“For Koch Brothers, All Politics Is Local”: Influencing Even The Most Local Policy Decisions
The Tennessee State Senate brokered a deal this week to move forward with a hotly contested bus rapid transit (BRT) project. The bill will provide the city of Nashville and neighboring Moore County with 7.1 miles of rapid bus transit lanes. But because of the compromise in the Senate, the BRT plan will now face greater oversight: The proposed buses will be allowed to use lanes separate from regular traffic, but will need approval from the state Assembly and by the commissioner of transportation before constructing those lanes.
Prior to Thursday, the Tennessee State Senate had been blocking the bill, in part because of an effort by a group affiliated with noted Republican donors Charles and David Koch.
The Koch brothers, and the Tennessee arm of their political organization Americans For Prosperity, had no explicit economic interest in blocking the bus project from moving forward. Rather, as the Tennessee director of Americans For Prosperity told The Tennessean in March, it was something of a trial run for implementing Koch-backed legislation around the country. “With supermajorities in both houses,” AFP state director Andrew Ogles told the paper, “Tennessee is a great state to pass model legislation that can be leveraged in other states.”
The citizens of Nashville and Moore County, however, are not the first Americans to feel the effects of the Kochs’ “model” legislation.
In a similar example of Koch influence on the local level, in 2012 Americans for Prosperity joined the effort to halt a streetcar project in Milwaukee, Wisconsin. The streetcar plan would connect the lower east side of the city with an Amtrak station two miles away.
The drive was led by Republican alderman Bob Donovan. After construction was approved by the Milwaukee Common Council, Donovan held numerous press conferences in the attempt to publicize a petition and force a referendum on the streetcar plan.
The effort got a leg up when Americans for Prosperity set up a website, “A Streetcar Named Disaster,” to gather signatures for Donovan’s petition.
Donovan’s union with Americans for Prosperity led other elected officials to question his loyalties. Jeff Fleming, then-spokesman for the Department of City Development, said in a statement: ”We never hear Ald. Donovan complain about his Republican friends cutting Milwaukee’s local road aids, our recycling aids or our state shared revenue, which funds police and firefighters. The alderman is so tight with groups and individuals who love gutting and kicking Milwaukee, you have to wonder where his loyalties are.”
Coincidentally, the streetcar project is a hallmark of Mayor Tom Barrett’s administration. Barrett unsuccessfully ran for governor of Wisconsin in 2010 and again in a recall election in 2012, losing to Republican Scott Walker both times. Walker has a close relationship with Americans for Prosperity, who argue that his anti-union legislation is an example that other Republican governors should follow.
Like the proposed rapid transit plan in Nashville, the Milwaukee streetcar plan has moved ahead over AFP’s objections.
The Kochs’ distaste for government-subsidized transportation did result in one big victory on the state level. In Florida, a large mass-transit plan to bring high-speed rail to the state was rejected after Republican Rick Scott was elected. The plan would have used state and federal funds to connect the cities of Tampa and Orlando, with plans to extend it to other tourist hotspots in southern Florida.
The Koch brothers’ fingerprints were all over Scott’s rejection of the plan. For starters, Governor Scott and the Kochs have a long and storied relationship. Scott, for example, famously attended a secret, invitation only meeting held by the Koch brothers in Colorado soon after being elected Florida governor.
The Koch brothers’ influence over Florida’s high-speed rail plan, however, extends beyond their relationship with Governor Scott.
As Curt Levine, former legislator in the Florida House of Representatives, noted at the time, Scott’s decision to nominate Robert Poole as transportation advisor deftly revealed the Koch brothers’ influence in his administration.
Levine wrote in a 2011 op-ed: “Poole is director of transportation policy at the Reason Foundation, a right-wing lobby group of road-based transportation industrial interests, including petroleum, asphalt and rubber-tire manufacturers. And, not coincidentally, Reason receives substantial funding by the ultraconservative billionaire Koch brothers. David Koch serves as a Reason trustee.”
Levin further explained that Scott’s decision to reject the high-speed rail plan was based, in part, on a report by the Reason Foundation that urged Scott to reject the plan ”as Wisconsin and Ohio have recently done.”
The fact that Koch-funded groups are influencing even the most local policy decisions should perhaps come as no surprise. As The Nation reported in 2011, the Koch brothers have been funding the American Legislative Exchange Council (ALEC) for years. The council touts itself as an organization that brings together conservative state legislators and members of the private sector to further free-market principles. And ALEC has been living up to that tagline — in precisely the way the Koch brothers want it to.
By: Ben Feuerherd, The National Memo, April 18, 2014
“Three Expensive Milliseconds”: Society Is Devoting An Ever-Growing Share Of Its Resources To Financial Wheeling And Dealing
Four years ago Chris Christie, the governor of New Jersey, abruptly canceled America’s biggest and arguably most important infrastructure project, a desperately needed new rail tunnel under the Hudson River. Count me among those who blame his presidential ambitions, and believe that he was trying to curry favor with the government- and public-transit-hating Republican base.
Even as one tunnel was being canceled, however, another was nearing completion, as Spread Networks finished boring its way through the Allegheny Mountains of Pennsylvania. Spread’s tunnel was not, however, intended to carry passengers, or even freight; it was for a fiber-optic cable that would shave three milliseconds — three-thousandths of a second — off communication time between the futures markets of Chicago and the stock markets of New York. And the fact that this tunnel was built while the rail tunnel wasn’t tells you a lot about what’s wrong with America today.
Who cares about three milliseconds? The answer is, high-frequency traders, who make money by buying or selling stock a tiny fraction of a second faster than other players. Not surprisingly, Michael Lewis starts his best-selling new book “Flash Boys,” a polemic against high-frequency trading, with the story of the Spread Networks tunnel. But the real moral of the tunnel tale is independent of Mr. Lewis’s polemic.
Think about it. You may or may not buy Mr. Lewis’s depiction of the high-frequency types as villains and those trying to thwart them as heroes. (If you ask me, there are no good guys in this story.) But either way, spending hundreds of millions of dollars to save three milliseconds looks like a huge waste. And that’s part of a much broader picture, in which society is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.
How much waste are we talking about? A paper by Thomas Philippon of New York University puts it at several hundred billion dollars a year.
Mr. Philippon starts with the familiar observation that finance has grown much faster than the economy as a whole. Specifically, the share of G.D.P. accruing to bankers, traders, and so on has nearly doubled since 1980, when we started dismantling the system of financial regulation created as a response to the Great Depression.
What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses — but that’s a hard argument to sustain after a decade in which Wall Street’s crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.
Wall Street’s friends also used to claim that the proliferation of complex financial instruments was reducing risk and increasing the system’s stability, so that financial crises were a thing of the past. No, really.
But if our supersized financial sector isn’t making us either safer or more productive, what is it doing? One answer is that it’s playing small investors for suckers, causing them to waste huge sums in a vain effort to beat the market. Don’t take my word for it — that’s what the president of the American Finance Association declared in 2008. Another answer is that a lot of money is going to speculative activities that are privately profitable but socially unproductive.
You may object that this can’t be right, that the invisible hand of the market ensures that private returns and social returns coincide. Economists have, however, known for a long time that when it comes to speculation, that proposition just isn’t true. Back in 1815 Baron Rothschild made a killing because he knew the outcome of the Battle of Waterloo a few hours before everyone else; it’s hard to see how that knowledge made Britain as a whole richer. It’s even harder to see how the three-millisecond advantage conveyed by the Spread Networks tunnel makes modern America richer; yet that advantage was clearly worth it to the speculators.
In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. Mr. Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.
So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 13, 2014
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