 2008, Page B2.)

So how does Dr. Ernest explain it?

The problem with enacting sound environmental public policy is not that it is unattainable from a technological or resource perspective; it is that the normal policy climate is generally hostile to the types of environmentally sound public policies that are necessary to restore a complex ecosystem like the Chesapeake Bay. The environmental policies that tend to emerge from this political climate tend to be reactionary, voluntary, and generally insufficient to meet the considerable challenges. (Page 33). {My emphasis}.

And what are the governing factors that make the normal climate so hostile to enacting effective environmental policy? He list four main ones, and then spends a good part of Chapter Two, “The Chesapeake Bay as a Political Dilemma” in elaborating their implications. They are economic primacy, America’s “fragmented political system” (with its added state and local “race to the bottom”), industry’s advantage over environmental groups seen through the dynamics of “interest group formation and maintenance,” and the limited positive “windows of opportunity” which events and good leaders can use to temporarily overcome the negative vector forces of the first three.
Primacy for “Economic Primacy”
Having spent more than a dozen years in the environmental trenches in New Jersey, and being intensely focused on the economics/financial system over the past two years, I just thoroughly enjoyed every word and nuance of this chapter. Space doesn’t permit me to due full justice to it, but I’ll try to give you the most important and striking aspects for the floundering politics of “saving the Bay.” Of course, we should give “primacy” to the first factor, economic primacy. In the vast majority of cases, good environmental policy will burden industries with additional costs which will not be welcomed, especially where direct physical pollution clean-up is on the table, as it certainly is here. Watermen and commercial fishing industries over-harvest the bay’s resources, from rock fish (striped bass in NJ) which have recovered nicely after catch restrictions, to oysters which haven’t, and blue crabs which are currently going down and are at the center of controversy at the moment, with Maryland proposing to require even the one day-trip summer crabber to get a license – that’s how desperate things have gotten. The idea that Maryland is ready to take on the 13 year old crabber with a “chicken neck on a string” but not the powerhouses of “Big Chicken” (Perdue, Allen Family Foods… whose output of nutrient and pollution producing manure from hundreds of thousands of their birds is one of the bays chief obstacles to recovery – leaves me speechless. More on that later. But these lines speak to economic primacy, for sure. These economic actors push back hard in the legislatures, and for the fisheries, in the regional and federal regulatory forums where such restrictions are thrashed out.

…and humble farmers…
And then there is agricultural, a very important economic player in Delaware, Maryland, Virginia and Pennsylvania. Agriculture of all sorts, from the traditional crop growers with their fertilizer and soil erosion contributions to big poultry, pork and cattle growers, especially the later two in the Shenandoah Valley in Virginia, whose main rivers flow north to empty into the Potomac at Harpers Ferry, and Lancaster County in Pennsylvania whose nutrient saturated streams eventually flow into the mighty Susquehanna, the largest source of fresh water for the entire bay. Farmers and their supporting civic and economic organizations are feisty, formidable foes of regulations everywhere and from all angles, whether it is over best management practices to keep cows out of streams, (fencing), buffer strips and forests planted between crop rows and waterways, keeping manure piles contained – and out of the rain – to protective land use zoning (say one house per 20-40 acres) which would preserve farmland from development. That is my take and my experience. To be fair, and Ernst treats them very respectfully, the costs imposed by some of the much needed regulations would substantially slice their annual income – like the costs of full chicken manure control on many operations. So the public is going to have to step up big time with direct financial help. As well as the missing big industry players. And that turns the public, in the form of taxpayers, into citizens facing economic primacy of a different sort, staring at a price tag for implementing watershed-wide best management practices for agriculture, aimed mainly but not exclusively at nutrient control, of a low-ball 1995 figure of $372 million, but which this writer thinks would be closer, in 2009 to the $500 million to $750 million range to be fully effective.

Cleaning bill for the Bay: $20-$28 Billion
And then there are the economic costs of upgrading 288 major sewage treatment works, only 65 of which had been improved as of Bay Blues publication time, and the woefully neglected realm of septic system modernization, 50,000 of which are waiting in Maryland alone, with funds for only about 650 according to a December Washington Post story. In Rhode Island, the banks “enforce” a septic upgrade policy; they won’t approve a closing without inspection proof of the new technology – so the seller carries the burden and the cost. Talk to the real estate industry in Maryland on that one. Right now, the general taxpayer pays and the state pays the homeowner – all voluntary, by the way. So what’s the total bill for Bay clean-up? Estimates are from $20-28 billion: VA for $9, MD for $7 and PA for $4. However, in January of 2009, the billions talk is about state budget deficits, not Bay clean-up appropriations.

The power of economics to limit environmental policy ambitions doesn’t just operate at the direct cost imposition/push-back level from specific business and farming interests, it also operates in the sense of a climate of cost perceptions measured against a general “how much pain is there today” economic weather outlook. So the generic polls may show citizens willing to pay higher taxes and lose some jobs if that’s what it takes to get the job done, but when the recession hits, like the Savings and Loan crisis in the late 1980’s or the 2000 stock market high tech bubble burst, the leverage of specific anti-regulatory business forces goes up, the arguments sharpen, and the legislative purses snap shut. Try even the perception of a slight cost imposition on the real estate industry in Maryland under today’s stark economic outlook. Based on the sea level rise I see coming, and Maryland heights barely above existing sea level, the Critical Areas Act ought to ban any non-water dependent construction within ¼-1/2 mile of tidal waters; that’s to save future lives, and help the Bay but also to prevent these new homeowners and businesses from asking the state to pick up their storm and flood insurance and rebuild costs – which are not so far away. Just visit Florida insurance politics for the reality check. Compared to what’s really needed in Bay protection land-use measures, and not just right next to the water, the fiddling with the Critical Areas Act this year was mere playing with the punctuation marks. That’s the reality of “economic primacy” - most of the time.

Six states, the District, the 1,650 local governments and the very map of the Chesapeake watershed itself show that a unified and effective environmental policy will be very hard to achieve. Pennsylvania, which has no direct bay shorefront (New York and West Virginia the same – well upstream), still comprises 35% of the watershed drainage and contributes a large chunk of the pollution due to its intense agricultural areas, like Lancaster County. It’s been quite a laggard in regulating agricultural nutrient pollution – not that MD, DE or VA has been exactly zealous or effective. Readers who are familiar with the difficulties of coordinating growth and transportation policies among just the greater DC Metro area’s adjacent counties – can easily appreciate the “fragmentation” effects from divided government for the entire Bay watershed. The major chicken producers have distributed their processing and rendering plants with a keen eye to “easy migration” between Delaware, Maryland and Virginia if the conditions they would prefer don’t materialize in a given state. They employ thousands, in some of the poorest areas of the region. And they’ve pretty much had their way - but not on behalf of the Bay.

“Mr. Rogers’” Bay Neighborhood
When Professor Ernst does his cross-comparison of environmental vs. industry effectiveness in influencing politics, it’s not much of a contest at all. Politely, with all due respect, he pays homage to the Bay’s oldest advocate and their impressive membership and fund raising numbers – the Chesapeake Bay Foundation, of course – and then proceeds to explain why they haven’t been able to get the job done. They don’t have nearly the lobbying force to cover six governors and six legislatures, plus Congress, plus multiple federal agencies. They have one to three full time, depending on how one perceives several staff roles – at least that was in 2003. They don’t have a separate political arm like the national Sierra Club and some other non-profits (like the PIRGs and Clean Water Action do) and no formal legal defense fund, even though they are presently taking legal action against EPA. In essence, they are just not political enough for the mission. I concur, but I’m not sure they can change their stripes and be effective. Their chosen style, it seems to me, is to be everyone’s friend, and to bring no close scrutiny to bear for any prolonged period on the major foot dragging economic interests of the Bay. Least of all farmers. Meanwhile, industry groups intensely defend against any incursions, regulatory or financial, upon their economic primacy, and their business associations have a cohesion and commitment not matched by the large dues paying membership of environmental groups. I would add my own observation that business lobbies also enjoy the civilian equivalent of what military strategists call the advantage of “interior lines” when playing defense: they seem to know all the legislators on a better basis than their environmental counterparts and to have “gotten there” ahead of us. Now how could that be?

To do the Right Thing: A Little Street $
Could it be due in part that in 1998 real estate gave $1.591 million, construction $1.586 million, transportation $623,00; agriculture $448,000 all to candidates running for statewide office in Maryland, the grand total being $34 million, while pro-environment/conservation groups gave $5,396; and of course, the author informs us that “most of the industry groups mentioned …maintain full-time lobbying operations. (Data is from the National Institute on Money in State Politics; Page 43).

Policy Stuck at “Cost Realization, Prolonged Limbo?”
And to further enrich our understanding of environmental politics, he introduces readers to Anthony Down’s 1972 essay “Up and Down with Ecology,” with its by now well known five stage “policy cycle,” consisting of:

• The pre-problem stage
• The alarmed discovery and euphoric enthusiasm stage
• The cost realization stage
• The decline of intense public interest stage
• The post-problem stage. In this stage, public attention moves ‘into a prolonged limbo – a twilight realm of lesser attention or spasmodic recurrences of interests (Pages 44-45).

Now I would say that efforts to “Save the Bay” are arguably stuck somewhere between the “cost realization stage and the “post-problem stage,” with the 1997 Pfiesteria “event” (a toxic organism whose “outbursts” are linked to nutrient enriched waters) played about as skillfully as it could be to help the bay by the Glendening administration and conservation groups. One could argue too that it was just a “spasmodic recurrence of interest” in that twilight realm of “the post-problem stage,” because it really didn’t lead to effective regulation of the chicken waste-nutrient problem. Legislation was passed, but, as we’ll see below, it was effectively smothered in implementation. While these categories may appear to have a bit too glib and cynical air about them, for anyone who has done intense policy work they have more the ring of truth than falsehood. If you’ve followed Global Warming since Dr. James Hansen’s congressional testimony in 1988, you’ll know that most of the subsequent years were spent in the “pre-problem stage,” and only were moved into the “alarmed discovery and euphoric enthusiasm stage” circa 2005, thanks to Katrina and Al Gore’s An Inconvenient Truth. Whether it can remain there in the face of our current economic Katrina remains to be seen.

“WANTED for Pollution: Ag Nutrients”
After bringing the best insights of political science to bear on the Bay’s broad political dilemma’s, Chapter Three of Bay Blues rightly zeroes in on the heart of the matter: nutrient overloading. Here’s the macro picture: phosphorus and nitrogen are the two main culprits. For phosphorus, 9% of it falls out of the sky from combustion sources, 25% comes out of pipes, like sewage treatment plant outfalls, and a whopping 65% comes from the diffuse “nonpoint sources,” including septic systems, paved surfaces/lawn run-off and agricultural sources. We get 21% of our nitrogen pollution out of tailpipes and coal burning plants, 22% out of those municipal treatment plants, and 57% from the nonpoint sources listed above for the phosphorus. But we can pinpoint the problem even further, and this focuses our attention on where we should be getting the most clean-up for our taxpayer dollars: “…agricultural runoff from cropland, pastureland, and animal waste has been identified as the single largest source of these pollutants. The Chesapeake Bay Program estimates that 58 percent of the nonpoint source nitrogen and 82% of the nonpoint source phosphorus that pollutes the Bay are the by-products of agriculture production. This level of nutrient loading is even more remarkable considering that agricultural land comprises only 29 percent of the Chesapeake Bay drainage basin.” (Page 71). Ernst zooms in even further to compare Ag’s loadings to other competing sources, something which needs to be kept in mind as various culpable parties play the “blame-shift” game when the legislation is looning: “It has been estimated that agricultural waste is responsible for more of the Bays phosphorus and nitrogen load than the combined nutrient loads from urban runoff, all point sources, septic systems, and the atmosphere- contributing more than 110 million pounds of nitrogen and 9 million pounds of phosphorus to the Bay per hear…It is now clear that unless the problem of agricultural waste is adequately addressed, the overall effort to restore the Bay is unlikely to succeed.” (Page 72). (My Emphasis.)

The 1998 MD Bill: Big Flaunt, Big Flop
The early state efforts to act on these facts led to agricultural remedies that were basically educational and voluntary, not regulatory, in their approach. To its credit, the Chesapeake Bay Commission and several of its specialized committees were skeptical that this approach would work in getting to a 1987 announced goal of a 40% reduction in “controllable” nutrients reaching the Bay by 2000. Pennsylvania was the first state to mandate agricultural management plans to get at the problem in 1993. But it had an unhappy life after that with delays and weakening changes prompted by the fierce opposition of farming interests so that by 1997 environmental groups were walking away from the legislation and implementation efforts. Maryland’s attempt for similar mandatory farm management plans was defeated in Annapolis in 1992, 1993 and 1994. Not until given the boost by the 1997 Pfiesteria outbreak was a bill passed, in 1998, called the Water Quality Improvement Act, a bill which was “widely touted as the most comprehensive agricultural nutrient management legislation in the country…” giving Maryland farmers “until the end of 2001 to develop mandatory nitrogen management plans…” and requiring “that they comply …by the end of 2002.” (Pages 77-78).

The results, as announced in early 2002 from data supplied by the Maryland Department of Agricultural, the supervising and implementing agency, were that “…only 20 percent of Maryland’s 1.7 million acres of farmland were under nutrient management plans.” And only 2152 out of more than 7,000 farms had even bothered to submit plans. “Quite simply, the majority of the farm operations had either ignored the law or grown frustrated with Maryland’s agricultural bureaucracy, which remains inadequate to meet its growing responsibilities.” (Page 78).

Humble farmers: …and where did the $ go?
And that’s some bureaucracy: apparently, it has no idea where the funds it did get, state and federal, were spent according to a December 8, 2008 news release from the Environmental Working Group on the 25th Anniversary of the first Chesapeake Bay Agreement, headlined “Historic Date, Historic Mess: A new review of Maryland’s farm conservation programs by the Environmental Working Group (EWG) uncovered a lack of targeting or accounting of critical environmental expenditures. More than $180 million in state and federal conservation funds have been spent in Maryland over the past 14 years, yet neither state nor federal authorities could identify specific locations where the majority of the money was spent or site-specific pollution problems that the spending addressed.” But how could that be? Federal EPA spent years on a “massive scientific exercise” in mapping 78 subsections of the Bay to help pinpoint water quality problems, and goals, and states then “mapped out ‘tributary strategies’ to comply with the new goals (according to the two-part Washington Post series in December of 2008, “Broken Promises on the Bay,” – more on it below). Is Maryland’s Department of Agriculture saying they had no idea where the most impaired waters were, and the farms closest to them, after all these studies, and if they didn’t, surely the Maryland Dept. of the Environment did – so were the two departments incommunicado? This is unbelievable, and Governor O’Malley is right to bring his BayStat technique of accountability to bear…but 14 years of unaccountability? And by the way, notice that Maryland’s new, and still too weak regulations to get at nutrient run-off from poultry farms removes the duties for promulgation and enforcement from Ag and places it with the Dept. of the Environment. More on these regulations below when we talk about the power of Big Chicken.

Epitaph for the Bay…and for An Era
The concluding paragraph to the political “framing chapter” of Chesapeake Bay Blues, entitled “The Chesapeake Bay as a Political Dilemma,” stands on its own as a first rate summary of both the process and “the feel” of what has happened in the long run-up to the failure to clean up the Bay. But it has far greater significance to this reviewer. It could as well stand as an epitaph for an era, the anti-regulatory era, one which we have also called “The Age of Market Utopianism.” So here it is, word for word:

The Bay’s greatest danger is the emergence of a cozy political partnership that provides plenty of opportunities for ‘success,’ but that produces few tangible environmental accomplishments. In such a situation, well-intentioned policy makers take credit for producing a steady flow of agreements, reports, and voluntary programs. Funding for environmental programs incrementally increases with each passing year. The scientific community is kept active researching and monitoring the health of the ecosystem. Collaborative programs provide countless opportunities for environmental groups and industry representatives to participate in the ongoing public policy debate. And occasionally, even hard-hitting regulatory actions make their way through the system. Collectively, the restoration effort is billed as the nation’s premier watershed restoration program and is promoted as a model for estuarine restoration programs worldwide. All the while, decades pass and the Bay’s most basic environmental indicators suggest little if any sustained improvement. (Page 49).

Those “Cozy Political Partnerships”
I can testify first hand, from participating in a number of watershed processes, including one for Delaware Bay (which was, and is, in far better shape than the Chesapeake the last time I checked, setting aside the fate of the horseshoe crabs and dependent birds) as well as land-use processes (The NJ Highlands, the NJ State Plan) to this penetratingly accurate portrayal given us by Professor Ernst in 2003. Pay attention especially to the phrase “cozy political partnership.” Amiable, low-key, congenial relations across the table were the norm during these decades of the 1980’s and 1990’s. Unspoken was the fact that tough regulatory measures were off the table, in most cases, or would be arrived at in the very end only if there was across the board agreement by all parties – thus virtually assuring that there would be no regulatory clamp down, even when glaringly called for – because of course the party needing the regulating was not going to join the consensus.

So Friendly, So Cooperative
In New Jersey, the rising star among environmental groups during the Whitman years was the Nature Conservancy, whose head, Mike Catania, a talented and creative former key regulator at the NJ DEP and author of crucial NJ Pinelands protections (perhaps the nation’s best land-use regulatory model) openly proclaimed that he was tired with the arguments and confrontations of the old regulatory approach. He and the Nature Conservancy, which by the “nature” of its traditional mission was non-regulatory, sort of an amiable “realtor for nature,” became the perfect expression of the smiling, no-conflict model of environmentalism. Phil Shabecoff’s “Fierce Green Fire” was turning into a Kiwanis Club barbecue. I’m not sure that Mike understood how whole-heartedly the political establishment jumped to embraced this “opening,” which by mere frame of unspoken reference, made the regulatory people, like yours truly, unreasonable, distemperate folks, always so ready to sour the meeting with unpleasant facts, incomplete missions and the reminder of the fast-emptying hourglass hanging over the landscape of a small, highly developed state like NJ. This new “Mr. Rogers” tone was unfolding, I would sarcastically point out, at the very time when the nation’s collective “AM Radio” dial was full of piercing cries for liberal, regulatory blood from Right Wing talk shows. Did Rush Limbaugh ever fail to preface a comment about an environmentalist without a mocking, insulting adjective? You can still hear the same tone, from the scourge-like voice of Mark Levin, on 630 AM radio today. This memory is popping up now not only because of this marvelous description by Professor Ernst, but also because I’ve been writing about Henry Paulson, the now departed Treasury Secretary who has devoted a good deal of time and money to …where else…the Nature Conservancy.

Ten Steps to a Better Bay?
Professor Ernst, having delivered such an acute insight in how the existing political processes have failed to protect the Bay, leaves us with “Ten Measures to Improve Politics for the Bay.” Do they cut it as remedies? Well, they might have a fighting chance, in a new era, one marked by the inverse of some of the findings he has just delivered in that powerful paragraph above. But right now, a new era has not yet clearly emerged, and the old one has left us with such heavy fiscal albatrosses around our necks that, for reasons the author has himself listed, especially the power of economic primacy, it will be a very difficult direction to turn around. However, let’s look at what he proposed in 2003 and also what he is saying in the press in the winter of 2008-2009.

First, in the book, he calls for a new regulatory body, perhaps like the one that is in charge of the marine resources of the Potomac River (The Potomac River Fisheries Commission) to manage the infamous and difficult measures to protect what’s left of the oysters, shad, blue crabs, and so forth. Maryland and Virginia have not exactly had a history of seeing eye-to-eye on setting harvesting limits.

TMDL’s To the Rescue?
Second, he wants to use the full legal powers of the federal Clean Water Act, particularly the Total Maximum Daily Load (TMDL) provisions, to clean up the many portions of the Bay and its tributaries which are currently on the EPA’s list of impaired waters. Although the potential was there for almost 30 years, EPA had to be prodded by legal challenges to finally issue the regulatory guidance for this tool in July of 2000. Suits have pushed Virginia to come up with a schedule for TMDL clean-up by 2010. Maryland has until 2011 – not very far away. While this approach has some merit to push the issue of how much pollution a given water body can take to a point of real clarity, it doesn’t solve the political and financial problems of how to apportion and pay for the remedies. As Ernst correctly points out, the closer the TMDL process comes to apportioning exact causation, limits and remedy, the legal challenges to fairness and apportionment – say between lawn maintenance companies and local sewage treatment plants - or a chicken processing plant, will surface, and so he says we’re going to need more expensive water quality data to withstand the certain legal charge. At its best, the process can really cut through a lot of the stalling and hemming that go with bureaucratic environmental processes. In practice, it also, in the wrong hands, can be used to further stall when the actual measurements and solutions are known, and there is just not the will to make the parties, public or private, execute them. In a new era, with higher standing for the public purpose and the regulators who will enforce the clean-up, it might be an improvement. No guarantee. I sat in on some of these dynamic processes in the late 1990’s in NJ. And, as the recent Washington Post series has pointed out, the EPA’s Chesapeake office has conducted an intensive tributary evaluation process, setting clean water goals “for 78 subsections of the bay and estimating how clean the water should be in each. That took three years. After states mapped out ‘tributary strategies’ to comply with the new goals, the price tag for the clean-up grew to $28 billion.” (“Broken Promises on the Bay,” by David A. Fahrenhold, December 27, 2008, page A-9).

Put It on the Ballot
Our Naval Academy teacher also wants a revival of direct citizen-environmental activist ballot initiatives, in the hope that this can deliver more funds and tougher remedies than politics as usual. Unfortunately, these measures would still have to navigate “politics as usual” to get the legislative go ahead. If we are indeed entering a new era of progressive politics, this proposal may have strong merit.

“Advocate or Abdicate”
As we have noted, Dr. Ernst calls for a more aggressive political stance by the major environmental actors on behalf of the Bay. His challenge is therefore to “Advocate or Abdicate” and he includes greater legal activism in a separate recommendation. But they overlap, because the call is primarily for the Chesapeake Bay Foundation to re-invent itself, or at least develop a separate more aggressive political 401(c)4 type of operation. Now that is not easy to do at all, even if it has precedent in other organizations, like the Sierra Club at the national level. 501(c) 3’s which are non-partisan by nature have to balance the major party differences within their own organizations. In the era we are just leaving, where the Republican Party’s identity was deeply bound up with an anti-government, anti-spending, anti-regulatory approach – how likely is it that the CBF, which has a good number of Republicans “ in its blood,” could have been what Dr. Ernst has been calling for during the 1980’s and 1990’s? And as for the Democrats of this era, theoretically at least without the ideological barriers to these three core tools, the EPA under President Clinton was no regulatory tiger, to say the least. Just ask good environmentalist, former Congressman Peter Kostmayer (D, PA) how long he lasted as the EPA Region 3 head He was pushed out faster than activists could pick up the phone to protest. We heard that Sen. Robert Byrd would not stand for his brand of oversight. Whoosh….gone…

The Unspoken Trade-Offs of Smart Growth?
As we drift back to that wonderful summary paragraph of Dr. Ernst’s, and the “emergence of a cozy political partnership…” – that phrase describes far more than just the dynamics of the Bay clean-up processes over the past 25 years. Does it not also, as this writer has noted in other essays, describe exactly where the “Smart Growth movement” has ended up? With land-use activists, environmentalists, planners and government officials turning over the driver’s keys to the “better sort” of developer, the progressive ones who want to get greater residential densities, and more environmental friendly (fewer cars, less CO2, more family time) outcomes with their mixed-use, transit friendly projects. Nothing wrong in that goal, or a friendly process across the table. But don’t forget: its emergence was in and stamped by the era we are leaving. There was a very important, unspoken bargain driven. That mean’s that our good environmental friends calling for the new city at White Flint Metro, and a re-do of the entire Rockville Pike (to go along with higher densities at Silver Spring, and Bethesda, Rockville, Twinbrook, and of course, DC) are most certainly not issuing demands that, in partial compensation for the higher densities that developers get on the Smart Growth sites, that, for example, Prince Georges County establish an protective agricultural zone, or that all the adjacent Chesapeake Bay counties have at least one unit per twenty acres zoning and preserve existing forests (which would have to be a state level requirement)…much less a regional planning body with regulatory powers over land-use and transportation matters, which famous architect-planner-developer Andres Duany rightly calls the true test of environmental planning effectiveness. No, all the things that were standard land-use prescriptions in the late 1970’s have simply faded from view as that friendly, congenial negotiating table called Smart Growth, and the cozy relationships it requires, have also managed to remove the will to regulate those land-use matters which are not on that narrowly focused table setting. Even a person as bright and experienced a planner as Montgomery County’s own Royce Hanson, who helped achieve the county’s national model Ag Protection zone decades ago, answered, when I asked him in 2007 whether Smart Growth could achieve its goals in an anti-regulatory, anti-government spending era, replied “sure.” No doubt about it. The answer was delivered with all the certainty we used to hear from Alan Greenspan.

However, the collapse of the whole debt-driven consumer spending model threatens Smart Growth’s previous Achilles heel, as Alex Marshall has pointed out: the retail model that it heavily depended on is broken…perhaps never to come back with the level that mixed-use struggled with – even in the “happy times.” Certainly Chairman Hanson’s view would have had a better chance with the price of oil at July, 2008’s $147 per barrel, rather than January 2009’s $35-$40. But it isn’t just about Smart Growth at the location’s named. What produced the “happy table” Smart Growth fiesta of the 1998-2008 period came at the expense, the sacrifice, of the land-use regulatory tools needed in other arenas – like improving the water quality of the Chesapeake Bay. (Not intentionally, in most cases, and some area groups do fight for tougher, protective zoning densities in semi-rural VA, for example). But the tone and demeanor that accompanied, indeed, perhaps was required by that “happy table” also meant that aggressive environmental demands, hard-nosed investigative reporting and “bird dogging” – oversight and accountability – were frowned upon and discouraged. And not just around the table. It became a wide-spread “stamp of the era,” characterizing the interactions of the federal financial regulatory and investigatory agencies as well, as we are now daily reading in the papers.

Before we look at what Dr. Ernst is saying now in the winter of 2008-2009, and before I offer a few more critical comments on the book, it is time to devote a little more focus to the role of the great chicken producing firms which have come to dominate so much of the landscape of the lower Chesapeake Bay in Delaware, Maryland and Virginia. They do get some attention in Chesapeake Bay Blues as major political and economic actors, but the focus is more broadly on the role of nutrient pollution from all agricultural activities across the Bay. I had to go off a bit on my own to learn more about “Big Chicken,” and what I found in a very good series of articles from 1999 in, of all places, The Washington Post, encouraged me to place the fate of the Bay in the same train of thinking as the failures to regulate Wall Street. So I’m going to be a little tougher, if the now departed, unforgettable Frank Purdue will forgive me (“It Takes A Tough Man to Produce a Tender Chicken” – an old commercial line of Purdue’s ), than our good Professor Ernst has been. At least in the book. Because his up to date comments from the winter of 2008-2009 make him sound like he’s soured on that old non-regulatory era as much as this writer has. But now on to that three-part series.

Big Chicken, Nutrients and the Dismal State of the Bay.
The numbers are enough to shock by scale alone. In, 2008, Maryland alone is raising 570 million birds, which produce 650 million pounds of manure (“In Maryland, Focus on Poultry Industry Pollution,” by Ian Urbina, The New York Times, November 29, 2008). Back in 1999, the total for the entire Delmarva (DE, MD, VA) peninsula was 600 million birds and 750 million pounds of manure annually. As Peter S. Goodman, the author of this fine series pointed out, that amount of chicken waste is the nutrient pollution equivalent to that produced by a city of 4 million people. You can fill in the blank for that imaginary city’s size now in 2009, a decade later: 5 to 6 million? (The series, which ran from Sunday, August 1st, through Tuesday, August 3rd, 1999 in The Washington Post, can still be found online at http://www.washingtonpost.com/wp-srv/local/daily/aug99/chicken1.htm. Quotes, unless otherwise noted, are from this series.)

So who are we talking about when we say “Big Chicken?” Primarily, five major firms: Allen Family Foods, Darling International, Perdue Farms, Inc., Townsends Inc., and Tyson Foods. The astounding thing stems from the fact that here we are in the first decade of the 21st century, and we still don’t know what to do with all this water polluting waste, despite decades of “Saving the Bay,” and smelling the NH3 (ammonia) produced. That’s right, 30 years into this game of “chicken” over the waste and we still primarily transfer all of it from the big chicken companies to the thousands of middle-men farmer/growers who raise the chickens for 6-8 weeks, and then give them back to the big five for processing in their slaughterhouses and rendering plants. The disposal of the manure is the problem of the individual farmers who raise the birds, Big Chicken would like you to believe, and so far, they’ve been able to get three state legislatures and some judges to agree to keep the responsibility off their hands, legal and financial. This large, glaring and outrageous fact did not make it into President Obama’s inaugural speech, however, under his discussion of “taking responsibility.”

Just Don’t Call It “Clean Chicken.”
To be sure, there are gestures of accountability on tangential lines, all the while dodging these main facts. The tangential gestures: feeding enzymes (phytase) to chickens to reduce the amount of phosphorus they produce (fought against in the MD legislature, while proclaimed as an example of good stewardship in public forums); turning chicken manure into fertilizer pellets for sale in Ag regions of the country (Perdue), but only one plant and no signs of a big market for the product; plans (Allen Family Foods) for burning the waste at their facilities for energy and heat in a kind of co-generation mode – still on the drawing board after many years; and most recently, in the Winter 2008 edition of the Chesapeake Bay Foundation’s magazine save the bay, a new configuration that would produce energy and fertilizer residue being worked on in Virginia (“Turning Chicken Manure Into Energy,” page 8) that sounds promising – but haven’t they all sounded promising over the years? As far as I’m concerned, I’m tossing all three technical solutions into the same file as the plans for the hydrogen car and carbon-sequestering coal plants. Please just don’t start calling it “Clean Chicken.” I wish I was
wrong, but so far, this has been fiddling around the edges of the problem. And missing from all the accounts I’ve read: where is that Greek Chorus of Vegans, singing “I told you so,” that the costs of factory-scale animal farming are just too high – for ecosystems, the animals themselves, and the humans. (Disclaimer: this writer is not a Vegan or a Vegetarian, although his eyes are not going to light up in quite the same way anticipating a good chicken dish.)

“‘Legacy of Lenience.’”
So what do you come away with, Chesapeake Bay lovers, after soaking up the three-part series by Peter S. Goodman in 1999, a necessary, more detailed follow-up to Bay Blues?
You come away with the same feeling you get in reading about the financial crisis and how it gestated and unfolded over the past 30 years. In the great struggle between regulator and regulated, Wall Street firms or Big Chicken, it turned into the same thing, what Goodman called “a legacy of lenience toward the primary economic engine for Delmarva.” With the collapse of a TVA-Tennessee coal sludge lagoon on our minds from Christmas time, 2008, how about these breeches in chicken industry lagoons:

• March of 1994, Perdue’s operation, Accomac, VA; spills totaling 8.3 million gallons into Parker Creek. Outcome: No fine
• October 1997, at Townsends’ slaughterhouse in Millsboro, Del.; 300,000 gallons into Swan Creek. Outcome: No fine.
• August, 1998, Allen’s slaughterhouse in Harbeson, Del.; 185,000 gallons into Beaverdam Creek: Outcome: No fine. (from “Permitting a Pattern of Pollution,”
August 2, 1999, Washington Post).

When Maryland water quality officials starting sending toughening signals to poultry principals under the reign of Governor William Donald Schaefer (1987-1994), J.L. Hearn, who directed the state’s Water Management Administration, said the industry would appeal directly to the Governor. According to Goodman’s account and quoting Gov. Schaefer directly, “‘the poultry industry is a very important industry on the Eastern Shore...Mr. Perdue and those other poultry executives are great leaders. I didn’t go after him with hammer and tongs, but we’d work with him to find a solution…I’d call up our guys and say, ‘They think we’re being a little heavy-handed. What can we do?’” (from “Permitting a Pattern of Pollution,” Aug. 2, 1999).

“ ‘We’re Overloading the Hell out of the System.’”
Goodman has a revealing section on conflicted attitudes in Delaware, a state that comes across as an even weaker regulator than Maryland, who toughened up, or at least tried to, under Governor Paris Glendening (1994-2002), although it was EPA that put the pressure on against Hudson Food’s operation in Berlin, MD in 1997, collecting a $6 million dollar settlement. The plant was later purchased by Tysons, which closed the Berlin plant in 2003). Here’s Delaware environmental official Joseph Mulrooney on the proper posture of regulator to regulated: “‘When you’re rigid and strict with your enforcement posture, you lose the ability to communicate with the company…they become too fearful to tell you anything…we can play hardball or softball, I don’t care, as long as we get compliance.’” But when asked whether his system is actually protecting the waters “he sighs. ‘We’re overloading the hell out of the system.’” Mr. Mulrooney, if you are still on the job, Gus Speth has a book just meant for you. (Ibid.)

Big Chicken Throws Down the $ Gauntlet
What really stuck in my mind after reading Goodman’s 1999 series was how the poultry industry is able to get three state governments, and less clearly, the federal government, to buy into their version of economic primacy, of accounting absolutes. Here’s the way James A. Perdue, son of the iconic Frank Perdue, and current president of the company that bears the family name, presents the “line-in-the-sand” on costs, threatening to ward off any and all attempts to impose the type of proper environmental pricing which is so close to the heart of Gus Speth’s goals in The Bridge at the Edge of the World: “‘This is an industry that measures its profitability in the tenths of pennies…it’s an intensely competitive business. If our costs go up, we simply can’t survive.’” (“Who Pays for What is Thrown Away, Aug. 3, 1999, Washington Post.) Readers: remember, this is 1999; how would that line on costs sound in July of 2008, when fuel and feed prices were rocketing?)

Governments, it would seem, have watched very intently as this gauntlet was thrown down. Every time there is a clean-up effort directed at Big Chicken, guess who ends up shouldering a good part of the price tag? Taxpayers, via government funds, of course. When Maryland passed that 1998 Water Quality Improvement Act requiring farmers to develop their nutrient management plans, it was the state kicking in $3 million to help truck excess manure to farms whose soils could absorb more. Industry’s share? They agreed to match the funds, “though the law does not require a contribution.” When current Congressman Chris Van Hollen, then a state senator from Montgomery County called for a law to make big poultry legally responsible for disposing of their chicken manure, “a close confidant and former aide to Senate President Thomas V. Mike Miller, Jr,” Gerard E. Evans, then a top lobbyist, called Van Hollen’s bill, according to Goodman, “extremist.” When the 1998 law did impose a cost on the industry, requiring the use of the phytase enzyme, they got half of the cost of doing so reimbursed - $270,000 – thanks to a bill from now retired Del. Ronald A. Guns (D, Cecil Co.) whom Goodman called “a powerful industry advocate.” (Looking at Guns’ bio, still posted on the web, he’s held many important formal posts presiding over the Bay’s clean-up directions.) Even Perdue’s fertilizer pellet processing plant was supported with $500,000 in state money. (Ibid.) So by now, readers, you’ve got the idea of who is in charge, and who is going to pay for improvements. Just pick the proper credit card, and charge it right next to the column you’ve reserved for “federal bailout, financial system.”

As we search for the proper response to the economic and political power of the major chicken producers, let’s keep in mind the balanced, reasonable tone urged upon us by Professor Ernst in his 7th Chapter, “Toward a Brighter Future for the Chesapeake Bay:”

Perhaps the greatest challenge when considering reform options is how to bring about meaningful improvements without sacrificing the collaborative spirit and collegial atmosphere that permeates the Bay’s restoration effort. As the program moves increasingly toward a regulatory approach, as it inevitably must to reach the next level of protection, it will remain important to maintain the goodwill that has fueled the collaborative effort to date. But a balanced approach requires that voluntary measures and economic incentives be complemented by meaningful regulations and ardent enforcement, a move that will undoubtedly sour some to the process. {My emphasis} Page 130.)

Bay Blues, Union Blues?
As I mulled over these sentiments from Professor Ernst, I went back over Peter Goodman’s three part series, looking for some clues as to how to do this, and then recalled that I never did see his long articles quoted in Bay Blues. Hmm. He wrote in 1999; Blues was published in 2003… And to add some further flavoring to this fascinating story, it struck me that no article or book reviewed here, not Ernst’s, Goodman’s or Fahrenhold’s, discuss whether Maryland’s (or VA’s or DE’s, for that matter) chicken plants are unionized. So I called both Perdue and Allen Family food’s to pose a simple question. The Perdue spokesperson stated that they were a “family run operation,” subtly implying that no such “family” operation would ever also be a union one – but as I recall, avoiding the direct answer. So that’s my inference, if inferences are still allowed. At Allen Family Foods, I was transferred several times under the reply “you’ll have to ask…so and so…” and eventually ended up in the corporate headquarters, where my “complex” question (“Are you unionized?”) still awaits an answer. (It’s been weeks). Trying very hard to keep the collegial atmosphere going, I even promised that I was not trying to argue the case one way or another, just establish the reality. You have to admit, readers, in fairness to the companies, it’s a pretty scary question. And pretty underhanded of me to ask, I’ll note.

That Collaborative Spirit/Collegial Atmosphere
Here’s Goodman quoting James A. Purdue in his first article from August 1st, showing the executive’s even-handedness in sharing the blame, and trying to calm the public “hysteria:” “Purdue…acknowledges that feeding and slaughtering millions of birds yields millions of tons of manure and nutrients. But he rejects as unfounded suggestions that Delmarva’s rivers and bays are worse off as a result. ‘What about all the septic tanks, and people fertilizing their lawns, and municipal sewage plants?’ he said. ‘How come nobody’s looking at them? There’s a lot of hysteria.’” (My emphasis here. Did you know that James A. Purdue has a graduate degree in marine biology and fisheries? From my research on Perdue’s web site.)

At a September, 1998 town meeting in Salisbury, Maryland hosted by former Congressman Wayne Gilchrest, Goodman, in his final article from Aug. 3rd, describes the collaborative spirit and collegial atmosphere at work, in this case arising from solid suggestions for raising the funds to deal with the pollution. It was a was a notion advanced by EPA regional administrator W. Michael McCabe, who “hoped poultry companies would agree to a half-cent surcharge on every pound of chicken sold in the country, with the funds going to pay for pollution programs. Without such a scheme, McCabe said, ‘all the environmental protection programs we’re talking about would fall at the feet of the growers.’” David Barnes, an activist grower-farmer, a middleman, in other words, (and member of the Delmarva Contract Poultry Growers Association), liked the idea and began talking to the press, Goodman reports. “The companies – not he – should be responsible for manure, he said.”

What Goodman reports next shouldn’t come as a surprise to any politically savvy reader today: we all know that even good collaborative and collegial companies are “forced” to manage the news cycle, and maybe even the reporters themselves, but this may come as a bit of a surprise to the 2003 Professor Ernst…Let’s listen in as Goodman picks up Barnes still talking to the reporter: “But before Barnes could finish his thoughts, he was heatedly interrupted by Kenneth M. Bounds, president of Delmarva Poultry Industry, and vice president of marketing at Chesapeake Farm Credit, a bank that specializes in lending money for new chicken houses. ‘Poultry companies are gone if they’ve got to deal with the manure,’ Barnes said.” (My emphasis.)

A little later in this same article, activist Barnes is sounding a bit more resigned to his assigned seat around that collegial table: “‘You have no leverage with these people...’ The contract grower system is ‘a great deal. I’m just on the wrong end.’”

The “Wrong End” of the Deal
It would appear that contract grower Barnes was right. He’s on the wrong end, because with the new O’Malley administration regulations on the table now in the winter of 2009, it is the contract grower, not big Chicken who has to pay the annual fees of permit applications, tiered from $120 to $600 to $1200, depending on the size of the operation. That’s not chicken feed. According to The New York Times article (at http://www.nytimes.com/2008/11/29/us/29poultry.html ) “In Maryland, Focus on Poultry Industry Pollution,” from late November, the regulations will only reach “75 to 100 of the 800 largest poultry farmers in Maryland.” While based on my experience with nonpoint source protection rules these leave a lot to be desired, they are a step in the right direction – very late in the game it should be said – and would leave those manure piles open to weather for up to 90 days until a 30 day limit kicks in – in 4 years. Hardly adequate, I would say. And who’s facing the big fines of “up to $32,500 per day” for failure to correct problems? Not big chicken, that’s for sure. Old Foghorn/Leghorn is clucking at this one, for it’s activist Barnes and the contract growers who are about to get stiffed, once again, “just on the wrong end” – if they don’t handle things correctly according to the new regulations.

Readers should be pleased to know that you have a seat at this happy table too. Chesapeake Bay Foundation President William C. Baker and Keith Campbell, Chairman of the Board, report to us in the Winter of 2008 edition of save the bay that “after two years of CBF work, Congress passed a Farm Bill that includes $440 million over five years of targeted funding for Chesapeake Bay states to reduce pollution from agricultural sources.”

And Perdue Farms Inc., which always seems to be at the top of their game when it comes to corporate imaging and promotions, was way ahead of these regulations. On September 20, 2006, they signed a formal Memo of Agreement with the USEPA called the Clean Bays Agreement whereby Perdue trained staff are going to analyze the larger poultry raising operations, collect the data, and start training and correction measures for its contractors throughout the country in 2008. It’s Purdue, EPA and “other partners” doing this. It sounds a lot like the “self-regulation” we’ve seen so much of on Wall Street over the past 30 years. It is not clear whether any of the $440 million above can or should be used for this purpose. But this writer thinks it’s a reasonable question to ask.

Fast forward now from the Goodman articles of 1999 to late 2008, early 2009. Peter S. Goodman is gone from The Washington Post, and is writing about the financial crisis for The New York Times. The epitaphs for, and protests over, the fate of the Bay are breaking regularly in the press. The Washington Post has run a very interesting two part series in December, which tosses out new revelations about how much federal and state officials knew about Bay clean-up failures, and when they knew it, but, somewhat eerily, makes no mention of the role of the big five chicken firms in polluting the Bay (it’s buried under more general, blurring words), and makes no mention of Goodman’s three- part series from 1999. It’s always a wonder to behold, this loss of institutional memory, even when what you should be looking for and cross-referencing is located in your very own paper’s archives. Our readers might remember one of our “End of an Era” essays that described the media’s studious avoidance of a 75th anniversary conference on the New Deal from the spring of 2008, the one where a Congressional financial sub-committee chairman shared what Wall Street had been telling him about their fears of not recession or even depression, but “meltdown.”

Get with the Program: Or Else…
Before we examine the Post’s “Broken Promises on the Bay” and look for themes and continuities with the handling of the financial crisis on Wall Street, it will enrich our experience a bit to recall an obscure little Op-Ed run by The New York Times on September 24, 2008, by the redoubtable writer Barbara Ehrenreich, who has been plumbing the darker sides of American economic life for a long time now, with her many books, most famously Nickel and Dimed (2001) and Bait and Switch (2005) and most recently, This Land is Their Land: Reports from a Divided Nation (2008).

Mistakenly labeled “The Power of Negative Thinking,” the Op-Ed (at http://www.nytimes.com/2008/09/24/opinion/24ehrenreich.html ) actually calls for Realism as the antidote to what has taken place in the national psyche since the late-nineteenth century shift away from gloomy Calvinism, a change so well explored by William James and more “recently” by Garry Wills in his biography of Ronald Reagan, Reagan’s America (1987), especially its chapter “Original Sinlessness.” But I digress. What was silently passed over by the commentariet in Ehrenreich’s article is the grip a near delusional form of positive thinking holds inside corporate America, including the financial sector. Here’s her take on the trend:

The tomes in airport bookstores’ business sections warn against ‘negativity’ and advise the reader to be at all times upbeat, optimistic, brimming with confidence. It’s a message companies relentlessly reinforced – treating their white-collar employees to manic motivational speakers and revival-like motivational events, while sending the top guys off to exotic locales to get pumped by the likes of Tony Robbins and other success gurus. Those who failed to get with the program would be subjected to personal ‘coaching’ or shown the door…No one was psychologically prepared for hard times when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on.

“ As long as the music is playing, you’ve got to get up and dance.’” (former Citigroup Chrmn. Chas. Prince)

It is the first part of David Farenthold’s Washington Post two part series on the Bay clean-up failures that really contains the political dynamite. It ran on December 27, 2008 and was entitled “Broken Promises on the Bay.” (at http://www.washingtonpost.com/wp-dyn/content/article/2008/12/26/AR200812...) The most powerful criticism of elected officials comes from EPA Chesapeake Bay Program Office head Rebecca W. Hanmer, who succeeded the long-running William Matuszeski (1991-2001). Farenthold writes that “Hanmer said she was instructed by regional leaders in 2002 not to acknowledge that the effort would fall short of its 2010 goals…. Hanmer said she was told to do so…by the Chesapeake Executive Council, which includes regional governors, the EPA administrator and the head of the bay commission. ‘They maintained that we should say it was doable,’ she said.” The three governors in question, Glendening of Maryland and Gilmore and Allen of Virginia, don’t recall anything that explicit.

Matuszeski also had some insightful things to say: he “described how the program repeatedly released data that exaggerated its success, hoping to influence Congress…” although “‘there wasn’t enough going on, and there wasn’t enough money behind it, and there wasn’t enough regulations behind it…’ He said… that Maryland officials had rejected his general suggestion to put tighter rules on farms.” And then revealingly, and quite within the grip that Barbara Ehrenreich has described for us, Matuszeski states that “‘as public officials, you are driven by the idea that the American people like to be part of a winning team.’”

At several points in the article, it is pointed out that the computer models that EPA officials were using were showing more optimistic results than the actual water sampling data from the field were recording. When I thought about this, in the broader context of what I have been writing about for two years now, on the failure of the modeling for the new financial products, the mortgage backed securities, it makes a lot of sense as a broader cultural delusion, not just a financial or environmental one. House prices couldn’t go down across the board, could they? (Only in Great Depressions, actually, the very thing that we have seen has been erased from Republican memory); Derivatives can’t spread risk, can they, especially when they have reduced it by spreading it to so many geographically dispersed institutions, and the derivative products themselves represent broad samples of different markets? (They can when enough of the transactions underlying them are fraudulent, lack due diligence, and have too little collateral backing them up). And just as in the mortgage realm, when the real world monitoring from low-income housing non-profits was very clear in claiming widespread fraud and abuse, and not heeded, it was real world data from physical monitoring stations in the Bay that was showing poorer results than the models themselves, and again, not heeded And on the ground, as opposed to in the water, didn’t EPA and state environmental officials know, as shown by this article, that virtually none of Maryland’s 50,000 septics had been upgraded, too few of its sewage treatment plants (and how can you not be able to track this huge physical and fiscal fact?) and that farmers, for whatever complex reasons, were demonstrating no sense of urgency at all in adopting either the required or recommended changes? It must come as somewhat a shock for mathematically inclined modelers of all sorts to realize that, despite their best efforts, it was incorrect historical and cultural assumptions and biases that did in the models, not the math wizardry displayed. (And are you thinking about the elaborate modeling on the drawing boards for the carbon cap and trade system like I am? And worrying about the nature of the assumptions built in…? We better start soon….)

So this writer thinks that if you read Farenthold’s article closely alongside Ehrenreich’s reality check editorial , and you listen closely to the clear wish to avoid inflicting any real sacrifice on farmers, watermen and other powerful interests (such as unnamed “Big Chicken)...and compare them to all the accounts piling in from the failures to regulate Wall Street, you realize then, we have been dealing with a special era itself; an anti-regulatory, anti-government, anti-spending one, certainly, but also one marked by the manic, enforced optimism so adroitly sketched by Ehrenreich, one which has helped kill the critical thinking, the realism, that might have brought the warning signs to the public a bit earlier. As if to punctuate these points, Montgomery County residents now can ponder this “hide the bad news” phenomenon in their own withheld water quality monitoring reports about the damage inflicted by up-county developments like Clarksburg: at http://www.washingtonpost.com/wp-dyn/content/article/2009/01/25/AR200901... (Wait until ICC construction is going full bore, then you’re really going to see water quality damage in these watersheds). The findings don’t surprise me, and they wouldn’t surprise Gus Speth or Howard Ernst. But you might want to check with Royce Hanson. The idea that growth as we’ve known it in Montgomery County, in the Chesapeake watershed, and in the very explosion of chicken “production” - is something we can’t handle or clean up very well is something I think is very hard to deal with.

“…A Product of Ronald Reagan’s EPA”
It was indicated earlier that the author of Chesapeake Bay Blues has been quoted more and more frequently in the growing coverage of the Bay clean-up failures. He deserves the coverage for his overall good book, which got it mostly right, and earlier than most. But what he’s saying now sounds to be on a slightly different key than the collaborative, collegial model that he was still hoping could be maintained - even as he called for more emphasis on the regulatory side. In Angus Phillip’s Outdoors column in The Washington Post of December 14, 2008 (at http://www.washingtonpost.com/wp-dyn/content/article/2008/12/13/AR200812... ), Ernst sounds sharper, angrier, like someone who is trying to tack out of the old era. Here’s how he put it in this well-known sportsman’s column:

The EPA’s Chesapeake Bay Program, he said, ‘is a 25-year experiment in voluntary, collaborative environmental management that didn’t work. It’s a product of Ronald Reagan’s EPA that is being emulated around the country – the Great Lakes, the Gulf of Mexico – even though it doesn’t work. It turns out that this sticky-sweet, light-green, voluntary approach to environmental protection has no nutritional value. There are two ways to change a culture: carrots or sticks. We got fat on carrots. Now it’s time for the stick.’ Ernst wants the Chesapeake Bay Program to be replaced by a Chesapeake Bay Authority with legal power to regulate polluters, fine and sue them if they fail to meet standards, and regulate living resources such as oysters, fish and crabs to prevent excess exploitation. The precedent for such a body exists, he says, in the Lake Tahoe Regional Authority, which oversees the restoration and protection of that treasured body of water on the California-Nevada border. ‘They monitor, they file lawsuits,’ he said. “It’s not pretty, it’s not nice, but it works.’”

We should recall that in the book, Ronald Reagan is only mentioned in passing, not as the anti-regulatory albatross of an age; the Lake Tahoe model is not mentioned either, and it sure sounds like the collaborative table has been rearranged a bit to have a regulatory sheriff at its head. Yes, as we’ve seen at Wall Street, the old model is broken, and we’ll be reaching out to forgotten and neglected ones, as well as ones we are yet to invent. I congratulate Professor Ernst and I hope that the Naval Academy, as an institutional promoter of courage, recognizes its display on the environmental battlefield.

Missing Perspectives?
In one sense, my formal recommendations to add to the ten at the end of his book have been taken care of in good part by what he has just said in the column above. Without directly saying it, he has, by emphasizing the world of Reagan and its ineffectual model, acknowledged that, in addition to his political science policy cycles, there are broad and deep ideological cycles, ones that have been talked about in the books we have reviewed on the financial crisis. And by citing the Lake Tahoe model as a direction for the Chesapeake Bay Commission to head towards, he is recognizing the importance of land-use regulation for water quality. I would add that what the Pennsylvania, Maryland, Delaware and Virginia (and perhaps West Virginia) portions of the 6 state Chesapeake Bay watershed have been missing is a comprehensive, regulatory/TDR driven land use system that lists good water quality impacts as its main objective. It would also be the missing, rural regulatory side to all those Smart Growth plans that just want to focus on the higher density nodes – and forget about the environmental needs in those old “sending” areas (a term you don’t hear anymore). Unstated in his book is the historical and environmental fact that these states have very weak traditions in land-use regulations. Most of what has been done well has happened at the county level, and there has not been enough of it. Maryland has the only one, and it is an outdated and unsatisfactory model, despite the best and heroic efforts of Gerald Winegrad – its Critical Areas law. As Tom Horton has said so well in his famous book, there is no better water quality “best management practice” than a large, healthy forest. We have too few, and those that we have are not well protected, excepting our ability to buy them up – seller willing. We must do better, and we’re going to have to convert a lot of ill-suited soils to forest cover. The idea that local governments, like the counties in Maryland, are ever going to do this on their own is an illusion.

A “CCC” for the Bay?
It’s hard not to go back over the failures of the state farm bureaucracies in PA, VA and MD to actually build the manure containment structures necessary, and to implement the other physical BMP’s (stream fencing, buffer strips, new tillage and planting techniques, nutrient testing…) and look at the need to actual start planting new forests (including enhancing natural field succession) and then not think of the glaring need for a modern day equivalent of the Civilian Conservation Corps. Readers of my economic writings know by now that we’re not looking at a two-year jump start situation…we’re looking at employment needs for at least 5 years, maybe 10. And as Ernst points out with the funding needs, so with the manual labor side: they’re ongoing, not one time static additions. Sea level is going to rise, and that’s going to create a whole new set of physically demanding changes that individual family farms are going to be very hard pressed to meet by themselves. And it’s going to create a bunch of very tough location decisions so that remedies and dollars are not wasted on land that will soon be underwater.

Blue Crabs on Chicken Wrappers?
But there is no more glaring, and symbolic failure in the whole sad Chesapeake Bay clean-up saga than the ability of the major chicken producers to avoid financial responsibility for their nutrient generating waste. On this point, I think Ernst could have been tougher, and put the finger on big poultry. They deserve it, it seems to me. They’ve been very successful at putting the burdens almost completely on the middlemen and the public, under the dubious Perdue claim that their narrow margins don’t allow for the increased costs. Well Mr. Perdue, I seem to have more faith in your company’s famous advertising abilities than you do. We’ve noted, with care and attention, the way your industry has evaded that EPA call to charge just a half-cent per pound nationally to raise the funds to pay for your share of Bay clean-up programs. And we’ve done a little math. We don’t think a half-cent a pound cuts it. Not close at all. If we work from just rough numbers in our Delmarva region, that would be 600 million birds times five pounds per bird at .005 cents, generating just $15 million. So how about 5 cents per pound, or a quarter for a roaster, for those 600 million birds? That would be closer to $150 million, and now we’re really talking “sharing the costs.” Of course the public is going to pay the bill, and you’re yelling it will destroy the industry, but would it if it were across the board? Let’s assume the worst, and say only Perdue charged it. As your company has done so many other times in its ad campaigns, with your supermarket birds prominently stamped with the outline of a blue crab in the center of the bay watershed silhouette and a quarter as reminders, it soon turns your birds into the ones that everyone wants to buy to “Save the Bay,” and your sales shares go up, not down. So at even your worst nightmare of a nickel a pound, it’s not a disaster, it’s another marketing triumph. And if everybody’s got to pay, then it’s a race of who’s doing the most in reality on the ground. But as the consummate business realist you are, please stop kidding yourself that you don’t have to pay more, that we don’t have to pay more, to get the job done.

Two Tiers of Obstacles
Although he is now coming around to sound like he sees the impact of long-term ideological cycles, author Ernst doesn’t fully flesh-out the two layers of obstacles that have blocked effective Bay clean-up efforts. One is a traditional problem that would always be faced on political playing fields as complex as that of the Bay watershed, completely independent of the ideological era one was in. It has never been easy to regulate farmers or produce growers of any sort in the interest of longer term public policy goals, whether in the NJ Pinelands, NY’s Adirondacks or the Northwest’s Columbia River Gorge area. As for long term public interest in sustainable fisheries, just look at the historical struggles between watermen/fishing interests and conservationists/scientists, between commercial and recreational interests, and the cumulative, disastrous, diminished status of fishing stocks on any of the US three major coasts: largely due to the failures of the industry inclined regulatory bodies. These are timeless struggles rooted in the disharmony between the long term public interest and specific commercial interests, with Ernst noting that “the forces that drive environmental degradation are deeply sown into the political soul of the United States, posing menacing challenges to those fighting to restore large ecosystems like the Chesapeake Bay.” (Blues, page 32). And of course, as Gus Speth has shown us, the private economic forces opposing reforms are busy externalizing and transferring costs, and doing their best to keep their focus narrowly on the standard bottom line. But the second layer which was added to these traditional forces was the crippling, in theory if not in full practice, of the tools by which environmental reformers try to get the job done: regulation, revenue, government spending. All were greatly crimped by the Reagan Era, which neatly coincides with the years of attempted Chesapeake Bay clean-up, 1980-2008. This era placed a deep imprint on attitudes among regulators at EPA, as well as governors and state environmental officials in all the state capitals. It was bound to make a very difficult job across so many players, so many states, even more difficult, and it is not surprising to this writer that the clean-up effort has failed, even when the object of all the efforts was the nation’s largest and most famous estuary, an iconic place, something every environmental campaign hopes to start with on its long protection journey. But it was not enough.

Omega Protein and the finny Prols of the Bay: Menhaden
This essay has covered a lot of ground in looking at the interplay of economics and environment, from the high level of generalization in The Bridge at the Edge of the World, to the more focused example of Chesapeake Bay Blues. Gus Speth’s message that what we’ve been doing so far isn’t working was powerful and compelling, reminding us of the vast capability of our economic system to inflict havoc on the natural world and make a mockery of the word “sustainability.” He especially called our attention to the behavior and values system inside the corporation. Howard Ernst covered similar themes, focused on one ecosystem, the Chesapeake Bay, and how economic primacy and a very fragmented political system have ruined the Chesapeake “formula” as an international model for ecosystem restoration: Reagan’s EPA’s failed model, he calls it in the press. To leave our readers with a particularly vivid example, at the individual corporate and species level, we turn now to follow the trail that Ernst himself left for us by mentioning the Omega Protein Corporation and the humble Atlantic Menhaden (Brevoortia tyrannus) in his informative Appendix.

What caught my attention on page 153 was that Omega received a $20.6 million dollar federal loan from none other than NOAA (National Oceanic and Atmospheric Administration) for modernizing its operations – at a time when conservationists up and down the East Coast were struggling to limit the decimation of menhaden stocks, which was once the most harvested species, by numbers and weight. It’s a perfect example of what Speth called a “perverse subsidy.” Of course those deeply involved in Chesapeake Bay policy matters know that this issue came to a head in 2005-06 with appeals to the Atlantic States Marine Fisheries Commission (ASMFC) and the state of Virginia to end or dramatically limit harvesting of the fish in the Bay itself. But I suspect that more casual conservationists don’t know of it, and the amount of press coverage dropped off dramatically when the issue came to a rather unsatisfactory conclusion (with all due respect to the Chesapeake Bay Foundation’s comments), leaving harvesting levels at the historical averages of Omega at the time of the agreement.

“The Most Important Fish in North America”
Why is it important to keep this fish story alive? First, the Bay’s fisheries are in terrible shape, with diseases/illnesses and malnutrition hitting even once robust species like the rockfish (striped bass), and the menhaden as well. The oyster collapsed long ago, and the blue crab is in big trouble today. Menhaden have been gaining prominence as a keystone species, what some have called “the most important fish in North America.” Because its eating habits can help cleanse the Bay, and everything seems to eat the menhaden (except people), larger fish as well as many bird species (gannets, osprey…) the continuing drop from historic high landings of 1.6 billion pounds in 1956 to just 233,000,000 lbs. in the mid-1990’s should have everyone worried. Menhaden’s once vast range up and down the Atlantic coast, from North Carolina to Maine, has contracted dramatically. State after state has put a stop to large scale commercial harvesting in state waters in the Atlantic (three miles out), and in the Chesapeake Bay, allowing only limited harvesting for use as bait in a variety of fisheries (lobster, crab, hook-bait and deep-sea chumming….)

Most likely, even if you couldn’t identify this fish if it washed up on a beach, being on average just a foot long and a pound in weight, you have probably seen them en masse, in schools, if you’ve ever wondered what those disturbed surface eddies of water were just off the beach. If you kept watching, the surface disturbance turned into fish jumping and later turned red as blue-fish began attacking the menhaden, with gulls and terns ready to swoop-in and pick up the pieces. If you’re very observant and lucky, you may have seen the spectacular gannets dive headlong into the midst of a menhaden school. Yet you’ve never eaten one, because they taste awful, very oily, a feature which apparently makes them beloved of so many other protein and oil hungry swimming and flying creatures.

Although my own relationship with menhaden goes back to the earliest days of my conservation career in 1988, the person who can really tell the story is H. Bruce Franklin, another English teacher writer drawn to the sea, and who just happens to teach at Rutgers and sailed out of Keyport, not far from Sandy Hook, my first conservation base. His 2007 Island Press book about the fish, The Most Important Fish in the Sea: Menhaden and America is the long version that will soon be on my shelf. In the meantime, we can share his insights on the corporate pursuit of what’s left of this species by Omega Protein in his article, Net Losses: Declaring War on the Menhaden, which you can find online thanks to Mother Jones in their March 1, 2006 issue at http://www.motherjones.com/news/feature/2006/03/net_losses.html

Omega has a fascinating corporate history, Franklin tells us, starting with it being an offshoot of George H. W. Bush’s Zapata oil company, although that happened after Bush sold his share of it. Zapata was taken over by another major corporate character, “real estate mogul Malcolm Glazer” of Tampa Bay Buccaneers fame (or infamy), who starting selling off the oil and gas components, and buying up competing menhaden operations along the Gulf and Atlantic coasts. In 1998, Zapata launched Omega Protein as a separate operation, although it retained a 58% share in a firm with a 2006 worth of just $145 million (and around $140-143 million in 2009), something to keep in mind for our concluding recommendations. Since 2006, Omega has bought back all of the Zapata owned shares. The remarkable thing about Omega is that is totally dependent on its Atlantic and Gulf harvests of menhaden for its wide variety of products: health food and cooking Omega 3 fish oil products, an ingredient for pet, poultry and livestock feed, and aquaculture, as an organic pesticide…and other animal and human health related products, and as a plant fertilizer.

“Overfishing menhaden: ‘…like removing your liver.’”
The huge problem, as Franklin tells the story, is that as menhaden stocks in the sea have collapsed, the scientific “stock” of menhaden as a crucial component of marine ecosystems, especially the Chesapeake Bay, has risen. He cites the work of marine biologist Sara Gottlieb, who has written about the menhaden’s prodigious water filtering capacity (four gallons a minute), comparing them to the work of the human liver. Now the very interesting thing about Franklin’s article is its focus on the feeding habits of the menhaden: that they go after phytoplankton, a good part of which consists of algae, which as we know from the saga of the chicken industry, gets out of control in the Bay due to nutrient overloading. So big schools of menhaden would help to eat large amounts of Bay algae. By extension of the logic, says Gottlieb, “overfishing menhaden ‘is just like removing your liver.’” And, Franklin points out, we’ve lost the oyster which used to clean the bottom of the bay with its tremendous filtering capacity; now we are losing the mid-and top layer filterers.

My, what a painful, entangled tale this has become. Everyone knows the Bay is in big trouble, and menhaden now are the keystone species also big trouble, pushing the older critical creatures (oysters, rockfish, blue crabs) out of the limelight. All the other states seem to get the picture of the menhaden as the aquatic “liver” – and have clamped down on Omega’s operations. All the Chesapeake Bay states except Virginia (and North Carolina on the Atlantic coast), that is, which is the home state of an Omega Protein processing plant, research facility, ten vessels and 8 spotter planes operating out of Reedville, located on a peninsula just south of the Potomac River, and across the Bay from Crisfield, Maryland. Now here’s the great irony as Franklin presented it in early 2006, and on top of that perverse $20 million dollar loan from NOAA that Ernst has cited:

What purpose does the menhaden reduction industry serve by slaughtering and commodifying menhaden? Omega’s financial reports disclose that fish oil is a substitute for vegetable fats and oils, and fish meal, the company’s main product, is a substitute for soybean meal, which even the industry journal National Fisherman acknowledges ‘serves the same purpose.’ If Omega’s main product – chicken and pig feed – is just a stand-in for soy, why not shut down or at least downsize the fishery and plant more soybeans? That would benefit fish and farmers, create jobs, and reduce nitrogen runoff, since soybeans keep nitrogen fixed in the soil.

I think, on the whole, and for the good of the Bay, the near Atlantic, and the Gulf, he’s right. After taking a look at the company’s website, at http://www.omegaproteininc.com/, it’s a little difficult to decide just how much menhaden oil is going into feeding Delmarva chickens, only to drain back into the Bay in a vicious cycle. They don’t highlight the poultry angle, and the product line seems to be diversifying into pet food, special veterinary products, aquaculture and so forth, but nonetheless, you can find, with some digging, a hen’s picture heading the “regular” fish meal line under the Agri-Products-Feed Ingredients.

Buying Out Omega?
What catches my attention about Omega is the very modest net worth of the whole operation, some $140-145 million. Based on the numbers presented, the Reedville, VA operation by itself has to be much less, perhaps $40-60 million. The scope of the disaster on Wall Street, the Bailout, the Stimulus plan, and the “final accounting,” preparing us for carnage in the range of billions and trillions, makes a buy-out scenario seem very doable, and a good bargain for the Bay and all the creatures dependent on a growing and healthy stock of menhaden. At minimum, a five-year moratorium on commercial harvesting in the Bay is called for by the urgency of the situation. Franklin notes that Omega’s operations in the Gulf are pretty close to another marine ecosystem disaster, the huge and growing dead zone where the Mississippi enters the Gulf. With a similar tale of nutrient overload, algae growth stemming from the pollution running off the Midwest’s farm fields, it may make sense to keep the menhaden numbers growing there as well, although the politics in the Gulf states may be tougher than here in Virginia.

In Virginia, we have, of course, a Democratic governor, Timothy Kaine, who now wears an additional hat as national Democratic Party Chairman. Hmmm. I’ve never seen one company, of such a small financial scale, that looks like it’s having such a disproportionate negative effect on a critical, keystone marine species, in an already troubled ecosystem(s). (The company claims the combined fishing fleet is down to 40 vessels from Franklin’s 2006 total of 61, and still with 32 planes).

Now couldn’t those vessels and planes be put to other uses, perhaps within the Department of Homeland security, which might also contribute some funding toward a switch in “duties.” Lou Dobbs, always worried about protecting the nation’s borders, would make a fine Coast Guard auxiliary admiral, and can supervise Omega’s new mission from one of its spotter planes. Well, just a passing thought.

A Closing Observation

Near the end of the December 27, 2008 article in The Washington Post about “Broken Promises on the Bay,” reporter David A. Fahrenhold quotes a challenge that Maryland Department of Natural Resources official Frank W. Dawson III tosses out to the general public. It is preceded by a question that Fahrenhold says leaders are asking themselves: “how badly does the public really want this?” According to Dawson, “‘ there’s a difference between the idea of ‘I want to have a clean bay,’ and what it might require me to change {about} the way I have to live my life…we collectively , as a society, may not be able to understand…the sacrifices necessary to get there’”

At first thought, this seems like a good and fair question. Upon further reflection, and in keeping with this writer’s work over the past two years, and for this essay, it perhaps goes too far in tossing the ball back entirely in the lap of the public, and getting elected officials and the mainstream press off the hook. The thrust of the first Fahrenthold article, has been, after all, how officialdom in the formal Bay mechanisms has soft-pedaled the news of failure and inability to meet the goals. And The Post itself seems to have taken the major chicken growers off the hook in this article, forgetting entirely Goodman’s work from a decade earlier – which is still available online. And ask yourself, as I did: how many people have heard of author Howard R. Ernst or his book, Chesapeake Bay Blues, before reading this? I hadn’t, and nobody told me about him either, despite having personally initiated many conversations about the trouble the Bay is in.

As this writer has been working on this long essay over the past two months, he, like many other “how badly do you want this” citizens have been reading about the great peanut butter recall traced to the problems of a Peanut Corporation of America plant in Blakely, Georgia, one under the oh so “watchful” eye of both Georgia inspectors and the federal Food and Drug Administration. According to a number of accounts I’ve read, the company was shipping products even after they had tested positive for salmonella bacteria in 2007 and 2008. From what I’ve learned, it was largely a self-inspection, self-regulatory system with a FDA veneer. Are my readers therefore surprised at its complete inadequacy? Eight dead and 550 sick inadequate. I don’t want to hear it from the Republican Right and other defenders, including far too many Democrats, who will now say that it proves that regulations don’t work. Regulatory systems can’t work when the people doing the regulating have had 30 years of Reagan brainwashing that the private sector knows best and that the regulators themselves are nothing but bumbling bureaucrats. This is just the Christopher Cox, SEC story all over again, now with fatal consequences.

And so, Mr. Frank W. Dawson III, whether the public wants to change or not, economic events are going to make great impositions on us all, like it or not. However, the public doesn’t have a fighting chance to be the authors of even a portion of the changes necessary unless the elected officials and public servants carrying out the new regulations (and the old ones that are still valid) have a changed relationship to the economic powers they’re supposed to be regulating. I’ve named them for my readers quite specifically in regards to the Bay. I don’t know whether the clean up of the Bay will remain a priority given the economic tsunami washing over us. But I do know that you’re just one Department over from those at Maryland Agriculture (and a thousand miles?), and the Environmental Working Group has left us with a very good first question: “More than $180 million in state and federal conservation funds have been spent in Maryland over the past 14 years, yet neither state or federal authorities could identify specific locations where the majority of the money was spent or site-specific problems that the spending addressed.” So where did the money go and why is there no investigation and public accounting? Please don’t take it personally, either you or Maryland, because we’re asking the same in regards to the Wall Street calamity, and calling for a new Pecora investigation/hearing.

I do know this, however. We’ll never get there until, in a new era, public regulators have a standing more equal to, in law, structure, and social reality, those they are charged with regulating. We have, in this regard, still a very long way to go.

William R. Neil
Rockville, MD