IPS Blog

Pope Francis vs. Fossil Fuel Execs

pope francis

Photo: Giulio Napolitano/Shutterstock

For most of us in the cities on Pope Francis’ upcoming U.S. tour, the major concern is traffic congestion. For fossil fuel executives, look out.

The pope closed out his blockbuster, 180-page encyclical on climate change in May by appealing to God to “Enlighten those who possess power and money that they may avoid the sin of indifference, that they may love the common good, advance the weak, and care for this world in which we live.”

Sound like anybody you know, Rex Tillerson? The ExxonMobil CEO is notoriously obstinate in his opposition to Pope Francis’ call for a shift from intensive fossil fuel use to alternatives like solar and wind. In fact, when a Catholic priest and shareholder activist urged investment in renewables at the company’s annual meeting this year, Tillerson openly mocked him.

Enlightening Tillerson and all the other wealthy and powerful U.S. fossil fuel executives who are just as dismissive of climate change will be a challenge of biblical proportions. A new report I’ve just co-authored for the Institute for Policy Studies sheds light on just one of the major obstacles: our CEO pay system. In 2015, corporate boards are still designing compensation packages that give oil, gas and coal executives zero personal incentive to diversify their companies’ portfolios to include renewable energy sources.

It’s pretty much a “pay more to drill more” system, and it’s been enormously lucrative. While shoving the costs of their climate-damaging activities on the rest of us, the 30 top fossil fuel CEOs made $14.7 million last year on average. Tillerson, with $33 million, made well more than double the S&P 500 average of $13.5 million.

One of the most perverse aspects of the fossil fuel executive pay system is that it rewards CEOs at bonus time for expanding their carbon reserves. Never mind that if the world’s largest fossil fuel companies were to burn all the oil, coal and gas they already own, it would cause irreversible climate disaster, everything from extreme flooding and drought to a significant rise in sea level.

And it doesn’t matter what’s in those reserves. At Marathon Oil, CEO Lee Tillman won an “above-target” bonus of $1.2 million in 2014, in part for expanding reserves of U.S. oil shale, the fracking of which poses well-documented environmental risks, including water contamination and even earthquakes.

CEOs are also rewarded for project execution, regardless of the environmental impacts. At ExxonMobil, the board justified high payouts to Tillerson and other execs in 2014 in part because they’d “successfully drilled” their first well in the Russian Arctic, even though their Russian joint venture partner has a dismal environmental record and the project was eventuallyscrapped.

Pope Francis has a growing number of allies in the investment community who fear climate change-dismissive CEOs are taking their firms down a risky financial path. If these firms don’t diversify, they could wind up stuck with massive quantities of devalued “stranded assets.” The coal industry is already imploding as a result of climate regulations and other factors that have reduced demand.

The pope will need all the help he can get to turn this bunch around. A just-released investigation by Inside Climate News reveals that ExxonMobil executives were warned of fossil fuels’ role in creating devastating climate change in the late 1970s, long before most of the rest of the world. How did they respond? By devising strategies to block climate solutions.

Changing Rex Tillerson’s personal reward system won’t be enough to prevent climate catastrophe. But as long as fossil fuel executives are insulated from the crisis they’ve helped create, we’ll all remain at risk.

Five Biggest Losers of the GOP Debate

None of the eleven candidates on stage came out the clear winner or loser after the second GOP debate last night. While differing slightly in style and delivery, the candidates tended to agree on their vision for the future of the country. That vision is frightening.

Here are the five biggest losers in a future Republican administration:

Women
The GOP debate had to be particularly cringe worthy for women watching. First came Donald Trump’s backpedaling of his absurd comments about Carly Fiorina’s face. Then the entire field voiced support over defunding Planned Parenthood, their only point of contention being whether the issue was worth shutting down the government over. Not a single candidate stood up for women’s right to reproductive healthcare. And finally, when asked about a woman on American currency, Mike Huckabee picked his wife, Ben Carson picked his mother, and Donald Trump picked his daughter. Carly Fiorina, the only female candidate, said she was opposed to putting a woman on American currency.

Peace
With the noted exception of Rand Paul, the candidates each expressed their interest for a more militaristic approach to foreign policy. Ignoring the fact that the U.S. has the most expensive military in the world, so large the Department of Defense can’t even account for all its many resources, Carly Fiorina and Ben Carson each called for expanded military spending with other candidates echoing support. Other candidates chimed in favor of war over diplomacy in regions ranging from Iran to Russia to Syria.

The Climate
CNN Host Jake Tapper asked the candidates if they support addressing climate change in the same way that President Reagan supported addressing ozone depletion. Marco Rubio responded saying he’s opposed to any policies that make America a harder place to do business with Scott Walker and Chris Christie echoing their support on that point. Not a single candidate stood up for addressing climate change in a serious way.

Immigrants
Each candidate expressed their support for securing the border with ideas ranging from building an enormous wall (Trump) to using drones (Christie) to tripling the size of Border Patrol (Cruz). Not a single candidate defended the dignity of undocumented families living in this country. Instead, candidates sparred over whether to deport the entire undocumented population of the country en masse or over time and whether the constitution should be re-written to end birthright citizenship.

The Poor
Over 47 million Americans live in poverty in the United States including 20 percent of this nation’s children, the highest childhood poverty rate in the industrialized world. Not a single question was asked or answer given as to how candidates would alleviate poverty. The closest they came was a short dialogue about the federal minimum wage: Scott Walker opposed any increase, while Ben Carson said it “probably or possibly” should be raised, while other candidates remained hushed.

While each candidate tried to distinguish themselves from the fray, it became increasingly clear that their vision for the country does not vary widely. Even when the GOP’s crowded field focused on policy over personal attacks, candidates described a future United States that devalues its citizens, degrades our climate, and glorifies war. In that scenario, everyone loses.

How our screwed-up CEO pay system makes climate change worse

(Image: World Economic Forum)

(Image: World Economic Forum)

Runaway CEO pay at the 30 largest U.S. public fossil fuel corporations rewards short-term actions, with disastrous results for the world’s climate, a new report finds.

CEOs at big oil, gas, and coal corporations are rewarded for a short-term fixation on pumping up quarterly share prices. They receive pay perks for expanding carbon reserves and building unnecessary fossil fuel infrastructure. Share prices can get a temporary boost from corporate lobbying to maintain government subsidies and block renewable energy initiatives, and from campaign donations that help elect climate deniers to Congress.

In 2014, the average CEO pay package at the 30 biggest oil, gas, and coal companies was $14.7 million, 9 percent higher than average CEO pay on the S&P 500. These pay trends are documented in “Money to Burn: How CEO Pay Is Accelerating Climate Change,” a report I coauthored for the Institute for Policy Studies.

The highest-paid fossil fuel CEO is ExxonMobil’s Rex Tillerson, who hauled in $33 million in 2014, boosting his total compensation over the last five years to $165 million. ConocoPhillips, the largest holder of land and resource positions in the Alberta tar sands, paid CEO Ryan Lance more than $27 million in 2014, an 18 percent pay increase over 2013. Chevron CEO John Watson is the third-highest paid with a $26 million paycheck in 2014.

The full brunt of the climate catastrophe will happen after these CEOs have cashed in their stock dividends and deferred compensation.

Over the last five years, the 30 largest U.S. publicly held fossil fuel companies doled out compensation worth nearly $6 billion to 163 CEOs and top managers. This payout is comparable to the $6.6 billion that private corporations spent globally on renewable energy R&D in 2014. Such resources, directed to green energy infrastructure, could generate almost 100,000 new jobs, according to the IPS report.

The CEO pay system at major U.S. corporations has been under fire for decades. Research has documented how excessive CEO pay encourages short-term actions to boost immediate share prices, including cooking the books, slashing workers, and failing to make investments to position a company for economic health over the long term. In the case of big fossil fuel companies, this has horrific results for the climate.

These 30 fossil fuel corporations are leaders in an industry that is spending more than $600 billion per year to locate additional fossil fuel reserves. Climate scientists argue that burning more than 20 percent of existing fossil fuel reserves will elevate the earth’s temperature by more than 2 degrees Celsius, leading to catastrophic climate change. So deploying resources to identify new carbon reserves is reckless and irrational — except in the perverse reward system at work at most energy giants. The 13 biggest oil companies tie executive bonuses to achieving positive “reserves replacement,” ensuring that new carbon reserves replace those already extracted and burned.

Perverse pay incentives encourage big oil, gas, and coal companies to build billions of dollars of unnecessary fossil fuel infrastructure in order to boost short-term profit horizons. These CEOs are rewarded for new pipelines and drilling platforms that lock us into fossil fuels at a time when our nation should be shifting investment into conservation and renewable energy.

Gregory Ebel, CEO of the Texas-based Spectra Energy Corporation, was paid $10.3 million in 2014. Spectra is constructing hundreds of gas pipeline projects around the U.S. that, if we take climate change seriously, will be obsolete within a decade. The primary purpose of these projects is not to meet local gas needs, but to goose short-term profits by moving fracked gas to coastal terminals and global export markets as soon as possible. As a result, hundreds of communities are having unnecessary gas pipeline projects rammed through them, increasing energy costs and exposing neighborhoods to unnecessary health and safety risks.

Big Fossil Fuel also uses its considerable lobbying clout and campaign cash to advance a short-term political agenda. This includes lobbying Congress to protect an estimated $37.5 billion in annual subsidies and tax breaks for the fossil fuel sector. In 2014, the top 30 fossil fuel corporations contributed $4.4 million to congressional candidates who had either denied climate change science or expressed skepticism about it.

Corporate boards and shareholders could shift the incentives to reward long-term viability. CEOs could be rewarded not for finding new reserves, but for reducing carbon emissions. They could be encouraged to diversify energy sources and move toward renewables. Their deferred compensation could be tied to business health over a longer time horizon than two or three years. This would require challenging imperial corporate management. Over the last 25 years, ExxonMobil shareholders have introduced 62 shareholder resolutions about climate change to shift company practices. Management has opposed every one.

In the end, big fossil fuel will only respond to external incentives to shift their investment, such as carbon taxation and emissions regulation. But in the meantime, the campaign to divest from oil, coal, and gas (and invest in wind and solar energy) can weaken the political clout and legitimacy of the fossil fuel sector.

Homecare Ruling a Historic Victory

AijenACTION_cropOn Friday, a federal appeals court upheld a Department of Labor rule requiring homecare agencies to pay the federal minimum wage and overtime.

Two million homecare workers—90 percent of them women and 53 percent women of color—will be affected by the new rule.

Homecare workers—home health aides that care for the elderly and disabled—were among the last domestic workers not to have basic labor protections in the U.S. Along with agricultural workers, all domestic workers (those who worked in private homes) were excluded from the Fair Labor Standards Act in 1938.

Anyone want to guess why?

Back in 1938 FDR needed the support of Southern legislators to get his New Deal passed. And the only way they’d support Roosevelt’s legislation was if certain exceptions were made to preserve the Southern way of life.

That, of course, meant preserving cheap African-American labor both in the fields and the homes of white families where black women toiled.

The Fair Labor Standards Act was a devil’s deal. It was historic on many levels and remains the foundation of basic labor protections in the U.S. But it was built on exclusions. The legacy of those exclusions is, sadly, still with us and continues to drive economic inequality today.

Last week’s court ruling marks the end of a long struggle to extend FLSA protections. In 1974, the FLSA was amended to include domestic workers (nannies, housekeepers, cooks, gardeners, and others) but a loophole was created for those who provide “companionship” for the disabled or elderly.

Since then, the “companionship exemption” has meant that employers of homecare workers who care for the elderly or disabled could claim the exemption to avoid paying overtime and minimum wage. And in recent years, large corporate employers have been profiting handsomely from this exemption.

At stake in last week’s decision was whether the DOL had the authority to narrow the definition of “companionship” to make it more in line with actual companionship—such as engaging in conversation, going on walks, or running errands.

But home health care services that require training—which covers practically all homecare workers—can no longer be claimed under the exemption.

Domestic workers and their allies organized for years to see this day, and they have won. It’s a victory for women and racial minorities, the elderly and disabled who need quality care, and everyone fighting to end extreme inequality.

Gender and race-based exemptions were baked into the legal regime that ended America’s first Gilded Age. As we confront rising inequality in our own second Gilded Age, we must focus on correcting the racial and gender inequities left in the wake of the first.

In this fight, domestic workers are leading the way.

Seven Fantasies of the GOP Presidential Debate

Andrew Cline / Shutterstock.com

Andrew Cline / Shutterstock.com

The Fox News debate between ten of the top presidential contenders in the Republican primary largely ignored the issues most pressing to ordinary people and to the environment.  Here are the seven worst moments from the debate in which the candidates and moderators ignored or actively opposed pressing issues of inequality.

 

1. Inequality is not a real problem

Not once did a candidate or moderator mention the fact that the gap between the ultra-wealthy and the rest of the country has risen to its highest point since the 1920s, or that one in five children in the U.S. live in poverty.  They didn’t offer solutions to address this absurd situation, but instead acted like it just wasn’t happening.  Should the minimum wage be increased? Is there a problem with Wall Street CEOs making 300 times more than their lowest paid employee? If the candidates had answers for addressing inequality, they certainly weren’t sharing them.

 

2. More tax breaks for the wealthy are needed

When candidates talked about the “flat tax” it’s important to remember that what they really mean is cutting taxes for the wealthy and raising taxes on the poor. The nonpartisan Tax Policy Center calculated that shifting to a flat tax would constitute a $250 tax increase for those making between $40,000 to $50,000 and a $495,000 tax cut for millionaires.  The tax code is certainly in need of reform, but a flat tax moves far in the wrong direction. Recent polling from Pew Research shows people are more concerned about the wealthy not paying enough in taxes than even their own tax rate. Why take from the poor to give to the rich?

 

3. Corruption is no big deal

Donald Trump wanted to make clear that when he was a mere donor and not a major candidate, he could get elected officials to do his bidding using campaign contributions. This form of legalized bribery was made infamous by the 2010 Citizens United ruling credited with opening the floodgates of campaign contributions. Rather than address what this means, the candidates tiptoed around the issue, while Trump boasted about buying Hillary Clinton’s presence at his wedding. Serious campaign finance reform is needed and necessary, but you didn’t hear that from this debate.

 

4. Climate change doesn’t exist

If you were holding your breath waiting for the candidates or moderators to mention climate change, you’d have ran out of oxygen long ago.  To Fox News, climate change appears simply not to exist and thus it was not mentioned a single time. Instead, Jeb Bush reiterated his call for aggressive participation in the “energy revolution”, which could more accurately be called the “climate change accelerator”.

 

5. What student debt?

Student debt made an appearance during Marco Rubio’s remarks on having recently held $100,000 in loans. With 40 million student debtors across the country and each graduating class leaving school with more debt than the one previous, it’s clear this issue is critically important to the millions of voters, but apparently not the moderators.

 

6. Growth will solve all problems

John Kasich and Jeb Bush each made aspirational statements that unrestricted economic growth could serve as the panacea to the nation’s woes. Ignored was the fact that such growth would cause undue harm to the ecological systems on which we depend.

 

7. Black Lives (don’t) Matter

Of the entire two plus hour debate, less than 60 seconds was given to what the Fox anchors referred to as “the civil rights issue of our time”. The one candidate asked directly about Black Lives Matter, Scott Walker, refused to acknowledge the movement or the systemic racism that BLM seeks to change and instead offered a curt reply on increased police training.

 

Of course there were many other absurdities and omissions from the debate, but these are the top. What are your favorite doozies from the debate?

Three Necessary Reforms to Reduce Gun Violence in America

Bullet hole

(Image: Shutterstock)

Every day, 31 Americans are murdered with guns. In our society, we’re inundated with statistics — but these 31 Americans aren’t just an abstract number. They are our friends, family, neighbors, and coworkers. They are men, women, and children — people with dreams for the future.

After a gunman opened fire inside a Louisiana movie theater during a screening of Amy Schumer’s film “Trainwreck,” killing two people and himself, the film’s writer and star described the personal connection she felt to the shooter’s victims. In remarks made Monday, she described Jillian Johnson as “a mother, daughter, sister, and a wonderful wife,” adding, “She was an artist. I think we would have been friends.” Schumer conveyed the heartache experienced by those left in the wake of gun violence, but also emphasized the resolve to transform our country’s lax policies. “Unless something is done and done soon, dangerous people will continue to get their hands on guns,” Schumer said.

Weak gun laws are strongly correlated with a higher prevalence of gun violence. As a prime example, Louisiana’s firearm laws are practically non-existent. As the state’s governor, Bobby Jindal, famously proclaimed, “We love us some guns.” This love for firearms directly translates into some of the highest levels of gun violence in the country.

As evidenced by the press conference held Monday featuring Schumer and her cousin, Senator Chuck Schumer, taking action to promote stricter gun laws is no longer taboo. However, these actions must be bold. There are three clear steps that Congress and state legislators can and should take if they truly intend on preventing future tragedies.

  1. Close the private gun sales background check loophole.

Background checks have been proven to be extremely effective. The Brady Act, authored by Senator Chuck Schumer and passed in 1993, has stopped over 2.1 million gun sales from taking place, according to the Bureau of Justice Statistics.

But we must finish the job that the Brady Act began. The law does not extend to private transfers of firearms. 40 percent of gun sales are considered private sales, which means the buyer isn’t required to undergo a background check. Allowing private gun sales to take place without any type of restrictions only makes our cities more dangerous.

Some cities and states have taken matters into their own hands through the use of ballot initiatives. For example, Seattle’s voters approved expanding background checks to private gun sales and transfers in 2014.

  1. Ensure that domestic abusers and stalkers don’t have access to guns.

Federal law prohibits domestic abusers from gaining access to a gun — unless of course it’s through a private sale. Although closing the loophole for private gun transfers is key, it is also necessary to mandate a more comprehensive definition of “domestic abusers” under the current law.

For example, the law excludes domestic abusers who are in dating relationships. This is commonly referred to as the “Boyfriend Loophole.” Thankfully, a bipartisan bill has been introduced in Congress to strengthen existing domestic violence prevention laws. This bill would prevent convicted stalkers from owning a gun, as well.

Despite 82 percent of Americans voicing support for the measure, the gun lobby managed to successfully stop a similar bill in Louisiana this year by misrepresenting the effects of the law.

In addition to adding new regulations, we must enforce our current laws. The federal government has failed to take away guns that individuals had in their possession prior to their domestic abuse conviction. This is especially dangerous — as one study found, “perpetrators who continued to possess firearms after they were prohibited from doing so by federal law were more likely to attempt homicide or threaten their partners with guns than domestic violence perpetrators who had relinquished their firearms.”

  1. Stop open carry laws in every state.

Open carry laws are a direct threat to public safety. As research shows, more guns do not equal a safer society. The idea that we need more “good guys” with guns has proven to be a myth.

Thirty-one states currently allow citizens to open carry without any type of license or permit. Guns in the public space both normalize weapons and violence that can occur with their use. As one Slate author wrote, “If it communicates anything, carrying a gun in public tells bystanders that the carrier is prepared to kill someone.”

From popular chains like Whataburger, to college officials and schoolteachers, people are taking a stand against laws enabling guns to remain a ubiquitous staple in our country. Hopefully, this opposition will reach the halls of Congress as well.

These policy changes won’t stop gun violence completely. But they will provide meaningful first steps in fighting our national gun epidemic, in addition to proving that elected officials are committed to protecting the public safety — as they’ve sworn to do.

Red Herring in the Inequality Debate

It sounds crazy, but a major distraction in our debate about inequality in America today is inequality itself.

I’m referring here to the concept of inequality in the abstract. The overwhelming majority of Americans believe inequality is necessary to a well-functioning society. Without inequality, the logic goes, there would be insufficient incentives for hard work, innovation, and education.

Once this frame of logic enters the debate, it’s hard to move beyond it. Current levels of inequality do get aired, but the discussion often gets mired in questions of relative morality. Yes, $100 billion is a ton of wealth for one family, the Waltons, to control, but what about all those savings their business model brought to tens of millions of Americans? From that perspective, is it unfair?

On top of that, there’s an emotional distraction. Many Americans who are not super-rich themselves nonetheless dream of being super-rich one day. To them, inequality is not only necessary; it’s beneficial.

Want to remove these distractions from the debate?

Then approach our current level of inequality or, to use a less distracting term, our current level of wealth and income concentration, from the other direction.

Under this approach, the starting point in the discussion would be: Is there any level of wealth and income concentration that would be destructive to our society?

And the answer? Yes, of course there is. If one family held all the country’s wealth, our nation as a whole would be worse off. Note how this question overcomes the emotional pull in the inequality debate. While it is common for people to see themselves as future one percenters, no family with a last name other than Koch would delude themselves into believing they could one day control all the country’s wealth.

Next question: At some point, does increasing concentration of wealth and income become destructive to our society?

The answer again must be yes, based only on the answer to the first question. For example, if America were at the point where two families held all of our wealth, further wealth concentration would be undesirable, since we’ve already established that one family controlling all the country’s wealth is undesirable.

Next question: Once we reach the point at which further concentration of wealth and income become destructive, should we implement measures to ensure that further concentration does not occur

Again, the answer must be yes, with no explanation needed.

And, finally, has America already reached the point at which measures should be implemented to prevent further concentration of wealth and income?

Essentially, we’ve now arrived back at the question whether one family should control $100 billion of wealth, but it’s no longer about the Waltons. And the data is overwhelming.

Citizens for Tax Justice reported that in 2012, twelve percent of all capital gains income reported by American taxpayers went to just 400 taxpayers.

On April 24, 2015, the Bloomberg Billionaires Index estimated that the ten wealthiest Americans now are worth, collectively, half a trillion dollars. The actual number is around $499 billion, but to these folks a billion dollars is no more than a rounding error.

Based on research by leading economist Emmanuel Saez, it was widely reported that between 2009 and 2012, 95% of the income gains in America went to the top one percent.

And there you have it. In order to understand inequality in America, don’t think about inequality.

Hell on Earth

As a progressive person of faith, I’ve had an interesting week. Pope Francis released an encyclical that called on the global human community to practice compassion, for each other and for our common home. In it, the Pope asked that our actions should be carried out in light of our “deepest convictions about love, justice, and peace.” It was inspiring and hopeful.

But the encyclical was released merely hours after a young, white man entered a historically Black church in Charleston, South Carolina and opened fire, killing nine people inside. We now know the shooter had long talked of sparking a race war and wanting segregation reinstated.

A day after this horrific event, I attended my weekly Bible study group, where we talked about motivations of the human heart with little mention of what happened in Charleston. We closed the meeting with a prayer, during which we said, “God, we will never understand why these things happen. And we may never know what motivated the person who carried out his terrible act.”

But we do understand. We understand this person committed an act of terror because of the narrative that has permeated our country since its founding – those who are different from us are less human than us, and we can treat them accordingly.

And we do know. We know the shooter was motivated by a conviction that Black people in America don’t deserve the same things as White people in America.

To claim – as people of faith – that we don’t understand or we don’t know is to abdicate our call to be a prophetic voice to the world. We would be failing to act out of love, justice, and peace, as the Pope calls us to.

On Sunday morning, I’m going to sit in a church, like I do most Sundays. Many Christians around the country will do the same. Pastors will lead us in prayer for peace and for comfort. But many of them will neglect to mention the hate-filled narrative against people of color or low income people that is embedded in our structures and systems in this country.

Many pastors will abdicate their call to speak the truth because racism is too uncomfortable and too difficult to talk about from the pulpit. Some won’t want to risk offending people or losing parishioners. It is certainly not “seeker-friendly.”

As people of faith, we are complicit to hate and to racism when we don’t act to dismantle the systems and structures that perpetuate it. We are complicit when we don’t speak hard truths about what’s wrong with the world because it’s risky and uncomfortable.

The places of worship where people of faith go to take refuge from the world are no longer safe. And we, as people of faith, can no longer turn a blind eye. We can no longer leave race conversations out of the pulpit – and our Bible studies – because violent, destructive racism literally came into a sacred space this week, and brought hell on earth.

We have to take courage and speak – like the prophets of old – against the injustices of this world. We have to take up the task of demanding love, justice, and peace even when – especially when – it is too risky to do so. It is, simply, our calling and our divine purpose.

There are great ideas on how to move forward at BlackLivesMatter or FergusonAction. For resources on how to have conversations about race in faith communities, visit gcorr.org/resources.

A Tale of Two Supermarkets: One Transition Town’s Efforts to Respond to Gentrification

Small food shop lit at night

(Image: Flickr / Lars Plougmann)

Community resilience is often thought of in concrete terms: growing local food, using sustainable energy, riding bikes and using alternative transit, and lowering carbon emissions.

All of this is tremendously important. But resilience is also a question of who, as well as what. It is possible to imagine a future full of gated neighborhoods that are highly resilient, where wealthy people live in carbon-neutral communities complete with bikes, electric cars, mini-farms, windmills, and solar panels.

This is how gentrification systematically undermines attempts to create resilience for all. It’s why the future scenario of “gated resilience” is one we must seriously consider and work to prevent. We must always ask: who is community resilience really for? It’s also clear that as communities build resilient “amenities,” such as community gardens, green space, walkable business districts, farmers markets, and bike paths, they become more desirable places to live – and real estate prices rise. Tragically, the folks who worked so hard to improve their communities, and make them resilient, get priced out.

Él Platanero and Hi-Lo

According to Jamaica Plain New Economy Transition (JP NET) organizer Carlos Espinoza-Toro, “Gentrification is a structural problem embedded into our financial and economic system.”

But despite its structural nature, people often approach gentrification as if it was a matter of individual choice. As a neighborhood changes and gentrifies, hurtful fights can break out. “New” and “old” neighbors often battle over potent symbols–such as murals and supermarkets. But it is possible to navigate these conflicts with skill and care, lessening the impact, and uniting the community rather than dividing it. (For an example, see this story about Beth Roy, a mediator who helped a community navigate gentrification in the San Francisco area.)

Take, for example, Tropical Foods Supermarket–or “Él Platanero”–in Dudley Square, Boston. Jeanette’s father, a native of Mexico, has shopped at Él Platanero for many years. He found a sense of community there, where everyone understood one another. Él Platanero was a place where he could connect with people in his native language. In 2014 he learned of the supermarket’s upcoming renovation project. Although it would be under the same owners, he feared the new, remodeled location will mean more expensive groceries and a loss of its unique culture.

Luckily, this story has a positive ending. The supermarket has now been open for business in its new space for a few months. It has brought in new customers, but it has also retained many old ones. Jeanette’s father still shops there and believes this change has had a positive outcome. The culture still remains and its appearance is more polished. Compared to other local supermarkets, her father believes Tropical Foods does a better job at respecting foreign and Latin American products. He can always count on finding his favorite products at reasonable prices.

We find a much more mixed story in neighboring Jamaica Plain, where a Whole Foods took over the “Hi-Lo” supermarket in 2011. Hi-Lo had served the Latino community for almost 50 years in JP. Very much like Tropical Foods in Dudley Square, it was a place to connect with friends.

Jeanette’s mother, of Puerto Rican descent, would visit Hi- Lo whenever she needed a product specifically from her home island. “At Hi-Lo, you almost felt as if you were shopping in a Latin American country,” she said.

This is the situation for many new Americans in search of a taste from home. Unable to find certain products for a good price, they have to settle for what is available.But even though Hi-Lo often had great deals on groceries, a product she most searched for, “pana,” or breadfruit, was always over-priced. Growing up in Puerto Rico, Jeanette had a giant breadfruit tree in the backyard. What was once abundant and taken-for-granted now costs Jeanette’s mother almost $10 for just one piece of fruit.

Whole Foods replaced Hi-Lo in 2011 after its long-time owners retired. This brought about both excitement and disappointment from Latino customers. Some were upset about losing a piece of home, while others were excited about change. Some worried there would be no place to find their products, and others–like Jeanette’s mother–worried that if Latin American products were sold at Whole Foods, the prices will increase even more.

In the end, Jeanette’s mother was right. Whole Foods does not carry breadfruit, and the prices for all its produce are high. While some Latino neighbors may occasionally get groceries at Whole Foods, it is certainly not the community center that Hi-Lo was.

In a gentrifying neighborhood, little “tastes of home” like breadfruit become hard–or even impossible–to find.

Getting Structural

Food is a powerful indicator of gentrification, and signifies who really belongs in a neighborhood. “If an institution like Whole Foods comes into a neighborhood and says it cares about the cultural well-being of neighbors, it should be able to provide food that enhances that well-being,” says Carlos. JP NET put together a “Meet your Neighbors’ Fruits” informational sheet so we can learn more about the fruits our neighbors know and love.

Clearly, fruit by itself does not address the structural causes of displacement. In fact, “It takes much more than one project or policy to address this issue,” says Carlos. “It takes a movement of people who understand it, structurally and systematically.”

Strong movements are built on solidarity. That’s why JP NET hosts bilingual potlucks–on topics ranging from gardening to sports to climate change–in order to build trust across neighborhood divides. “We’ve learned that there is no quick fix to a structural problem,” says Carlos. “Only through conversations, education, and the slow work of relationship-building, can we spark a powerful movement of people who know, trust, and care about each other–and who are willing to fight for community resilience for all neighbors.”

 

A Disappointing New SEC CEO Pay Rule

laughing businessman with arms up

(Image: Shutterstock)

In my more than two decades of work on runaway executive pay, sparking public outrage has never been the problem. The real challenge has been persuading the public there’s something we can do about it.

To help change that, we’ve been publishing a list of more than 30 creative and practical reforms in our annual Institute for Policy Studies Executive Excess reports. We assign each reform a report-card style grade, based on how far it would go towards advancing economic fairness and stability in executive pay policy and practice.

The CEO pay proposal issued by the Securities and Exchange Commission April 29 gets one of our lowest marks. The new rule — an effort to implement just one of a half dozen exec pay reforms in the 2010 Dodd-Frank financial reform law — requires U.S. corporations to disclose the relationship between their executive pay and financial performance.

Los Angeles Times columnist Michael Hiltzik has already given this SEC proposal a thorough thrashing. He deftly points out that the rule’s narrow “performance” metric — total shareholder returns — will only increase incentives for executive bad behavior.

“Predatory pricing, skimping on product quality, mistreatment of suppliers, and the manipulation of local communities to extract tax breaks and subsidies for factory locations all reflect the drive to upstream all corporate returns to the shareholders,” Hiltzik notes. “The SEC’s executive compensation proposal further chisels the myth of shareholder value into the rules of corporate behavior.”

Other observers of the executive pay scene worry that the new SEC rules could cause confusion since the new reporting requirements on performance will include the value of realized equity-based pay rather than the grant date value in the calculation of executive compensation.

“If an executive has just received a massive options grant, he might look underpaid this year, but overpaid in 10 years when he cashes it in,” points out Rosanna Landis Weaver, who heads a program focusing on executive compensation at As You Sow.

For all these reasons, we stand by the low mark we’ve been giving this monitor-pay-by-performance form since Dodd-Frank made it the law in 2010.

We base our reform ratings are on five criteria:

Does the reform encourage narrower CEO-worker pay gaps?

Extreme pay gaps — situations where top executives regularly take home hundreds of times more in compensation than average employees — run counter to basic principles of fairness and, at the same time, endanger enterprise effectiveness. Management guru Peter Drucker believed that the ratio of pay between worker and executive can run no higher than 20-to-1 without damaging company morale and productivity.

Does the reform eliminate taxpayer subsidies for excessive executive pay?

Ordinary taxpayers should not have to foot the bill for excessive executive compensation. And yet they do. Government contracts and subsidies routinely make mega millionaires out of corporate executives. And all chief executives benefit from a tax provision that lets corporations deduct unlimited amounts from their income taxes for the expense of executive pay.

Does the reform encourage reasonable limits on total compensation?

The greater the annual reward an executive can receive, the greater the temptation to make reckless decisions that generate short-term earnings at the expense of long-term corporate health. Government policies can encourage more reasonable compensation levels without micromanaging pay levels at individual firms.

Does the reform bolster accountability to shareholders?

On paper, the corporate boards that determine executive pay must answer to shareholders. In practice, shareholders have little impact on corporate behavior. The “Say on Pay” provision in Dodd-Frank only gives shareholders a nonbinding vote on executive pay packages.

Does the reform extend accountability to broader stakeholder groups?

Executive pay practices, as the 2008 financial crisis vividly demonstrated, impact far more people than shareholders. Effective pay reforms need to encourage management decisions that take into account the interests of all corporate stakeholders, including the consumers, employees, and communities where corporations operate.

What reforms get high marks when we apply these criteria? All these below now happen to be in play in Washington.

CEO-worker pay ratio disclosure: Nearly five years after President Barack Obama signed the Dodd-Frank legislation, the SEC still has not implemented this commonsense transparency measure. The reform would discourage both large pay disparities that can lower employee morale and productivity and excessive executive pay that can encourage excessively risky behavior.

Ending taxpayer subsidies for executive bonuses: In 1993 Congress set a $1 million cap on the individual executive pay corporations could deduct from their income taxes. But that cap did not apply to “performance-based” pay, including stock options and other “incentive” pay. Several bills have been introduced to address this problem, the most recent version by Senators Reed and Blumenthal and Congressman Doggett. The Joint Committee on Taxation estimates that eliminating this loophole would generate $50 billion in revenue over 10 years.

Ending the preferential capital gains treatment of carried interest: Under current law, hedge and private equity fund managers pay taxes at a 15 percent capital gains rate on the profit share — “carried interest” — they get paid to manage investment funds, rather than the 35 percent rate they would pay under normal tax schedules. Last year, the top 25 hedge fund managers raked in a combined $11.6 billion. Seems they could afford to pay their fair share of taxes.

Pay restrictions on executives of large financial institutions: Within nine months of the enactment of the 2010 Dodd-Frank law, regulators were supposed to have issued guidelines that prohibit large financial institutions from granting incentive-based compensation that “encourages inappropriate risks.” Regulators are still dragging their feet on this modest reform.

Many other creative CEO pay reforms are gaining support at the state level in this country and in nations around the world. A shortage of solutions is not the problem. A lack of political —and regulator—will is.

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