TT's Lost in Tokyo — by TokyoTom

(Note; tongue firmly in cheek: see my straight post earlier.)

Well, maybe they weren’t WISE to build a row of nuclear power plants on a coastline known for earthquakes and a history of prior massive tsunamis, but surely the earthquake and tsunami are not TEPCO’s fault, right?

And it’s not THEIR fault that

• their founding shareholders took advantage of Japanese limited liability incorporation laws that free shareholders from any concern about personal liability (and, as TEPCO’s shares are “fully paid-up”, from any future cash calls by management) that would otherwise exist for private enterprises;
• the Japanese government allowed them to qualify as a ‘public company’ and thus widely raise capital from the public, under regulations that isolate managers from shareholders and create barriers to entry);
• the Japanese government licensed TEPCO as a public utility, effectively granting it a monopoly in the greater Tokyo area,
• the Japanese government ensured that TEPCO could raise the long-term capital necessary to fund the nuclear power plants,
  • by authorizing to set rates guaranteeing TEPCO’s returns on its investments by government,
  • by licensing the power plants themselves and approving their location, suppliers and safety, and
  • by giving TEPCO express liability caps for damages that radiation releases may cause others if an “act of nature” occurs?

And surely none of the concatenation of these acts of government, the construction of the plants and the earthquake or tsunami is the PERSONAL responsibility of any of TEPCO’s emploees, managers or executives, right? (Much less of the poor shareholders!) After all, having a corporation means that we get to embark on mega-projects that pose mega-risks, all without any real people being  personally responsible! How else, without these layers of protection for personal responsibility provided by government, would progress ever be made?

Thus, we can see clearly that this was all nothing more than a simple ACCIDENT, in which “TEPCO” – whoever the heck we consider that to mean – is the BIGGEST VICTIM – both of the earthquake/tsunamis and of Japanese silly government and citizens and customers who now clamor for TEPCO to pour more BILLIONS down a money hole! Outrageous – all of these snivelling people should just go away, and lump it, so that TEPCO can more easily figure out what it should do next. Cleanups are for governments and the smaller victims.

Such a wonderful system, allowing such marvelous works! Though unfortunate calculations might be made, the system allows us to quickly move ahead, as if nothing had happened. Naturally, TEPCO might require further assistance from government and government-protected banks, so that TEPCO can build more engineering marvels.

Boy, aren’t Austrian insights wonderful?

[Those of you who missed or who wish to refresh your recollection regarding my posts last year on a very related case, might enjoy the following link:

http://mises.org/Community/blogs/tokyotom/search.aspx?q=victim+bp.]

Further to my previous posts, excerpted below are the recommendations that Paul Joskow (energy expert, MIT economist and current president of the Alfred P Sloan Foundationn) recently made in a speech at the National Press Club:

What is to be done?

We need to stop dealing with the electric power sector by placing band aids on the Federal Power Act of 1935. We need a comprehensive national policy for the electric power sector — a Federal Power Act of 2009 to replace the Federal Power Act of 1935. A policy that respects legitimate state rights but also reflects the contemporary attributes of electricity generation, transmission and distribution technologies, opportunities for innovation, and the public policy demands that are or will be placed on the electric power sector. While, I recognize that there are many technical differences between them, the restructuring of the U.S. natural gas industry provides a very successful basic organizational model to start with for the electric power industry. The special attributes of electricity and electricity networks can be layered on top of this model.

What provisions might a Federal Power Act of 2009 contain?

1. The economic, planning, reliability, and siting review and regulation of high voltage transmission facilities with voltages above, let’s say, 69 kv, should be federalized and the prices for transmission service over this network fully unbundled from generation and distribution service and made transparent. This would follow the structural and regulatory reform model associated with interstate pipeline transportation of natural gas and the successful implementation of electricity sector reform models introduced in other countries. Recent federal legislation effectively “federalized” reliability rules and made them mandatory. This is a step in the right direction.

2. The key provisions of FERC Order 2000 should be put into law. This would require the creation of [additional] TROs [regional transmission organizations] that manage the operation of large regional transmission networks, implement FERC’s transmission access, pricing, and planning regulations, and operate voluntary wholesale markets for electric energy, ancillary services, capacity and transmission rights. There is abundant evidence (a) that RTOs are needed to support efficient competitive markets, (b) that expanding the geographic expanse of RTOs and improving the market designs for energy, ancillary services and capacity lead to efficiency improvements, (c) and that wholesale market designs built around what is generally referred to as the “standard market design,” augmented by capacity obligations and capacity markets, promote economic efficiency.

3. Vertically integrated utilities should be required to unbundled generation service from distribution service so that their respective costs or prices are transparent. They should also be required at least to move their generation facilities to a separate generation affiliate. Existing cost-of-service arrangements governing existing generating capacity can be replicated through properly structure long-term wholesale contracts between distribution and generation affiliates that are regulated by FERC. This will preserve the imbedded economic benefits (or costs) of existing generating capacity for retail consumers. These contracts would be transparent wholesale power contracts and regulated by the FERC.

4. The states would be free to decide whether or not they wanted to introduce retail competition for some or all customer classes. Where distribution companies continue to have obligations to serve retail customers at regulated retail prices, however, they would be required to meet at least their incremental power supply needs through competitive wholesale market solicitations managed by the states using procurement mechanisms that meet reasonably flexible FERC competitive procurement criteria. In states that have already restructured and adopted a competitive wholesale market model, all default retail supply obligations would be met through approved competitive procurement programs.

5. Any federal loan guarantees available for financing nuclear, CCS, or renewable generation would be available only for “merchant” generating facilities and not to facilities subject to traditional cost-of-service regulation. Generators should get loan guarantees only once. Regulated generators can effectively get loan guarantees through cost of service regulation. Merchant generators can get similar financing relief from federal loan guarantees. This would roughly place regulated and merchant generation investment options on a level playing field.

6. [Assuming that a cap and trade program is enacted,] Any free CO2 allowances allocated to the electric power sector should go directly to electricity consumers through non-distortionary lumpsum distributions based on, say, historical consumption in a base period. All generators that emit CO2 would be required to buy allowances in the market to cover their emissions. Generators subject to cost-of-service arrangements would be allowed to pass the associated costs through the retail price regulatory process and they would be reflected in retail prices. Consumers would get a lump sum “dividend” on their bills each month for the value of the allowances allocated to them. That is, consumers would face the efficient retail price on the margin, while receiving a dividend that would not depend on whether their consumption increases or decreases, but would lower their total bills. This would then provide better retail price signals on the margin where it matters for stimulating wise consumption decisions.

7. State regulatory jurisdiction and regulation would continue over distribution facilities, sub-transmission facilities below 69 say kv, whether and how retail competition will be permitted, energy efficiency programs, and competitive procurement of generation consistent with FERC procurement criteria. This is no different from the states’ jurisdiction in the natural gas industry.  …

It will take significant political courage to design and implement a comprehensive electricity sector reform program because there are powerful interest groups that benefit from the status quo. 

(emphasis added)

I encourage interested readers to see Joskow`s full written remarks, linked above.

H/T Lynne Kiesling.

I believe that a key problem – and thus a key opportunity – that our country faces is over-regulation and misregulation of the electric power sector.  Regulatory reform in this area is a middle ground, both for enviros and those whose principle concerns are economic liberty and healthy markets.

As I noted previously, Paul Joskow, current President of the Alfred P Sloan Foundation and former head of the MIT Department of Economics (now on leave) and former director of the MIT Center for Energy and Environmental Policy Research, laid out a history of the electric power regulation and a series of regulatory reform proposals in a speech given at the National Press Club in September last year.

Here is an excerpt of his remarks on the evolution and current status of electric power regulation: 

For almost 50 years this sector was stuck in an organizational and regulatory framework that may have been well matched to the electricity generation and transmission technology available in 1935, but was surely poorly matched to changes in technology, new technological opportunities, contemporary investment needs, or current economic and environmental challenges. Then in the early 1980s, electricity sector reformers began to stir, responding to concerns about the system of regulated vertically integrated monopolies inherited from the 1930s. The “good old days” of regulation represent a view to the past with rose colored glasses. The system of regulated vertically integrated monopoly was plagued by cost overruns associated with nuclear power plants, poor operating performance for both nuclear and large fossil-fueled plants, poor fuel procurement decisions, wide price differences between neighboring areas, excess generating capacity, inefficient dispatch and economy energy trading between generating companies, regulatory incentives to keep old inefficient plants operating rather than retiring them, too many small utilities to take advantage of economies of scale, institutional and technological barriers to using the transmission network to access lower cost power, productivity lags, and inefficient retail prices. The system …was unnecessarily costly and inefficient.

Reformers looked to the favorable experience with restructuring, competition, and regulatory reform in other sectors and with electricity in other countries to help to solve the problems associated with the fragmented electric power sector made up of over 100 vertically integrated geographic monopolies. Municipal distribution companies and large industrial customers were especially aggressive at promoting reforms focused on open transmission access, the creation of transparent organized regional competitive wholesale markets, and (in the case of large industrial customers) retail competition.

A large number of states initially embraced this restructuring, competition, and regulatory reform vision and began to implement it. In 2000 it looked like restructuring and competitive market reforms were going to sweep the U.S. electric power industry.

Then came the California electricity crisis, the collapse of Enron and a number of merchant generating companies, increased volatility to natural gas markets and associated volatility in wholesale electricity market prices, and a long march upward in fossil fuel prices ultimately resulting in rising retail electricity prices in both regulated and restructured states. Most of the states that were leaders in restructuring during the late 1990s, when natural gas prices were low and there was excess capacity, initiated reforms during a period when regulated prices for generation service were expected to be much higher than perceived comparable competitive wholesale market prices. The expectation was that over time retail prices would fall. This forecast was based on the assumption that low prices for natural gas in particular would continue and that a new system built on efficient CCGT technology would evolve. At that time, a major “problem” that many of these states had to cope with were the “stranded generation costs,” primarily associated with what were perceived to be costly nuclear power plants, that were expected to result from the introduction of real wholesale and retail competition. This was expected to be a “transition problem” because it was expected that competition would result in market prices that would fall to levels below the embedded costs of nuclear plants and older fossil plants that would have otherwise been used to calculated (higher) regulated retail prices.

However, as natural gas and coal prices continued to rise far above anyone’s expectations, many of these states soon found that competitive market prices were rising dramatically along with natural gas prices (which affect competitive wholesale electricity prices in most regions of the country) — arguably rising to levels above what regulated prices would have been today under the status quo ante (though this requires a difficult counterfactual analysis). This, of course does not mean that these electricity sector reforms were a failure. In states that adopted the restructuring, wholesale and retail competition model, retail prices now reflect marginal supply costs, as they should to give consumers the right price signals to use electricity wisely. Rather it means that regulated prices are or would have been too low to give consumers appropriate incentives to make wise consumption decisions.

In evaluating restructuring, competition and regulatory reform one must understand all of its efficiency and distributional properties, not just at short run price effects. From an efficiency perspective, the restructuring reforms implemented at the federal level and in some states have led to numerous cost reducing successes in the face of rising fossil fuel prices.  These include dramatic improvements in the performance of divested nuclear plants, significant improvements in the performance of fossil plants that now face market incentives, roughly 200,000 GW of new (mostly merchant) gas-fired generation has been added to the system between 1999 and 2004, while the risk of cost overruns, fuel price fluctuations, demand variations, and availability problems experienced by some of these plants were shifted to their owners through the market rather than borne by consumers through cost-of-service regulation. There is good empirical evidence that the expansion of the boundaries of RTOs (e.g. PJM) have led to significant changes in power flows and more efficient dispatch of power plants, while inefficiencies are observed at the boundaries of RTOs that have not agreed to be consolidated (e.g. NY/NE). Gradual improvements in wholesale market designs have increased the efficiency of these markets and have restored investment incentives. Moreover, retail prices now respond quickly to changes in wholesale market prices, providing consumers with the right price signals rather than the wrong price signals resulting from retail price regulation. And these price signals are properly differentiated by time and location to reflect marginal supply costs, rather than the depreciated original cost of generating plants built 50 years ago. Demand management programs linked to short-term supply and demand conditions are expanding quickly as well in the reform regions.

Of course, the full reform program has not been implemented in large areas of the South, the West, and portions of the Midwest. The partial electricity reform equilibrium that we appear to be in now will not serve the country well and is potentially quite unstable. We have a system that is 1/3 reformed and 2/3 stuck in the structural and regulatory paradigm of the 1935s or somewhere in between.

The problems created by an antiquated industry structure and incompatible mix of state and federal regulation have not gone away. They are lurking out there to undermine achieving the goals that I enumerated earlier. Absent a comprehensive national electricity policy framework this sector is and will perform poorly in meeting the four sets of goals that I discussed earlier.

More later.

David Talbot, chief correspondent for the MIT Technology Review, has an excellent, long piece in the January/February online issue that explores some the of intra- and inter-state regulatory hurdles that frustrate both the expansion of renewable power and a truly free power market.

I’d like to excerpt some portions of the article here:

When its construction began in the late 19th century, the U.S. electrical grid was meant to bring the cheapest power to the most ^­people. Over the past century, regional monopolies and government agencies have built power plants–mostly fossil-fueled–as close to popu­lation centers as possible. They’ve also built transmission and distribution networks designed to serve each region’s elec­tricity consumers. A patchwork system has developed, and what connections exist between local networks are meant mainly as backstops against power outages. Today, the United States’ grid encompasses 164,000 miles of high-voltage transmission lines–those familiar rows of steel towers that carry electricity from power plants to substations–and more than 5,000 local distribution networks. But while its size and complexity have grown immensely, the grid’s basic structure has changed little since Thomas ­Edison switched on a distribution system serving 59 customers in lower Manhattan in 1882. …

While this structure has served remarkably well to deliver cheap power to a broad population, it’s not particularly well suited to fluctuating power sources like solar and wind. First of all, the transmission lines aren’t in the right places. The gusty plains of the Midwest and the sun-baked deserts of the Southwest–areas that could theoretically provide the entire nation with wind and solar power–are at tail ends of the grid, isolated from the fat arteries that supply power to, say, Chicago or Los Angeles. Second, the grid lacks the storage capacity to handle variability–to turn a source like solar power, which generates no energy at night and little during cloudy days, into a consistent source of electricity. And finally, the grid is, for the most part, a “dumb” one-way system. Consider that when power goes out on your street, the utility probably won’t know about it unless you or one of your neighbors picks up the phone. …

The U.S. grid’s regulatory structure is just as antiquated. While the Federal Energy Regulatory Commission (FERC) can approve utilities’ requests for electricity rates and license transmission across state lines, individual states retain control over whether and where major transmission lines actually get built. In the 1990s, many states revised their regulations in an attempt to introduce competition into the energy marketplace. Utilities had to open up their transmission lines to other power producers. One effect of these regulatory moves was that companies had less incentive to invest in the grid than in new power plants, and no one had a clear responsibility for expanding the transmission infrastructure. At the same time, the more open market meant that producers began trying to sell power to regions farther away, placing new burdens on existing connections between networks. The result has been a national transmission shortage.

These problems may now be the biggest obstacle to wider use of renewable energy, which otherwise looks increasingly viable. Researchers at the National Renewable Energy Laboratory in Golden, CO, have concluded that there’s no technical or economic reason why the United States couldn’t get 20 percent of its elec­tricity from wind turbines by 2030. The researchers calculate, however, that reaching this goal would require a $60 billion investment in 12,650 miles of new transmission lines to plug wind farms into the grid and help balance their output with that of other electricity sources and with consumer demand. The inadequate grid infrastructure “is by far the number one issue with regard to expanding wind,” says Steve Specker, president of the Electric Power Research Institute (EPRI) in Palo Alto, CA, the industry’s research facility. “It’s already starting to restrict some of the potential growth of wind in some parts of the West.”

The Midwest Independent Transmission System Operator, which manages the grid in a region covering portions of 15 states from Pennsylvania to Montana, has received hundreds of applications for grid connections from would-be energy developers whose proposed wind projects would collectively generate 67,000 megawatts of power. That’s more than 14 times as much wind power as the region produces now, and much more than it could consume on its own; it would represent about 6 percent of total U.S. electricity consumption. But the existing transmission system doesn’t have the capacity to get that much electricity to the parts of the country that need it. In many of the states in the region, there’s no particular urgency to move things along, since each has all the power it needs. So most of the applications for grid connections are simply waiting in line, some stymied by the lack of infrastructure and others by bureaucratic and regulatory delays. …

Utilities, however, are reluctant to build new transmission capacity until they know that the power output of remote wind and solar farms will justify it. At the same time, renewable-energy investors are reluctant to build new wind or solar farms until they know they can get their power to market. Most often, they choose to wait for new transmission capacity before bothering to make proposals, says Suedeen Kelly, a FERC commissioner. “It is a chicken-and-egg type of thing,” she says. …

Smart-grid technologies could reduce overall electricity consumption by 6 percent and peak demand by as much as 27 percent. The peak-demand reductions alone would save between $175 billion and $332 billion over 20 years, according to the Brattle Group, a consultancy in Cambridge, MA. Not only would lower demand free up transmission capacity, but the capital investment that would otherwise be needed for new conventional power plants could be redirected to renewables. That’s because smart-grid technologies would make small installations of wind turbines and photovoltaic panels much more practical.  …

The good news is that many utilities have begun installing the requisite meters–ones that intelligently monitor power flow out of a house as well as into it. The question now is how to move beyond the blizzard of pilot projects, install smarter technologies across the grid, and begin integrating more renewable power into the new infrastructure. “The smart-grid vision is nice; we all have our color PowerPoint slides,” says Don Von Dollen, who manages intelligent-­grid research at EPRI. “I think people kind of get the vision by now. Now it’s time to get stuff done.”  …

Last summer, former vice president Al Gore began arguing that the country needed to implement an entirely carbon-free electricity system within a decade to avert the danger of global warming. As part of his vision, Gore called for a “unified national smart grid” that would move power generated from renewable sources to cities, increase the efficiency of electricity use, and allow for greater control over renewable resources. He estimated that the grid overhaul would cost $400 billion over 10 years.  …

While pilot projects like the one in Boulder are worthwhile as a way to demonstrate new technologies, they’ve been implemented in hodgepodge fashion, with different utilities deploying different technologies in different states. Transmission projects are advancing incrementally, but they’re often complicated by conflicts between the states. “What we have today is this patchwork of rules and regulations that vary by state,” says Peter Corsell, CEO of GridPoint, a startup in Arlington, VA, that makes smart-grid software and is participating in the Boulder project. “We are all entrenched in this broken system, and there is no agreement on how to fix it. It’s a vicious circle.”

Some think that the answer is to give FERC more ­authority. Today, the agency can overrule states’ decisions on where to site transmission lines, but only in regions that the U.S. Department of Energy has designated as critical for the security of the elec­tricity supply. So far, only two such corridors have been designated: one in the mid-Atlantic states and another in the Southwest. Even in those regions, delays continue. Southern California Edison has proposed a major transmission line in the southwest corridor; stretching from outside Los Angeles to near Phoenix, AZ, it would be able to handle power generated by future photovoltaic and solar-thermal power plants. But Arizona rejected the idea, so the utility is preparing to take its plans to FERC.

Others think the solution is a new federal policy that would make the market for renewable power more lucrative, perhaps by regulating carbon dioxide emissions, as the cap-and-trade policy proposed by Obama would do. Under such a policy, wind energy and other carbon-free electricity sources would become much more valuable, providing an incentive for utilities to expand their capacity to handle them (see “Q&A,” p. 28). “It could all change very fast,” says Will Kaul, vice president for transmission at Great River Energy in Minnesota, who heads a joint transmission planning effort that includes 11 utilities in the Midwest.  …

[A]n explosion in the use of renewables will depend heavily on upgrading the grid. That won’t come cheap, but the payoff may be worth it. “We should think about this in the same way we think about the role of the federal highway system,” says Ernest Moniz, a physics professor at MIT who heads the school’s energy research initiative. “It is the key enabler to allow us to modernize our whole electricity production system.”

(emphasis added)

One would think that deregulation of state utilities would also be a step in the direction of freeing up markets, introducing competiion and incentivizing both new grid investments and profitting from efficiency improvements.

In any case, I hope to vist this subject in other posts.

[cross-posted from the We Build Our Society FB group]

What is a “drone corporation”?

I don’t wanna know — I just want to pretend that I need Govt to SAVE US! from “business” and “free markets”.

http://www.slideshare.net/BobMonks/what-is-a-drone-corporation

“Corporations “un-owned” by their shareholders—corporate “drones”—are far worse corporate citizens and have significantly lower average shareholder returns than firms in which owners still exercise authority over management”

http://www.corporatecrimereporter.com/news/200/monksanddr.oneceos05062013/

“First, corporations have ascended to levels of unprecedented power in the United States, thanks in large part to legal rulings. The Supreme Court’s decision in the 2010 case Citizens United v. Federal Election Commission, for example, removed virtually all limitations on corporate political spending—a “grotesque decision,” rightly judges Monks. Second, the leaders of the largest and most powerful corporations in the U.S. (ExxonMobil, IBM, and General Electric top the list) have never been less accountable to shareholders. This is because of weak boards and the movement of large ownership positions to passive institutional investors, among other things. The result is “drone corporations,” in which “manager kings” have free rein to pursue their own self-interest. Monks puts more than half of the Fortune 500 among their numbers.

“The dangers in such a situation are obvious. Monks offers up a litany of them, including the gutting of the political system, regulatory abuse, tax avoidance, the mistreatment of U.S. workers, obscene CEO compensation packages—and the list goes on.”

http://www.strategy-business.com/blog/In-Drone-Corporations-Self-Interest-Prevails?gko=cda90

“What makes a corporation a drone corporation?

“By drone corporation, I mean one in which there is no element of effective ownership to monitor or to restrain the exercise of power by the corporate executive,” Monks told Corporate Crime Reporter in an interview last week.

Most major American corporations are drone corporations.

“I would say that about 60 percent of the biggest ones are,” Monks said. “Companies like General Electric. Exxon. IBM.”

Name some that aren’t drones?

“Microsoft, Berkshire Hathaway, Google, Apple,” Monks says.

The key characteristic of a drone corporation?

“Drones were more likely to externalize liability,” Monks said. “In comparing drone corporations to non-drone corporations, we discovered that the drone corporations were distinctly more likely to externalize liability. They were distinctly more liable to be indicted for criminal activity. And the extent of their criminal fines were significantly larger than those for the non drones.”

“There are now a significant number of drone corporations that use the violation of criminal law and the fines and penalties that result as a sales expense that on balance they have concluded is worthwhile.”

“This is true for companies like Pfizer in the pharmaceutical industry. And it seems to be a policy that British Petroleum has followed. They are prepared as a matter of management policy to conduct themselves in such a way as to violate criminal laws, to accept criminal penalties, and then continue to violate criminal law. That seemed to be substantially more prevalent in drone corporations than in non drone corporations.””

http://www.corporatecrimereporter.com/news/200/monksanddroneceos05062013/

For those befuddled about the “Global War on Terror” and the attacks on US embassies/consulates in Libya and Egypt, perhaps this bit of fun from The Onion in 1998 might help:

State Department To Hold Enemy Tryouts Next Week (excerpts below; go to link for full piece)

Taking steps to fill the void that has plagued the American military-industrial complex since the 1991 collapse of the Soviet Union, Secretary of State Madeleine Albright announced Tuesday that the U.S. will hold enemy tryouts next week. …

The decision to hold enemy auditions was made during an Oct. 16 meeting at the Pentagon attended by a number of top military-industrial-complex officials, including Albright, Defense Secretary William Cohen, the Joint Chiefs of Staff, Senate Armed Services Committee Chair Strom Thurmond (R-SC) and Lockheed Martin CEO Thomas Reuthven.

“Everyone was of the opinion that an enemy was needed–and fast,” said Reuthven, whose company has laid off 14,000 employees since the end of the Cold War. “Nobody wins when there’s peace.”

General Electric CEO Jack Welch, who was also at the meeting, agreed. “Our profits are down 43 percent from 10 years ago. We sold more tritium hydrogen-bomb ICBM/MIRV triggers in 1988 than in the last six years combined,” he said. “Something had to be done.” …

Speaking to reporters, McDonnell Douglas CEO Richard Klingbell said the State Department should have foreseen the possibility of peace and taken steps to avoid it years ago.

“For decades, we took Soviet aggression and the arms race for granted,” Klingbell said. “We failed to realize that one day it might all come to an end. We failed to sow the seeds of future foreign discord, for our children’s sake. Thankfully, though, we’re finally setting things straight. We’re finally remembering that to make it in this world, you’ve got to have enemies.”

[Earlier posts by me on “defense” issues here:  http://tokyotom.freecapitalists.org/2008/05/27/ironic-success-neocon-venture-influence-wanes-progress-middle-east/ and here: http://tokyotom.freecapitalists.org/2007/11/22/war-profiteering-quot-parasitic-imperialism-quot/.]

From columnist Anand Giridharadas of the New York Times on September 9 (emphasis added):

when Ms. Palin strode onto the stage last weekend at a Tea Party event in Indianola, Iowa. Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide.

The next day, the “lamestream” media, as she calls it, played into her fantasy of it by ignoring the ideas she unfurled and dwelling almost entirely on the will-she-won’t-she question of her presidential ambitions.

So here is something I never thought I would write: a column about Sarah Palin’s ideas.

There was plenty of the usual Palin schtick — words that make clear that she is not speaking to everyone but to a particular strain of American: “The working men and women of this country, you got up off your couch, you came down from the deer stand, you came out of the duck blind, you got off the John Deere, and we took to the streets, and we took to the town halls, and we ended up at the ballot box.”

But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.

She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).

In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.

Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.

“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”

Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.

Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.

Strangely, she was saying things that liberals might like, if not for Ms. Palin’s having said them.

“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”

Is there a hint of a political breakthrough hiding in there?

The political conversation in the United States is paralyzed by a simplistic division of labor. Democrats protect that portion of human flourishing that is threatened by big money and enhanced by government action. Republicans protect that portion of human flourishing that is threatened by big government and enhanced by the free market.

What is seldom said is that human flourishing is a complex and delicate thing, and that we needn’t choose whether government or the market jeopardizes it more, because both can threaten it at the same time.

Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.

On one side would be those Americans who believe in the power of vast, well-developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better. On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.

No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting.

We can see the same phenomenon in extractive economies wherever governments own the resources, but locals own the risks – as in the Gulf of Mexico/BP (as I noted in a number of posts) accident, Nigeria, Ecuador/Texaco, etc.

We can also see this more generally with crony, corporation-based capitalism.

Japan’s version is more complicated and seductive: the locals get paid off – at the expense of electric power ratepayers who are subject to a government-supported monopoly – in a way that encourages them to abandon their own livelihoods and further dependent on handouts.

Below are excerpts from a May 31  article at the New York Times:  In Japan, a Culture That Promotes Nuclear Dependency

Excerpts:

When the Shimane nuclear plant was first proposed here more than 40 years ago, this rural port town put up such fierce resistance that the plant’s would-be operator, Chugoku Electric, almost scrapped the project. Angry fishermen vowed to defend areas where they had fished and harvested seaweed for generations.

Two decades later, when Chugoku Electric was considering whether to expand the plant with a third reactor, Kashima once again swung into action: this time, to rally in favor. Prodded by the local fishing cooperative, the town assembly voted 15 to 2 to make a public appeal for construction of the $4 billion reactor. …

As Kashima’s story suggests, Tokyo has been able to essentially buy the support, or at least the silent acquiescence, of communities by showering them with generous subsidies, payouts and jobs. In 2009 alone, Tokyo gave $1.15 billion for public works projects to communities that have electric plants, according to the Ministry of Economy, Trade and Industry. Experts say the majority of that money goes to communities near nuclear plants.

And that is just the tip of the iceberg, experts say, as the communities also receive a host of subsidies, property and income tax revenues, compensation to individuals and even “anonymous” donations to local treasuries that are widely believed to come from plant operators. …

In a process that critics have likened to drug addiction, the flow of easy money and higher-paying jobs quickly replaces the communities’ original economic basis, usually farming or fishing.

Nor did planners offer alternatives to public works projects like nuclear plants. Keeping the spending spigots open became the only way to maintain newly elevated living standards.

… Towns become enmeshed in the same circle — which includes politicians, bureaucrats, judges and nuclear industry executives — that has relentlessly promoted the expansion of nuclear power over safety concerns. …

“This structure of dependency makes it impossible for communities to speak out against the plants or nuclear power,” said Shuji Shimizu, a professor of public finance at Fukushima University.  …

Much of this flow of cash was the product of the Three Power Source Development Laws, a sophisticated system of government subsidies created in 1974 by Kakuei Tanaka, the powerful prime minister who shaped Japan’s nuclear power landscape and used big public works projects to build postwar Japan’s most formidable political machine.

The law required all Japanese power consumers to pay, as part of their utility bills, a tax that was funneled to communities with nuclear plants. …

Political experts say the subsidies encourage not only acceptance of a plant but also, over time, its expansion. That is because subsidies are designed to peak soon after a plant or reactor becomes operational, and then decline.

“In many cases, what you’ll see is that a town that was depopulating and had very little tax base gets a tremendous insurge of money,” said Daniel P. Aldrich, a political scientist at Purdue University who has studied the laws.

As the subsidies continue to decline over the lifetime of a reactor, communities come under pressure to accept the construction of new ones, Mr. Aldrich said. “The local community gets used to the spending they got for the first reactor — and the second, third, fourth, and fifth reactors help them keep up,” he added.

Critics point to the case of Futaba, the town that includes Fukushima Daiichi’s No. 5 and No. 6 reactors, which began operating in 1978 and 1979, respectively.

According to Professor Shimizu of Fukushima University, Fukushima Daiichi and the nearby Fukushima Daini plants directly or indirectly employed some 11,000 people in communities that include Futaba — or about one person in every two households. Since 1974, communities in Fukushima Prefecture have received about $3.3 billion in subsidies for its electrical plants, most of it for the two nuclear power facilities, Mr. Shimizu said.

Despite these huge subsidies, most given in the 1970s, Futaba recently began to experience budget problems. As they did in Kashima, the subsidies dwindled along with other revenues related to the nuclear plant, including property taxes. By 2007, Futaba was one of the most fiscally troubled towns in Japan and nearly went bankrupt. Town officials blamed the upkeep costs of the public facilities built in the early days of flush subsidies and poor management stemming from the belief that the subsidies would remain generous.

Eisaku Sato, who served as the governor of Fukushima Prefecture from 1988 to 2006 and became a critic of the nuclear industry, said that 30 years after its first reactor started operating, the town of Futaba could no longer pay its mayor’s salary.

“With a nuclear reactor, in one generation, or about 30 years, it’s possible that you’ll become a community that won’t be able to survive,” Mr. Sato said.

Futaba’s solution to its fiscal crisis was to ask the government and Tokyo Electric, Fukushima Daiichi’s operator, to build two new reactors, which would have eventually increased the number of reactors at Fukushima Daiichi to eight. The request immediately earned Futaba new subsidies.

“Putting aside whether ‘drugs’ is the right expression,” Mr. Sato said, “if you take them one time, you’ll definitely want to take them again.”

Eiji Nakamura, the failed candidate for mayor of Kashima, said the town came to rely on the constant flow of subsidies for political as well as economic reasons. He said the prefectural and town leaders used the jobs and money from public works to secure the support of key voting blocs like the construction industry and the fishing cooperative, to which about a third of the town’s working population belongs.

“They call it a nuclear power plant, but it should actually be called a political power plant,” Mr. Nakamura joked.

Right?

1.  BP Spent $2 Million Lobbying On Offshore Drilling, Spill Liability, Other Regulations In First Quarter Of 2011 (Marcus Baram, Huffington Post, April 21, 2011): (emphasis added)

On the first anniversary of the Deepwater Horizon oil spill that killed 11 workers, oil giant BP revealed via mandatory disclosure forms that it spent at least $2 million on federal lobbying in the first quarter of 2011 on a wide range of issues, from advocating for an end to the offshore drilling moratorium imposed by President Barack Obama in the wake of the spill to caps on its contributions to the restoration of the Gulf Coast.

BP tapped five well-connected lobbying firms — Alpine Group; Fierce, Isakowitz & Blalock; the Podesta Group; Stuntz Davis & Staffier; and the Duberstein Group — to ply their influence on Capitol Hill and at federal agencies in the wake of the four-month-long spill, which devastated the environment and leaked more than 205 million gallons of oil into the Gulf of Mexico. Executive-branch agencies targeted by the beleaguered oil behemoth, which faces a criminal probe by the Justice Department, included the Environmental Protection Agency and the State and Treasury departments.

In addition to the drilling moratorium and coastal restoration contributions, BP lobbied heavily regarding implementation of the presidential oil spill commission’s recommendations, which included stricter oversight of offshore drilling.

BP also lobbied Congress on the Put the Gulf Back to Work Act, the legislation passed last week by the House Natural Resources Committee under the leadership of chairman Doc Hastings (R-Wash.) which speeds up the approval process for new drilling permits. That bill prompted Interior Secretary Ken Salazar to accuse House Republicans of having “amnesia” about the oil spill.

Among other issues of interest to BP: the Restoring American Offshore Leasing Now Act, which requires Salazar to conduct certain offshore oil and gas lease sales; financial reform legislation and proposed rules; and liability protection for producing and retailing motor fuel that contains 15 percent ethanol. In addition, the oil company lobbied on several proposed EPA rules relating to greenhouse gas emissions and ambient air quality standards, and lobbied Congress on energy tax issues, corporate tax reform and the export of Caspian gas into European markets.

Earlier this week, it was revealed that BP broke its self-imposed moratorium on political donations in the wake of the spill.

2.  Coal mining to expand on public lands in Wyoming, CNN, March 23, 2011: (emphasis added)

Coal mining on public lands will expand in the coming months in Wyoming, as the federal government makes more coal-rich land available for lease by mining companies.

“Coal is a critical component of America¹s comprehensive energy portfolio, as well as Wyoming’s economy,” Interior Secretary Ken Salazar said at a news conference Tuesday.

The leases are expected to bring in between $13.4 billion and $21.3 billion in leasing bids and royalties to the federal government and the state of Wyoming. Wyoming will receive 48% of those revenues, with the rest going to the federal government.

The four tracts of land in northeast Wyoming’s Powder River Basin are expected to yield about 758 million tons of coal, Salazar said.

“Wyoming is the No.1 coal producer from public lands, contributing more than 400 million tons annually to our domestic energy supply, providing nearly 40% or the coal used by power plants nationwide to provide electricity nationwide,” Salazar said.

Wyoming Gov. Matt Mead, a Republican, applauded the move.

“Coal is a big deal here in Wyoming,” Mead said. “We need the energy, we need the jobs that come with energy, and we need the electricity.”