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  • From: "Tradingpost" <tradingpost@lobo.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] More thoughts on USDA and Obama
  • Date: Sat, 29 Nov 2008 09:24:58 -0700


(But many of us are already pursuing alternatives to eating oil, without
needing votes, studies, foundation funding, or permission)


More thoughts on USDA and Obama
With the food world's eyes on farm policy, is the real action at Treasury?
Posted by Tom Philpott at 11:49 AM on 26 Nov 2008
http://gristmill.grist.org/story/2008/11/26/11820/880

Food-politics blogs and listservs are blowing up with speculation about whom
Obama will tap as USDA chief. I've weighed in myself here and here. (Update:
House Ag Committee chair Colin Peterson, tipped as a top contender for the
USDA spot, says he's not interested. Evidently, he calculates that his
current post is the more powerful one).

But I'm starting to think the real action has already happened -- with
Obama's recently announced economics team. Our food system is intimately
intertwined with the broader economy; reforming it will require new ways of
thinking about economics. And Obama has delivered a team representing
warmed-over versions of old and discredited ideas.

According to the USDA, the food and fiber system generates about $1.2
trillion in economic activity each year, about 12 percent of total GDP.

That means there are massive vested interests embedded in the system -- and
hundreds of billions of dollars invested in the infrastructure need to grow,
process, and retail environmentally damaging, unhealthy food.

Any serious food reform will mean taking on those interests -- large,
powerful companies like grain trader/processors Archer Daniels Midland and
Cargill, industrial meat giants like Smithfield and Tyson, and huge retailers
like Wal-Mart and McDonald's.

What's more, the overall economy arguably runs on cheap food. Median wages
have been stagnant and/or declining for 35 years. According to University of
Massachusetts economist Robert Pollin's Contours of Descent: The Economic
Consequences of Clinton, Bush, and Greenspan, real hourly wages peaked at
$15.73 in 1973 and by 2000 stood at $14.15 (in 2001 dollars). Under Bush II,
real wages eroded still further.

In such circumstances, cheap food becomes an important social salve. Imagine
the unrest that might have occurred if food prices had risen steadily while
wages stagnated.

Instead, of course, food expenditures as a percentage of disposable income
dropped steadily (until the biofuel boom that started in 2006), pushed down
by the growing monopsony power of the few big firms who buy, process, and
retail the great bulk of our food.

To put it crudely, Wal-Mart's laser-like focus on "every day low prices" --
achieved by squeezing suppliers (e.g., farmers) and workers alike -- meant
that even Wal-Mart employees could afford to eat every day.

For me, it's impossible to imagine a new food system without a new economy --
one that views food not as a cheap source of calories for a low-wage
workforce, but rather as a tool for building health and wealth within
communities.

Models abound. One is Hardwick, Vermont, a once-dying town that has built a
vibrant economy around sustainable food. I met Tom Stearns, whose company
High Mowing Seeds is an anchor of Hardwick's economy, at Slow Food's Terra
Madre conference last month.

He told me that while the national economy plunges into recession and sheds
jobs, Hardwick continues adding jobs at a robust clip.

Rather than seriously consider such models, what has the Obama team done?
They've essentially handed the economic levers over to the folks who ran the
show during the Clinton years.

Like Clinton, Obama is hanging his economic policy on the wisdom of Robert
Rubin, Clinton's Treasury chief and current director and senior counselor of
bank giant Citigroup.

Given Citi's ignominious recent slide into a $300 billion taxpayer-backed
black hole, it would have been a bit much to name Rubin to a top economics
post. (For the record, Citi has shed something like 80 percent of its value
since Rubin signed on to its leadership team after exiting Clinton's Treasury
Department in 1999.)

Rather than tap Rubin, Obama has turned to Rubin's proteges. Here is the New
York Times:

It is testament to former Treasury Secretary Robert E. Rubin's star power
among many Democrats that as President-elect Barack Obama fills out his
economic team, a virtual Rubin constellation is taking shape.

The president-elect's choices for his top economic advisers -- Timothy F.
Geithner as Treasury secretary, Lawrence H. Summers as senior White House
economics adviser and Peter R. Orszag as budget director -- are past protégés
of Mr. Rubin, who held two of those jobs under President Bill Clinton. Even
the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin's
chief of staff in the Treasury Department who followed him to Citigroup, and
James S. Rubin, Mr. Rubin's son.

Can someone explain this to me? I can't figure out why Rubinomics isn't
considered a joke. Rubin has been at or near the top of Citigroup's
leadership hierarchy since 1999 -- watching idly while the bank charged into
the very "toxic assets" now fouling up the entire global economy:
derivatives, mortgage-backed securities, sub-prime mortgages, etc.

Indeed, Citi likely wouldn't exist in its current form, nor have jumped
willy-nilly into the derivatives market, were it not for Rubin's hard work at
Treasury.

According to a recent New York Times article, Rubin mounted "fierce
opposition" to regulating derivatives markets, even after an Commodity
Futures Trading Commission official testified to Congress that opaque
derivatives trading could "threaten our regulated markets or, indeed, our
economy without any federal agency knowing about it."

Rubin and his ally, then Fed chief Alan Greenspan, won the political battle;
derivatives trading took place without transparency or government oversight.
But the CFTC official was vindicated in the end.

As Treasury chief, Rubin also watched while Citigroup violated the spirit of
Glass-Steagall Act, which prohibited taxpayer-insured deposit banks from
entering the investment-banking and insurance businesses. Under his watch,
then Citibank snapped up Wall Street titan Smith Barney and insurance
behemoth Travelers. From those moves emerged Citigroup -- an institution
deemed too big to fail. Rubin also famously championed the Gramm-Leach-Bliley
Act, which drove a stake into what was left of Glass-Steagall. Clinton signed
it just before Rubin left office. Before long, Rubin was holding court from
Citigroup corner office.

So what can we expect from these Rubin proteges, Geithner and Summers? New
visions for an economy that truly revalues food, or just a new jolt of
Rubinism?

The answer to that question, and not the new USDA chief, will likely dictate
the fate of our food system in the next decade.





  • [Livingontheland] More thoughts on USDA and Obama, Tradingpost, 11/29/2008

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