By Kevin Connolly BBC News, Pittsburgh
Summit venues are not chosen by accident.
When the Obama administration had to decide which American city should host the G20 gathering, a great deal of thought went into the selection of Pittsburgh, Pennsylvania.
One White House team was on the phone to the Mayor's office making sure the city had the right kind of convention facilities, the right number of hotel rooms and a big enough airport to deal with the 33 national delegations which have somehow ended up being invited to this gathering of the 20 richest nations on earth.
Another was ensuring that the Pittsburgh story told a positive story about Obama's America.
And the White House thinks the city passed both tests with flying colours.
The logistical effort required to host such a huge event is well under way, as is the security operation designed to contain the protesters who will inevitably assemble to make sure their concerns are somehow written into the story of the meeting.
Revival
And the symbolism?
Well, the population of Pittsburgh seems remarkably on-message. Local politicians, business leaders and folks in cafes and bars will all tell you the same story.
Pittsburgh - the grimy old steel town that was a powerhouse of American heavy industry and made its money under choking clouds of smoke from its mills and mines - is no more.
In its place is a clean, green example of regeneration. A city where pleasure cruisers carry tourists between the wooded banks of its three rivers and where people make a living in services such as health and education or in hi-tech business.
No-one puts it better than Frank Coonelly, president of the city's baseball team the Pittsburgh Pirates: "It's a remarkable transformation, not just of the economy but of the city itself from an industrial steel town to a city that now really is driven by hi-tech and service sectors.
"People who think of Pittsburgh as a smoky steel town, when they come in here this week they'll see quite a different thing."
It feels like the perfect message for the Obama administration to send out from a city which is about become the backdrop for 1,000 TV reporters from around the world.
Hidden costs?
On paper, Pittsburgh is a text-book example of how a globalised economy works.
Old manufacturing jobs migrate to cheaper labour markets, so your steel is made in India and China.
Your population educates itself; then moves into the cleaner, more sophisticated service sectors of tourism, healthcare and education.
The problem is that not all Americans agree these policies are working in their interests.
Just a short drive from the city, in the Mahoning Valley of Northern Ohio, plenty of people are troubled by the new world economic order.
While economists may shudder at anything that sounds like the opening shots of a trade war, a meeting of the local United Autoworkers Retired section in Lordstown was delighted by the news that the Obama administration has imposed a tariff on imports of cheap Chinese tyres.
Manufacturing woes
Dave Green, president of the Union Local 1714, argues that businesses in countries like China can only undercut their American rivals because they do not pay the same wages as US companies or operate under the same environmental and safety regulations.
His point: America needs a manufacturing base and cannot afford to allow more manufacturing jobs to migrate to lower wage economies.
"Made in the USA used to really mean something," Mr Green says.
"It used to mean something to my grandparents and my parents as well and we've kind of lost that. It's decimated our jobs here.
"Akron just 40 miles west of here used to be the rubber capital of the world. Ride through Akron now, they make very few tyres. We want fair trade, not free trade."
In nearby Warren they also see globalisation as a process in which the upside to Americans - cheap consumer goods from Asia - is vastly outweighed by the downside, which is a steady of haemorrhaging of jobs to the very people who make those cheap goods.
In his family's restaurant, the Saratoga, Jim Economos lists the industries that have closed.
"We used to make all the water fountains for the world, we used to make compasses, we made kitchen cabinets, we made all the electrical parts for GM and all different kinds of steel.
"Hopefully they'll be coming back, but everyone is closing up or moving out," he adds.
Pros and cons
So, very close to Pittsburgh with its stirring symbolic story of regeneration and post-industrial prosperity lies this other America of the Mahoning Valley where they see the costs of globalisation in their closed-down factories and derelict buildings on Main Street.
What they do not see for the moment is any benefit to balance that cost.
As one local said: "We can't have an economy where we just serve each other meals and dry clean each other's clothes. We have to start making things again."
The hard-working chamber of commerce in Warren is sending a representative down to Pittsburgh for the G20 talks.
It would be nice to think he might get a little face time with one or two of the world leaders gathering there. He has a story worth listening to.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8271496.stm
Published: 2009/09/23 22:35:34 GMT
Friday, September 25, 2009
Wednesday, September 23, 2009
Emphasis on Growth Is Called Misguided
September 23, 2009
By PETER S. GOODMAN, New York Times
Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.
In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.
“What you measure affects what you do,” Mr. Stiglitz said Tuesday as he discussed the study before a gathering of journalists in New York. “If you don’t measure the right thing, you don’t do the right thing.”
According to the report, much of the world has long been ruled by an unhealthy fixation on swelling the gross domestic product, or the quantity of goods and services the economy produces. With a singular obsession on making G.D.P. bigger, many societies — not least, the United States — failed to factor in the social costs of joblessness and the public health impacts of environmental degradation. They allowed banks to borrow and bet unfathomable amounts of money, juicing the present by mortgaging the future, thus laying the ground for the worst financial crisis since the 1930s.
The report is more critique than prescription. It elucidates in general terms why leaning exclusively on growth as an economic philosophy may yield unhappiness, and it suggests that the incomes of typical people should be weighed more heavily than the gross production of whole societies. But it sidesteps the thorny details of slapping a cost on a ton of pollution or a waylaid career, leaving a great mass of policy choices for others to resolve.
Some Americans may reflexively reject the report and its recommendations, given its provenance: it was ordered up last year by President Nicolas Sarkozy of France, whose dissatisfaction with the available tools of economic assessment prompted him to create the Commission on the Measurement of Economic Performance and Social Progress. Tuesday’s briefing was held in an ornate room at the French consulate. The official French statistics agency is already working to adopt the report’s recommendations. Mr. Sarkozy plans to bring it with him to the G-20 summit meeting in Pittsburgh this week, where the leaders of major countries will discuss a range of policy issues.
But whatever one’s views on the merits of European economy policy, and wherever one sits on the ideological spectrum, these appear fitting days to re-examine how economists measure vital signs — particularly in the United States.
By most assessments, the American economy is now growing again, perhaps even vigorously. Many experts expect a 3 percent annualized rate of expansion from July through September. As a technical matter, the recession appears to be over. Yet the unemployment rate sits at 9.7 percent and will probably climb higher and remain elevated for many months. In millions of households still grappling with joblessness and the tyranny of bills, signs of health served up by the traditional economic indicators seem disconnected from daily life.
This was precisely the sort of contradiction Mr. Sarkozy sought to unravel when he created the commission, tasking it with pursuing alternate ways of measuring economic health.
To head the panel, he picked Mr. Stiglitz, a former World Bank chief economist whose best-selling books amount to an indictment of the Washington-led model of global economic integration. Mr. Sarkozy also selected Mr. Sen, a Harvard economist and an authority on poverty.
The resulting report amounts to a treatise on the inadequacy of G.D.P. growth as an indication of overall economic health. It cites the example of increased driving, which weighs in as a positive within the framework of economic growth, as it requires greater production of gasoline and cars, yet fails to account for the hours of leisure and work time squandered in traffic jams, and the environmental costs of pollutants unleashed on the atmosphere.
During the real estate bubble that preceded the financial crisis, the focus on economic growth helped encourage overbuilding and investment in real estate. Mr. Stiglitz argues that the single-minded focus on growth gave American policy makers a false sense of assurance that their policies were virtuous, as they allowed financial institutions to direct virtually unlimited sums of money into real estate and as consumer debt levels built with unrestrained momentum.
Credit enabled spending, and spending translated into faster growth — an outcome that was intrinsically good, and never mind how long it might last or the convulsions that would accompany the end of easy money.
A growth-oriented policy encouraged homeowners to borrow as if money need never be repaid, and industry to produce products as if the real cost of pollution were zero, Mr. Stiglitz added.
“We looked to G.D.P. as a measure of how well we were doing, and that doesn’t tell us whether it’s sustainable,” he said at the briefing. “Your measure of output is grossly distorted by the failure of our accounting system. What began as a measure of market performance has increasingly become a measure of social performance, and that’s wrong.”
Instead of centering assessments on the goods and services an economy produces, policy makers would do better to focus on the material well-being of typical people by measuring income and consumption, along with the availability of health care and education, the report concludes.
Many of these prescriptions will no doubt resonate with policy makers and ordinary people.
Indeed, the difficulty comes in turning these general principles into new means of measurement. The report notes that its authors concur on the big picture, but diverge on the methodologies to be employed when it comes to factoring in the value of a better education and cleaner skies.
The old mode of measurement has taken a beating, and yet the new one, it seems, is still a work in progress.
By PETER S. GOODMAN, New York Times
Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.
In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.
“What you measure affects what you do,” Mr. Stiglitz said Tuesday as he discussed the study before a gathering of journalists in New York. “If you don’t measure the right thing, you don’t do the right thing.”
According to the report, much of the world has long been ruled by an unhealthy fixation on swelling the gross domestic product, or the quantity of goods and services the economy produces. With a singular obsession on making G.D.P. bigger, many societies — not least, the United States — failed to factor in the social costs of joblessness and the public health impacts of environmental degradation. They allowed banks to borrow and bet unfathomable amounts of money, juicing the present by mortgaging the future, thus laying the ground for the worst financial crisis since the 1930s.
The report is more critique than prescription. It elucidates in general terms why leaning exclusively on growth as an economic philosophy may yield unhappiness, and it suggests that the incomes of typical people should be weighed more heavily than the gross production of whole societies. But it sidesteps the thorny details of slapping a cost on a ton of pollution or a waylaid career, leaving a great mass of policy choices for others to resolve.
Some Americans may reflexively reject the report and its recommendations, given its provenance: it was ordered up last year by President Nicolas Sarkozy of France, whose dissatisfaction with the available tools of economic assessment prompted him to create the Commission on the Measurement of Economic Performance and Social Progress. Tuesday’s briefing was held in an ornate room at the French consulate. The official French statistics agency is already working to adopt the report’s recommendations. Mr. Sarkozy plans to bring it with him to the G-20 summit meeting in Pittsburgh this week, where the leaders of major countries will discuss a range of policy issues.
But whatever one’s views on the merits of European economy policy, and wherever one sits on the ideological spectrum, these appear fitting days to re-examine how economists measure vital signs — particularly in the United States.
By most assessments, the American economy is now growing again, perhaps even vigorously. Many experts expect a 3 percent annualized rate of expansion from July through September. As a technical matter, the recession appears to be over. Yet the unemployment rate sits at 9.7 percent and will probably climb higher and remain elevated for many months. In millions of households still grappling with joblessness and the tyranny of bills, signs of health served up by the traditional economic indicators seem disconnected from daily life.
This was precisely the sort of contradiction Mr. Sarkozy sought to unravel when he created the commission, tasking it with pursuing alternate ways of measuring economic health.
To head the panel, he picked Mr. Stiglitz, a former World Bank chief economist whose best-selling books amount to an indictment of the Washington-led model of global economic integration. Mr. Sarkozy also selected Mr. Sen, a Harvard economist and an authority on poverty.
The resulting report amounts to a treatise on the inadequacy of G.D.P. growth as an indication of overall economic health. It cites the example of increased driving, which weighs in as a positive within the framework of economic growth, as it requires greater production of gasoline and cars, yet fails to account for the hours of leisure and work time squandered in traffic jams, and the environmental costs of pollutants unleashed on the atmosphere.
During the real estate bubble that preceded the financial crisis, the focus on economic growth helped encourage overbuilding and investment in real estate. Mr. Stiglitz argues that the single-minded focus on growth gave American policy makers a false sense of assurance that their policies were virtuous, as they allowed financial institutions to direct virtually unlimited sums of money into real estate and as consumer debt levels built with unrestrained momentum.
Credit enabled spending, and spending translated into faster growth — an outcome that was intrinsically good, and never mind how long it might last or the convulsions that would accompany the end of easy money.
A growth-oriented policy encouraged homeowners to borrow as if money need never be repaid, and industry to produce products as if the real cost of pollution were zero, Mr. Stiglitz added.
“We looked to G.D.P. as a measure of how well we were doing, and that doesn’t tell us whether it’s sustainable,” he said at the briefing. “Your measure of output is grossly distorted by the failure of our accounting system. What began as a measure of market performance has increasingly become a measure of social performance, and that’s wrong.”
Instead of centering assessments on the goods and services an economy produces, policy makers would do better to focus on the material well-being of typical people by measuring income and consumption, along with the availability of health care and education, the report concludes.
Many of these prescriptions will no doubt resonate with policy makers and ordinary people.
Indeed, the difficulty comes in turning these general principles into new means of measurement. The report notes that its authors concur on the big picture, but diverge on the methodologies to be employed when it comes to factoring in the value of a better education and cleaner skies.
The old mode of measurement has taken a beating, and yet the new one, it seems, is still a work in progress.
Tuesday, September 22, 2009
Will investors show an appetite for local food?
Green venture capitalists are sought to back organic growers, independent food merchants, farmers markets and restaurateurs
By Cyndia Zwahlen, The Los Angeles Times
September 22, 2009
The Let's Be Frank food trailer parked most days outside the old Helms Bakery complex in Culver City is no ordinary lunch wagon.
The San Francisco company that operates the hot-dog vendor serves franks and sausages made from cows that ate only grass or pigs that were raised humanely. Customers also can choose turkey or soy dogs, all on buns from L.A. Breadworks.
The small business was funded in part by venture capitalist Peter Rogers and his Dry Creek Ventures, which targets clean energy, water and food businesses.
Such small local food outfits, especially those that are gentle on the environment, are key to the long-term health of the economy but need formal access to local investors to succeed, says social venture-capitalist and entrepreneur Woody Tasch.
Shifting capital to organic farmers, independent food entrepreneurs, farmers markets and restaurateurs will pay off in stronger local economies, a healthier environment and improved supplies of affordable, healthful food, Tasch said.
He founded Slow Money Alliance last year to spearhead the creation of regional networks of local investors that want to put their money into local enterprises.
"We've had the life sucked out of our society and economy by financial markets run amok and globalism run to extremes," Tasch said. Slow Money is "part of a network emerging of people who want to repair the damage."
The Brookline, Mass., nonprofit, which was inspired by the Slow Food International local-food movement, had its first national meeting in Santa Fe, N.M., two weeks ago. Investors, investment bankers, entrepreneurs, farmers and others from around the world debated how best to build the networks. A team of five Southern California members, including chef and entrepreneur Gordon Smith of San Diego, will lead the efforts to build a regional network in the Southland.
Tasch says he feels a sense of urgency in shifting capital to local food businesses. He believes that the agriculture and food industry is ultimately as unstable and vulnerable to collapse as the global credit markets turned out to be.
Supermarkets full of cheap food have blinded people to the risk much as the 10%-plus annual returns on their stock portfolios lured people into a false sense of financial security before the recent global financial markets collapsed, he said.
"We have an industrial food system that is as imbalanced as the credit markets are, in terms of loss of biodiversity and aquifer depletion and soil depletion, leading to food systems as vulnerable to a massive correction as the credit markets are," said Tasch, author of "Inquiries Into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered."
What is slow money?
A network of investors, donors, entrepreneurs and others committed to building and steering major new sources of capital to local food systems. More broadly, it's part of a larger questioning in the wake of the financial craziness of the last X number of years, part of an emerging dialogue of fundamentally rethinking how to repair some of the problems of globalization and, including, markets gone crazy.
How can slow money help small local businesses?
Local food systems are just one pillar of local economies. Small businesses that have more direct, strong connections to their local customers and investors from the region are going to be more resilient and stronger businesses. This is all about building relations on local and regional levels of enterprises on one side and investors on the other.
Are you creating these networks from the ground up?
It's a big job, and it needs to happen relatively quickly for our health and security in face of future shocks of various kinds. Depending on how much money starts coming through Slow Money, we would be seeking to put that network in collaboration with existing networks and intermediaries to the extent possible. Where needed, we are also very willing to create new ones.
You want to create new capital markets to invest in sustainable, local, food-related businesses?
That's the beauty and challenge of what we are doing with Slow Money. It's not a typical fund structure. We didn't go to market to raise a $100-million fund. We are actually gathering a lot of people with us and looking at how can we do this on a mass scale.
How can we take it forward and have maximum impact in the shortest amount of time? Because I feel a real sense of urgency. There is a chance we can actually get organized around this and then move as fast as we can in other sectors.
Many small-business owners are struggling in the recession. Why should they take the time and possible risk to find more local places to invest their money?
This is a transition. This is not one-size-fits-all. But it's a direction people know deep down we need to go in, so people just need encouragement and to take whatever small steps they can.
People shouldn't feel like they have to jump overboard, but let's realize as a society and economy that we are very imbalanced right now, dependent on distant sources of supplies from people we don't know. It sounds like I am an isolationist, and I don't mean it that way. But an element to this is we are not in control; we are not creating what we need.
Where can a small-business owner or entrepreneur find slow-money investors?
Well, individual investors around the United States are just starting to, let's say, recognize the need to do this and are already expressing the desire to. There is no organized structure for doing this, and that is exactly what we are trying to figure out how to set up.
We have had five regional workshops around the country, including in Point Reyes, Calif., and that's just the beginning of the process, to sort of support the desire that is already being expressed around the country for people to come together in regions and begin to create a slow-money marketplace or fund or exchange, whatever you want to call it.
It's a lot easier to raise a single fund and invest in a portfolio and go home. But we have this desire, the intention, to try to support the evolution of this quickly. We need slow money, quickly.
smallbiz@latimes.com
By Cyndia Zwahlen, The Los Angeles Times
September 22, 2009
The Let's Be Frank food trailer parked most days outside the old Helms Bakery complex in Culver City is no ordinary lunch wagon.
The San Francisco company that operates the hot-dog vendor serves franks and sausages made from cows that ate only grass or pigs that were raised humanely. Customers also can choose turkey or soy dogs, all on buns from L.A. Breadworks.
The small business was funded in part by venture capitalist Peter Rogers and his Dry Creek Ventures, which targets clean energy, water and food businesses.
Such small local food outfits, especially those that are gentle on the environment, are key to the long-term health of the economy but need formal access to local investors to succeed, says social venture-capitalist and entrepreneur Woody Tasch.
Shifting capital to organic farmers, independent food entrepreneurs, farmers markets and restaurateurs will pay off in stronger local economies, a healthier environment and improved supplies of affordable, healthful food, Tasch said.
He founded Slow Money Alliance last year to spearhead the creation of regional networks of local investors that want to put their money into local enterprises.
"We've had the life sucked out of our society and economy by financial markets run amok and globalism run to extremes," Tasch said. Slow Money is "part of a network emerging of people who want to repair the damage."
The Brookline, Mass., nonprofit, which was inspired by the Slow Food International local-food movement, had its first national meeting in Santa Fe, N.M., two weeks ago. Investors, investment bankers, entrepreneurs, farmers and others from around the world debated how best to build the networks. A team of five Southern California members, including chef and entrepreneur Gordon Smith of San Diego, will lead the efforts to build a regional network in the Southland.
Tasch says he feels a sense of urgency in shifting capital to local food businesses. He believes that the agriculture and food industry is ultimately as unstable and vulnerable to collapse as the global credit markets turned out to be.
Supermarkets full of cheap food have blinded people to the risk much as the 10%-plus annual returns on their stock portfolios lured people into a false sense of financial security before the recent global financial markets collapsed, he said.
"We have an industrial food system that is as imbalanced as the credit markets are, in terms of loss of biodiversity and aquifer depletion and soil depletion, leading to food systems as vulnerable to a massive correction as the credit markets are," said Tasch, author of "Inquiries Into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered."
What is slow money?
A network of investors, donors, entrepreneurs and others committed to building and steering major new sources of capital to local food systems. More broadly, it's part of a larger questioning in the wake of the financial craziness of the last X number of years, part of an emerging dialogue of fundamentally rethinking how to repair some of the problems of globalization and, including, markets gone crazy.
How can slow money help small local businesses?
Local food systems are just one pillar of local economies. Small businesses that have more direct, strong connections to their local customers and investors from the region are going to be more resilient and stronger businesses. This is all about building relations on local and regional levels of enterprises on one side and investors on the other.
Are you creating these networks from the ground up?
It's a big job, and it needs to happen relatively quickly for our health and security in face of future shocks of various kinds. Depending on how much money starts coming through Slow Money, we would be seeking to put that network in collaboration with existing networks and intermediaries to the extent possible. Where needed, we are also very willing to create new ones.
You want to create new capital markets to invest in sustainable, local, food-related businesses?
That's the beauty and challenge of what we are doing with Slow Money. It's not a typical fund structure. We didn't go to market to raise a $100-million fund. We are actually gathering a lot of people with us and looking at how can we do this on a mass scale.
How can we take it forward and have maximum impact in the shortest amount of time? Because I feel a real sense of urgency. There is a chance we can actually get organized around this and then move as fast as we can in other sectors.
Many small-business owners are struggling in the recession. Why should they take the time and possible risk to find more local places to invest their money?
This is a transition. This is not one-size-fits-all. But it's a direction people know deep down we need to go in, so people just need encouragement and to take whatever small steps they can.
People shouldn't feel like they have to jump overboard, but let's realize as a society and economy that we are very imbalanced right now, dependent on distant sources of supplies from people we don't know. It sounds like I am an isolationist, and I don't mean it that way. But an element to this is we are not in control; we are not creating what we need.
Where can a small-business owner or entrepreneur find slow-money investors?
Well, individual investors around the United States are just starting to, let's say, recognize the need to do this and are already expressing the desire to. There is no organized structure for doing this, and that is exactly what we are trying to figure out how to set up.
We have had five regional workshops around the country, including in Point Reyes, Calif., and that's just the beginning of the process, to sort of support the desire that is already being expressed around the country for people to come together in regions and begin to create a slow-money marketplace or fund or exchange, whatever you want to call it.
It's a lot easier to raise a single fund and invest in a portfolio and go home. But we have this desire, the intention, to try to support the evolution of this quickly. We need slow money, quickly.
smallbiz@latimes.com
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