Building Local Power

In this episode, ILSR’s Co-Director, John Farrell, is joined by Alan Hipólito of Verde. Alan joins several activists in leading the fight for clean energy equity in Portland, Oregon. To move this goal at the local level, Verde participates in a coalition campaigning for an important ballot initiative this year.

The proposed policy could raise an impressive $30 million a year through a 1% surcharge levied on big business. It would help ensure an equitable transition to 100% renewable energy, a goal Portland committed to in 2017.

Alan and fellow organizers have brought together a broad coalition of grassroots organizations representing communities on the frontlines of climate change. Their efforts have resulted in more than 300 endorsement statements for the ballot initiative, more than any previous ballot initiative in Portland! With elections less than a week away, Alan explains why it’s critical to invest in climate solutions targeting low income and people of color.

The vote takes place on November 6, and may set a precedent for how cities can fund equitable climate solutions.

So across the country more than 80 cities of all sizes have adopted ambitious goals to generate 100% of their electricity from renewable sources, but very few of these cities have concrete plans how to get there. This week I talk with Alan Hipólito at Verde, a tax-exempt nonprofit in the Cully neighborhood of Portland about a powerful initiative that’s on the November 6 ballot to guide Portland towards meeting its 100% renewable energy commitment.

Alan, welcome to the program.

John Farrell:

There were really three commitments that we moved forward in the resolutions. The first was working with rate payer advocates to protect low income rate payers from price impacts during these transitions. The second, was, advancing workforce and contracting diversity goals. So, that workers and business from all communities have the opportunity to participate in the development and construction of our renewable energy infrastructure. But, then there was a third commitment, that, we think is especially connected to the Portland Clean Energy Initiative.

As, I mentioned we did some pretty good work on advancing workforce and contracting equity commitments in the resolutions. But, a lot of these projects that will be done will be very big scale projects. So, it will be done by, big contractors, big companies working at big institutions. And, there’s a lot of reasons why that make sense. But, that’s a difficult level for frontline communities to compete. So, we wanted to open up a new playing field for low income people and people of color and their community serving institutions to be a part of our transition 100% renewables. And, we called that “community-based renewable energy infrastructure.”

So, each resolution recognizes that that’s a model to ensure that the benefits of our transition are made available to low income people and people of color communities. Then each sets standards for what percentage of community-wide energy will come from community-based renewable energy infrastructure. Each of them says that by 2035, two percent of all the energy in the city of Portland — so, not just things that are owned by the city out right or city building — but, every unit of energy that’s consumed within the city, that two percent of all of that will come from this kind of infrastructure. And, then the city goes even further and says by 2050, 10 percent. So, one out of every ten units of energy in the city will be created by community-based renewable energy infrastructure. This is a massive transfer of generative capacity to the community level. The Portland Clean Energy Initiative is really of one of our first efforts to increase the toolkit. Both, in terms of funding, as well as policy, to give communities the opportunity to respond to that challenge.

So, my response would be, it’s not either-or, and we need to recognize that local communities have capacity challenges to engage at these broader scales. We’ll be there one day, and this is part of a broader strategy to build power. But, also, we understand our communities best at the local level and can design responsive solutions at that level.

But, what I think that 100% Renewable advocates, energy transition advocates, fail to recognize, often, is that the demographics of our country and our cities are changing. And, the 20th century model of moving environmental policy isn’t going to work anymore. Because, we just don’t have the numbers. And, I say this as someone who has worked on protecting the environment and serving community, my whole adult life. We don’t have the numbers. We can’t get… couldn’t get climate legislation through a Democratic House and Senate and a Democratic President under the Obama Administration. So, if we don’t bring new communities to the table and don’t serve those communities — one, we won’t win the policy battles. And, second, we’ll be leaving a whole segment of the marketplace unserved, and therefore leaving out all of the greenhouse gas emission reduction and renewable energy growth that could take place in those excluded communities.

What I found amazing about this initiative for Portland was two pieces to it. One was the deliberate focus on a particular part of the population and in the shape of how the revenue is raised. And, another one is the magnitude. I would start with the magnitude, first, that this intended to raise like 30 million dollars a year. That’s something like ten times more than what these other cities have been pouring into climate work. So, I just wanted to note first of all the, the scale is impressive.

And, the second one is, could you tell me a little bit more about why, you know, the ballot measures is funded by a one percent tax on local gross receipts of retailers with national sales over a billion, if they do at least a half million in sales in Portland. So, you’re talking about big retailers that you’re targeting. Why did you pick that as part of the initiative? What’s the strategy there? And, what are the implications then, in terms of your political battle, to get this initiative passed come November 6th?

Thirdly, Oregon is actually a very business-friendly place. Seven out of every ten tax dollar in Oregon comes from individual taxes, not from corporate revenue. So, they have the resources to contribute, to pay their share, in what is clearly a society-wide, civilization-wide challenge.

And then, of course, in addition to that favorable treatment, they just received a roughly 40 percent tax cut from the federal government and the Trump Administration. So, they have the resources available to lean into the solution with us. And we’re not asking for a lot. One percent on their general revenues within the city of Portland for … If that company has $500,000 in local revenues, in addition, of course, to meeting the $1 billion national box they have to check as well, that’s just $5,000 on that $500,000, so we’re not … It’s a very targeted, very narrow, and devoted to very specific purposes, from companies that can afford it and that have climate impacts.

So the genesis, the origin of the idea and how it’s been brought before voters, brought before the public, is very different. I would also say that the, in part, because of where we came from and how we built this, and because, frankly, there’s a great hunger, I think, in our communities for climate solutions that also address poverty and meet the growing income disparities that we see in our communities. We’ve seen tremendous support all the way across the board, from other mainstream environmental organizations, from labor — and that’s both service unions, public employee unions, and building trades —, housing organizations — so groups that advocate or provide affordable housing —, advocates for the homeless, faith communities, neighborhood associations. All the way across the board. We submitted 307 endorsement statements to the voters’ pamphlet, and the voter’s pamphlet deadline was September 10th, that’s the most that they’ve ever received before.

Now that doesn’t mean we don’t have opposition. We do. Our primary opposition is what I would call an “astroturf” group, or a front group called “Keep Portland Affordable.” And they are associated with the Portland Business Alliance, which is kind of like our Chamber of Commerce. And they’ve begun to receive contributions. We’ve just entered into the seven-day reporting period, where campaigns have to report contributions with seven days. And we’re starting to see donations from groups like Amazon, US Bank, WalMart, Comcast. So the opposition is showing up and they’re going to come after us, particularly, we think, in large media buys. Their ground game is not the same as ours, of course, because we’re community-based. So, we can’t beat them at their game, but we can beat them at our game, which is community-based, grassroots, networks.

And so, for your listeners who want to find out more and want to support us they can certainly go to our website portlandcleanenergyinitiative.com. But also, it’s important that they follow us on their social media of choice, whether they’re Instagram folks or Facebook people or Twitter. To follow us, to re-tweet, or to post to their friends and followers that they’re following us, because that’s how we’re gonna amplify and get our message out as we compete for voter’s attention moving towards November 6th.

So, it sounds like in a way, as we sometimes call them here, the “usual suspects” are aligning against us. Which is to say, the big national companies, for whom they have a sort of a limited investment and interest in Portland, as a unique community, and rather, is just one other place that they have a subsidiary or a chain.

I’m curious about some of the incumbent large businesses, and I’m thinking about the utility companies, whether it’s a gas utility or an electric utility. I know there’s been some discussion and contention with them about how far they’re going around renewable energy. I think I read something about the electric company saying, “Oh, we’re going to close the coal plant, but then we want to build a gas plant.” Are they much involved in this and has there been a lot of work related to this initiative or to your work on the 100% renewables with regard to the utility companies, and where are they positioned?

Roughly 10 percent of all of the residents in Cully live in those six mobile home parks. And we, together with groups like St. Charles Church, St. Vincent de Paul, do a lot of organizing and service work in those mobile home parks. We’re finding folks there paying 200 [dollars] a month to heat their homes in the winter. So, we are very conscious of wanting to reduce expenses for low-income households because, especially for low income to the very lowest income people, even a 20, 30, 40 dollar savings a month — to say nothing of how much you could reduce a $200 a month heating bill — makes a tremendous difference in their lives.

So narrowly within the context of the Portland Clean Energy Initiative, I would say we’re mostly concerned about prices to those who are carrying high energy burdens. Writ large, in the broader 100 percent renewable, we are concerned with the cost that low-income rate payers are paying, and we did work very diligently with the CAP agencies, the advocates for low-income rate payers, for low-income weatherization programs, to insert those commitments, to hold low-income rate payers harmless in this transition. So, I would say those concerns are there, and they just have a different level of focus, depending on the scale that we’re at.

And I would urge folks to check out the literature. Check out the polling, because poll after poll — whether it’s state polls in California, national polls, or even polls that the Portland Business Alliance did here in the City of Portland — show that communities of color support environmental regulations and policies at higher levels than the general population, including their willingness to see government pay for those policies and solutions. So, this is the future. Get on board.

And I would say that environmentalists do need to be conscious of their political power, their access, their privilege. For example, they have relationships with elected officials, policymakers, funders, that can be brought to bear to meet the needs and serve low-income and people of color communities. And, so, what we always say is the best thing is for mainstream environmental organizations to do the hard work of building relationships with organizations on the ground serving communities of color. And that relationship might bear very little in what you would consider externally measurable fruit. It’s not going to be something you can put an output in your grant chart, your grant flowchart, that you have to turn into your funder.

It’s the slow organic work of saying, “Hey. This is who we are,” in a sort of a perspective of deference and respect that we always encourage organizations to reach out to the frontline community-serving organization. We’re in every city, doing important work every day, and say, “Hey. I work for this group. We’re good at some things, like we know a lot about …” — I don’t know — “… air quality, water quality, energy policy. We’ve got good relationships with these elected officials, or this agency, or these funders, but we really want to be of service to your community. And so I’m here wanting to start a relationship with you in hopes that, over time, we can figure out the way that the work that I do, in my organization, can be of service to the work that you do in your organization.” And then, “I understand it’s going to take time and trust, and I know lots of people come through that door and say, ‘Hey. I’m from so-and-so, and I’m here to help.’ And I just want to make a commitment and ask for the opportunity to prove that we’re serious about helping.”

And then see what happens.

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Photo Credit: Portland Clean Energy Intitiative

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

Host and ILSR’s Communications Manager, Hibba Meraay, is joined by Chris Mitchell, Director of the Community Broadband initiative, for an update on the progress of community broadband networks. Community networks have come a long way in the past few years including impressive developments in business models, financing options and quality of service.

They also discuss the Internet in current events including: California passing statewide net neutrality, why Colorado always seems to have a municipal network related ballot initiative, and the buzz around 5G.

Tune in for an update on all things community networks! For more on broadband check out our Community Broadband Bits podcast.

We tend to think of both of them as community networks. Both of them were seeing tremendous drives. In coops, it’s a bit more rapid, I’d say, but in the municipal space, we’ve seen a lot of interest and a fair amount of more investment. We’ve seen a lot more cities considering these investments, but we haven’t seen the same level of rise of them building them, although we have continued to see an increase of new cities building networks.

Now, another business model which has very low risk, and an approach, is what the City of Ammon, Idaho has done. We’ve covered that very closely. That’s very exciting, because it demonstrates how the cities can move forward on an incremental and somewhat slower basis than if they were to bond and borrow a lot of money, but you can get your toes in the water, and get a sense of what the community reaction really is by financing it with assessments on the homes where you have homeowners that are excited to take part in this.

There’s a number of different financial models that are still growing. I think we should be thinking of this as municipal networks are still relatively young as an idea, municipal fiber networks in particular. I think we’re going to see continued growth and maturing in this area.

Whenever you say something like that, if you’re in this field, you might think of Chattanooga, which has brought billions of dollars of investment to the community. Well, more than a billion, I should say. I don’t want to exaggerate it. They were the first city in the nation, and I actually think possibly the first city on the planet, in which anywhere in the city, and in a lot of the county that is surrounding the city, you can get 10 gigabits per second, and you can get that at a price that’s cheaper than you can get even 100 megabits a second in a number of other areas. That’s a different of 100-fold in terms of capacity.

To give people an idea, there’s a couple of ways that we can measure this. One is just raw speed, and we certainly see very non-biased measures showing that cities are building networks that have very powerful speed. We also know that Consumer Reports has said that Chattanooga is the best ISP as ranked by the customers of ISPs. Now, Consumer Reports is a wonderful organization, a consumers’ union, but they tend to focus on larger networks. Many of the municipal networks aren’t even studied. In fact, the vast majority of them aren’t a part of those studies. I’ve visited almost all 50 states now in my lifetime. I get around quite a bit. I’ve visited more than 30 to talk to people about municipal networks, and so I’ve met a lot of people and talked to them about their experiences. They’re very positive on it.

Then a final piece of information. There’s certainly more out there, but one that I’ll just bring up is Harvard. Harvard has a center on technology and society called the Berkman Klein Center. They did a study looking at pricing and found that the citywide municipal fiber networks do tend to price their services lower. We certainly see multiple lines of evidence showing that cities build networks faster and at lower cost, higher reliability, and greater customer satisfaction, which frankly makes sense because if people don’t like the service they’re getting, it’s not just a matter of calling up and complaining. They actually vote. They vote on their city council members. They vote on the mayor. If they’re served by a cooperative that’s doing a broadband network, then they can vote on the board there. These things are accountable in ways that Comcast and Charter Spectrum just are not. We would expect them to be better, frankly.

At the state level, we actually see more partisanship, and then at the federal level, we see extreme partisanship. In many ways, that’s sort of what we see in many fields right now, but it’s quite remarkable, the difference between Republican attitudes when it comes down to a pragmatic, local issue of solving this problem of Internet access versus the federal issue, where Republicans tend to be the ones that don’t want cities to be able to build the networks that people who vote Republican are building across the country. So it’s frustrating, but I often don’t know if I’m working in Ammon, I don’t know if I’m dealing with a conservative or one of the admittedly relatively few more progressive type folks there. Because it doesn’t come up. You know it’s not like people say my ideology tells me to do this. You know this is just more of a pragmatic decision of we understand that very large companies don’t put our interest first, so we are going to solve this problem locally. And there’s that. And it’s not a matter of saying, “Therefore I love Elizabeth Warren,” or something like that.

Thank you so much for tuning in to this episode of, “Building Local Power.” This is the part of the show where you usually hear an ad or a message from our sponsors, but that’s not really how it works here. We’re a national organization that supports local economies, which means we don’t accept national advertising. Please consider making a donation to ILSR. Not only does this support our podcast, but it helps us produce all the research and resources we make available for free on our website.

Please take a minute to go to ILSR.org/donate, any amount is welcome and really appreciated. That’s ILSR.org/donate. Thanks so much, and now back to the show.

Thanks so much, Chris, for joining us today. So let’s start off with this next section about how broadband issues are happening in current events today. The midterms are coming up in just a few short weeks and I’ve noticed it seems like every election cycle, Colorado seems to have a ballot initiative about community networks, for folks to vote on. Why is this a theme for them and are there other states using ballot initiatives in the same way as Colorado is?

But Colorado’s pretty unique in this broadband world because they passed a state law in 2005 I wanna say which basically took local decision-making on broadband issues away from local communities. And that was very strongly pushed by the company that’s now CenturyLink, but it was then U.S. West, which got gobbled up by Quest, which go gobbled up by CenturyLink so, sort of the same lineage with that reminder of the consolidation that we see.

If a city or a county or even other kinds of political jurisdictions in Colorado, if they wanna do a partnership, if they wanna build their own network, if they even just wanna really explore the issue, they basically have to pass a referendum to reclaim local authority. Very few other states have that. Iowa does have something similar to that if you wanna set up a telecom utility, but other states, we have not see that. Now in some of the western states, where they have a stronger tradition of ballot initiatives, those people who’ve wanted to put a pro-active kind of ballot initiative on the ballot and, it may not even carry the day in terms of, if it passes the city would be obligated to do something, but it would give cover or really give energy to those on the city council that would wanna do something.

So that’s some of the ways that we see some ballot politics happening. But in Colorado we’ve seen more than 120 now local jurisdictions opt out of that state law and still, even with that obvious, just incredible level of support for regaining local authority, the state legislature has not been willing to really go so strongly against CenturyLink to get rid of it. I think the cable and telephone companies are very good at making sure that there’s nothing that goes through the state legislature that will significantly change the market or result in a better choice for a lot of people.

If AT&T, which famously hosts this magic, major golf tournament as a major lobbying thing that every legislature member seems to, general assembly member, seems to love. We’re waiting, Governor Brown kept us waiting and made his decision at the end of September and signed the bill. California has basically re-instituted the rules of that the Obama administration created to preserve the open internet, but they also went a little bit further than the FCC had gone and it’ll be interesting to see where that leads. I don’t think anyone really has a sense of that. We know that there will be lawsuits, in fact there already have been lawsuits to try to stop California.

I don’t know how many other state legislatures will follow along. I’m sure that there will be campaigns to have other state legislatures pass other kinds of bills. I think that we may see a lot of places adopt a ‘wait and see’ attitude. I would love to see this lead to more effort of people to really change the state laws. I don’t know that I would make it my campaign around the neutrality right now, if we had a certain amount of political energy I think I’d be looking more, given ILSR’s point of view that the way we wanna solve this is by creating alternatives that are accountable to the community. I think regulation is certainly better than nothing, but in the end, at the Institute for Local Self-Reliance, we strongly believe that market structure is a far better solution, one that encourages local businesses and locally accountable entities to be competing against each other and remove that incentive for a monopolist control so much, the ability of a monopolist to control so much.

I don’t want to say that local municipal networks are inevitably, forever going to be good on net neutrality. I think they have been. The evidence suggests that they have been. We’ve never come across a city that is violating that neutrality, and we don’t expect cities to do that generally, particularly with they have fiber networks. The older infrastructure was cities built cable networks, there might be, depending on who’s running it, at least consideration of violating net neutrality in order to prevent one or two people from using so much data that it impacts others.

So I would say that this is an area, and it’s a bit gray. But there’s two reasons that we don’t expect cities to significantly violate that neutrality. Maybe even three or 10.

Smaller networks, the power dynamic is just totally different. And then the second piece of it is, again, people want an open internet. They don’t want their network to tell them how to use it, and if their network owner starts telling them how to use it, and they can vote that person out, they’ll do that, that’s my strong suspicion. But there’s a final piece also that’s worth saying and that’s that cities are generally building the best infrastructure possible because they’re trying to maintain a business climate that is welcoming to new businesses and is really allowing existing businesses to thrive. So they have very big pipes. There is no reason that they would want to constrain that. They generally see their big pipes as an advantage. And so they have a different incentive than a provider like Comcast, which sees an ability to sell more and to try to have an economy of scarcity whereas these cities want an economy of abundance, so, there’s just different incentives for smaller providers and in particular for small municipal providers. Let me just say that this is one of the reasons that we’re very supportive of publicly owned networks. I would be pretty skeptical of large state owned or multi-state publicly owned networks because I’m afraid that the dynamic could be different and we like municipal networks at the scale that they’re at generally now.

As you’re saying Verizon is rolling out in several different communities, several different neighborhoods of the communities to be specific, not the entire city of Sacramento immediately but to some areas from in there for instance and a few other places. They’re testing this out to see what it’s gonna be like. This is something that’s exciting in terms of an iteration of wireless. It’s gonna make wireless better. Much like 4G has gotten better over the past five or six years or whatever it’s been available on the market. 5G will continue to be better.

In fact, wireless is constantly getting better. It’s just arbitrarily they say, “Alright, we’re gonna call this next thing 5G”, rather than 4G.3 or whatever. It’s exciting but we’re concerned about it because it’s being over hyped and it’s being used by some to suggest that because 5G will be better, it will provide better wireless that maybe we don’t need more wired choices in our homes. Maybe cities shouldn’t be building networks. Maybe we shouldn’t be developing government programs to expand into rural areas because wireless is going to be better in the future. I don’t find that very persuasive.

In general 5G uses frequencies that are gonna be poorer in rural areas to use which is to say right now 4G uses towers that are high up off the ground and they go for miles. The signal goes for miles. 5G is gonna be much faster but the signal does not travel as far effectively. We’re gonna see more smaller radios more close to us in urban areas. In rural areas if you wanted to do that you’d have to take fiber really deep into the rural areas and if you’re gonna do that you might as well connect people with the fiber optic connection.

One of the things I remember seeing is a study from a company called Vantage Point which works with a lot of small ISPs and telephone companies, independent telephone companies, and they did a big study and said that 5G effectively delivers 20% of the benefits of fiber optic connections at 80% of the cost. This is something that even AT&T is responding to and we see from their CFO’s statements that suggests that AT&T is recognizing that this is not a very good bet for the use of their money. As people see all this stuff about 5G I think you should not get very excited because even though it is very exciting it’s still pretty far off in the future before most of us will see the benefits of it.

What’s concerning is that the Trump Administration is really taking a lot of local authority away from cities as to how cities can negotiate with companies like Verizon in striking these deals. Right now schools often gets tens of thousands or hundreds of thousands of dollars per year from leasing out space to the wireless companies on top of their buildings. They will soon not be able to do that. Instead, basically the federal government is mandating that local governments give that away at a much lower cost. That means the rest of us will pay more for our schools and Verizon’s shareholders will make more money. I guess my retirement savings might get a little bit of a boost from that but I’d frankly prefer that the schools get the money now than that shareholders of Verizon end up making out better. This is the sort of dynamic we’re seeing right now in the telecom space where all this excitement around 5G, unwarranted excitement given the timeline in which it will be really deployed, is being used as an agenda by some to steam roll local authority.

One is, We the Corporations: How American Business Won Their Civil Rights by Adam Winkler. It’s a story that many of us think we know about the fight between American constitutional law and corporations but frankly the number of areas in which I had it totally backwards I’m stunned. It was book that was very eye opening. I can’t recommend that enough. Don’t just read reviews of it, read the book.

The other book that, again I think I may have mentioned this in the past, but Nassim Nicholas Taleb who frankly is a person that I really hate recommending his books because I think he is a person that is incredibly difficult to follow on Twitter to see what he’s doing. He’s mean but he is very sharp and his book Fooled By Randomness: The Hidden Role of Chance of Life and in the Markets is stunning and should be frankly forced down the throat of high schoolers probably. I’m strongly recommending that as well even though I’m nervous about giving him any more power given his meanness I’ve seen demonstrated.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: Wikimedia Commons

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

In this episode, Stacy Mitchell, ILSR’s co-director, chats with author and journalist David Dayen. David is the author of the acclaimed book Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, which was named the winner of Studs and Ida Terkel Prize. David is also the Goodman Fellow at In These Times and a contributing writer to the Intercept and New Republic.

David’s work focuses on the underlying policies that allow the big and powerful to rig the economy and get away with it. He’s great at shining a light on corruption and connecting the dots between systems of injustice and people’s everyday experiences — whether that’s paying exorbitant airline ticket prices or losing a home to foreclosure.

Stacy and David discuss:

One journalist who has been working tirelessly to shine a light on injustice and corruption is my guest today, David Dayen. What I love about David’s work is that it isn’t just about bad actors, it’s about the underlying policies that allow the big and powerful to rig the economy and get away with it. With the election coming up, I was eager to get David on the show to see if he sees any signs of hope in what candidates are talking about on the campaign trail. I also want to ask him about being an investigative reporter, how he looks for stories and what makes a good story. David is the author of a really terrific book that if you haven’t read you should. It’s called Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud. It came out in 2016. And it’s the winner of the IDA and Studs Terkel prize. David is also a contributing writer to the Intercept and New Republic and he is the Goodman Fellow at In These Times. He lives in Los Angeles. David, welcome to Building Local Power.

This is just fundamental to what actually happened after the crisis. I felt like that part of it has always been sort of left to the side, we get these swashbuckling narratives about central bankers and regulatory officials and CEOs plotting together to save the financial system. It’s a nice story for Andrew Ross Sorkin but what about the millions of people who were really hit hard. And so, at In These Times, as part of my retrospective, I talked to one of the people that write me every day practically. Someone who’s still fighting to save their home after a very dubious attempt at foreclosure. This is something that is ongoing, the financial crisis hasn’t ended for many, many people who are still locked in battle with their banks, who are trying to take their homes away under somewhat dubious circumstances.

So, I don’t think you get a full picture without that. And if you add that in, I think you see the crisis as a truly tragic event. One that failed to stand by the millions of people who bore its front, it failed to allocate losses equitably. Banks ended up bouncing back very quickly. Homeowners and people who lost their jobs struggled for years and years and years in ways that we still see affecting our economy today. So, I think that the financial crisis is a cautionary tale about who really matters in a recession.

So after 2006, there were some mild reforms, mostly around disclosure of lobbying activities. Obviously it did not eradicate corruption in any meaningful way thereafter. This time around, there is what is known as a democracy reform task force that the House of Representatives has put together in a kind of a blueprint for the kinds of things that they want to do if put into power and there are some lobbying reforms. They’re kind of attacking it more broadly. They’re talking about voting rights within the context of that. They’re talking about money and politics within the context of it.

John Sarbanes who is sort of the leader on the house side of this effort has talked about things that I think might be interesting to you and your listeners around bringing local control and individual control back into politics. So they have this thing called, I think at some point they call it democracy bonds or things like that, which would be sort of $100 that you would get tax free. It would be sort of a refundable tax credit that you could give to any political candidate and it would be matched at the government level I think a six to one match. So, instead of having to go after Goldman Sachs or Amazon or some giant pack, you could string together thousands of people, get the hundred dollar democracy bond from them and get a government match on that and fund your campaigns that way, which would bring millions more people into the process, literally every American citizen would have an opportunity to donate, which today that’s reserved for, a very small number of people actually donate to elections.

So, I think that’s kind of an interesting concept to democratize election funding really in some way. Obviously, I don’t think Donald Trump’s going to sign that. But if you look at a change in the balance of power of a number of years, maybe that’s something that could break this kind of vicious cycle of corporate power begetting political power.

So, that’s a way to bring these issues to a very direct and immediate level. When you’re talking about family farm financing, when you’re talking about the systems by which seed monopolies or livestock monopolies make it difficult for the livelihoods of family farmers. That’s a way to really bring those messages into focus. So, that’s one example I can think of.

There are some other races around the country where you’re seeing this, but I will say that in general, there’s been kind of a nationalization under Trump of the political realm, and to the extent that a corruption message is playing or an anti-corporate message is playing, it’s filtered through Trump and the Trump Organization. At least on the Democratic side, that’s kind of where they’re looking to leverage the unpopularity of Trump and to play up the ways in which he’s personally enriched himself, how he’s enriched other corporate interests through policymaking, which I think is a realistic way for people to connect to these issues. But it is limited to that frame in most contexts, not all but in most contexts.

One of the things that really struck me as I was looking back through your reporting before this interview is it just, I kind of all of a sudden had this aha moment that you write a lot about law enforcement basically. You know, this sort of lack of law enforcement for so called white collar crime. I was thinking about, I heard an interview with Senator Elizabeth Warren recently and she has got just a really strong stance about corporate criminals. These folks on Wall Street or the CEOs and what they get away with and what kinds of punishments they really deserve, to be removed from their offices or to face other kinds of penalties for things that they do.

Rohit Chopra, who as you know is a member of the FTC, he’s an FTC Commissioner, there are five commissioners, he’s a fairly new Commissioner there, a Democrat. He did a memo back in May that’s all about the fact that government enforcement agencies including the FTC don’t really sufficiently enforce the law in the sense that they, if a company breaks the law the penalties are minor, and so minor that they often just go out and break the law again. We see this with things at the FTC, orders that they’ve given to Google and Facebook where the fines are so minuscule that it doesn’t really matter at all, it’s just spare change to these companies. We see it with Wells Fargo, I can’t even keep up with how, I mean, Wells Fargo just seems to break the law like on a grand scale and then turn around and break the law again. I mean, it just goes on and on.

And so, I’m just curious like, is this like law and order framework? Is this something that maybe the Democratic Party might pick up? Do you think that this is something, sort of corporate law and order that we ought to talk about more and ought to be a more central theme?

It’s something that policymakers must guard against by pursuing equal justice under the law. And if that means less time for lower level offenses and more time for those who create giant financial crises that affect millions, then so be it.

So, everyone who’s flown in the last 10 years recognizes that either they’ve gotten a lot bigger or the ability for them to fit into the seat is a lot or treacherous and the experience of flying has become one that was actually seen as luxurious in the 50s and 60s to where today, it’s an absolute sure and drudgery to get yourself onto an airplane, squeeze into that seat, be nickel and dime for everything, any kind of amenity that gets you out of the misery of flying, whether it’s a larger seat or ability to put your bags in the overhead bin. And also you’ve seen just non stop delays, cancellations of flight, little computer glitches that cost thousands of connections to be missed.

And that is a subset of the concentration in the industry. We went from eight major airlines to four in a relatively short period of time. Deregulation in the 1970s facilitated this concentration. And now we have this situation where there are four airlines that control 80% of the routes and they move together in terms of the amenities they provide, in terms of the fees that they charge. They are essentially one airline because they do not differentiate really on quality or price in any meaningful way.

That’s something that anyone who has tried to book a flight or take a flight can immediately book into. It’s very obvious what’s going on. I think those types of parallels, those types of ways to connect to people are available very broadly across sectors of the economy. When you talk about this in terms of the standard anti-trust law argument, of consumer welfare and whether there are efficiencies gained by mergers and things like that the eyes of your audience are going to glaze over but if you talk about it in terms of what people are experiencing, it becomes very clear, yes, my cable company is terrible because they don’t have to provide me with good service because they’re the only game in town. Yes, the experience of flying is pathetic. Yes, everywhere I go on the internet I’m stalked by targeted advertising that seems to be coming right out of the words and experiences that I provide on Facebook or my email every day, and that’s because my data is being sold to every advertiser under the sun.

Everyone has this experience. So if you can just sort of connect that to concentration, I think that’s the way that you build a critical mass.

So if you enjoy this podcast, I hope you’ll consider making a donation to the Institute for Local Self-Reliance. We’re coming up on the end of the year and this is always a big time of year for us in terms asking people to donate. Any amount is great, $25, $50. Those small donations are really important to us. The bulk of our funding comes from grants that we get from foundations but grants, while they’re wonderful, are not always very flexible. We have to use them for very specific things that we’re funded for. Dollars from our donors, donors like you, make a huge difference to us because they’re flexible and we can use them to take on new projects or things that come up that we really feel are important to look at. They’re also the dollars that support this podcast.

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The cable companies are widely hated as are the airlines. And boy, gosh, I’m in a small city, which is really awful if you have to fly. My nephew a few weeks ago was getting on a flight from here to go home and his flight was oversold or canceled anyway, he didn’t have a seat and the next time they had a free seat for him was six days later, which is just astonishing. Those kinds of experience, I guess I’m, people feel the awfulness of Time Warner or American Airlines.

But what about monopolies or companies that have a lot of power that generally have a pretty enjoyable consumer experience. I’m thinking of Amazon, of course, which we do a lot of work on. How do you think we get there because and I think that’s a harder thing. I think partly because people are so in this consumer frame of mind, and I guess one of my strategies has been to remind people that they’re also producers of value and that their role in the marketplaces broader and that they’re also citizen that I’m not sure that’s a little bit maybe roundabout and harder to reach people with. Curious how you think about those, the friendly monopolies.

That’s something that I think anyone who is a worker of any kind can understand, like what if the thing that you did was being forced to be sold in one particular store, the thing that you produce or the service that you provided with the threat of undercutting your business and putting you essentially on the street if you didn’t comply. I think there are ideas like this out there that point to sort of a very American concept of fairness that we’ve gotten away from I think a little bit. But it is in some way, at the heart of this notion of American values, that if you work hard, play by the rules, that whole thing, that you should be able to make your way through. Companies like Amazon prevent that in fundamental ways. I think you have to make more of a values based argument but you can use the specific details specific examples and connecting on this concept of fairness and values I think that can bring it through.

That continues to be true today but the difference is that Live Nation is a concert promoter. Live Nation owns 200 venues and Live Nation manages about 500 or so artists. So, think of the vertical combination here. You have the company selling the tickets is the same company that owns the venues, the same company that owns the artists. What’s going to proceed from that? Well, it’s pretty obvious. The artists are only going to play at the venues owned by their management team. They’re only going to have their concerts promoted by that same company. They’re only going to sell those tickets exclusively with Ticketmaster instead of a competitor.

This lack of choice within the economy inevitably plays itself out in fees. I mean, anyone who’s ever bought a ticket knows that there’s a ridiculous amount of fees that Ticketmaster and Live Nation add to their concerts. There’s even more interesting stuff around the resale market. There was sort of a nominal competitor to Ticketmaster called StubHub which did a lot of resale through scalping essentially that is secondary market for tickets. And StubHub actually has about 50% of that market. But number two is an exchange called ticketsnow.com, which is owned by Ticketmaster. So now Ticketmaster is getting into the resale game. What you can see is that if you go to Ticketmaster looking for a ticket and it’s not available to concert sold out or whatever, they will steer you to TicketsNow without disclosing that they own TicketsNow.

There are other ways in which resellers kind of look like they’re coming directly from the original venue when in actuality they’re marked up resale seats that are done through the auspices of Ticketmaster. So, you see Ticketmaster sort of expanding into the secondary market now in addition to having total, near total control of the primary market for ticket sales.

There was a very interesting Government Accountability Office report that came out about all of this and more back in May. There are some members of Congress, Bill Pascrell being probably the biggest one, he’s a congressmen from New Jersey who has talked about really breaking up this ticket monopoly and making it obsolete.

So that’s interesting, right? Here’s someone that’s sacrifice their entire sort career path that they’ve laid out in a weird way for themselves because they’re whistleblowing essentially on a large company. So that’s an example obviously, whistleblowers are people I deal with on a semi-regular basis.

Obviously, there are groups out there that are doing great work that sometimes you just want to elevate, whether it’s the Institute for Local Self-Reliance which I’ve certainly partnered with on the numbers stories. I certainly get a lot of leads from people who are on the ground and doing that work. Sometimes things are just sort of lying in plain sight. I’ll give you an example. So now, Mick Mulvaney has taken over the Consumer Financial Protection Bureau. There hasn’t been a whole lot of enforcement in the year or so that Mulvaney has been in charge. He’s the head of the Office of Management and Budget under Trump. And since he’s taken over, CFPB has pretty much shut down the enforcement.

There were a number of enforcement actions that came out in somewhat rapid succession over a one or two month period. And in just reading those press releases, I noticed that they would give a top line number for the penalty and then say, for whatever circumstance the offending company wouldn’t be able to pay that. And so we’re going to allow them to pay a smaller amount. I saw this in the press releases over and over and over again. So I connected those things together and did a piece about what I called the Mulvaney Discount been given to these financial bad operators who, the claim was they couldn’t afford to pay these large fines.

Sometimes the story is right there in front of you and no one has picked up on it and it’s up to you to just run with it.

But around 2002, 2003, I heard about these things called blogs, political blogs, and became interested in them. After a year of sort of lurking and reading and maybe commenting decided that sounds like fun, I’ll start my own. And so I would go to work and edit some television and set something off to render, which is creating effects or something like that, and then go over to my laptop and start blogging a little bit and then back and forth and back and forth. If you were a political blogger in 2004 or 2003, you were part of a pretty small group in a way that is not certainly true today. There was a way to get noticed. There was a way to move forward at that time. It was sort of a moment in time. And that’s what I did. I wrote at some of the larger sites where you could post diaries, places like Daily Kos and got to know people through that community and in that world. Started writing group blogs and things like that.

Eventually took a job at a group called Fire Dog Lake, which is no longer with us, but at the time, was somewhat influential. And I ran their news desk for a few years. And when that was over, I decided to spin out and do freelance writing on my own. And because of the years of being involved in that community and people that I knew graduating up into traditional journalism had the contacts to be able to make that work. All through that time, I was still editing TV, right up until 2015 actually, I was still doing that. 2016 actually was the last bit of TV that I made. It was a circuitous route to say the least but one that has been rewarding.

The changes in the internet more generally played a role. Why go to a blog if you can go to social media and get 100 different opinions from virtually everybody on any topic. There’s been massive changes I would say in the ecosystem of journalism and independent journalism specifically. Whereas at the time that I sort of got interested and involved, there really was a pathway where you could go from being a blogger to being a journalist. I would say that that pathway is far more narrow if not closed today. I don’t know what a 22 year old wanting to break into journalism is supposed to do with this point. I don’t know that journalism school and given the struggles of traditional journalism is the typical internships or whatever, I don’t know that that’s the way to go. I certainly don’t think blogging is the way to go or building a social media presence. It can be very trying since there’s so much competition. I wonder about that and I wonder how young people are going to break into this industry.

It’s interesting that reviewers in the United States have picked up on a very narrow section of Crashed, this small portion where it talks about how the Federal Reserve used these large swap lines with other central banks to make sure that they had liquidity and dollars. It’s an episode that in some ways looks favorably upon what the Federal Reserve did and the rescue efforts. And all the US reviews talk about that almost exclusively. When in reality, if you read the whole book, it’s a very long book, it’s about 600 pages, it really savages elites both in the United States and around the world with allowing the crisis to occur, of failing to see the warning signs, of patching it up in such a way that restored the system rather than overhaul it and engendering the kind of populism that sort of came out of frustration with the way in which the bailouts and rescue of the financial system was conducted.

So Crashed a really, really great book. Set aside some time, it’s a long read, but it’s certainly worthwhile.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: JBSA

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

In this episode, host John Farrell, ILSR’s Energy Democracy Initiative Director is joined by Neil Seldman, ILSR’s co-founder and director of the Waste to Wealth program, to discuss how convenient single-bin recycling may have made things easy for the consumer, but harder for cities to capture the economic benefits of recycling.

Recently, China made good on a promise to stop accepting U.S. recycling due to the low quality of materials. The problem has been exacerbated by consolidation. Four giant waste companies, profiting more from disposal than recycling, control half the market. The combination of contamination in the bin and poor processing practices by industry giants means missed opportunities to grow local economies.

One of the reasons is environmental but the other is economic. Labor in China has been increasing in cost and the Chinese figured, why should they pay to clean up US recyclables? So over the next few years, they kept on restricting more and more imports from the United States of single-stream material, and in 2007 they announced a very strict policy in which they literally stopped taking US imports through a variety of means. They stopped issuing permits, they started requiring inspections in the United States then doubling inspections back in China, they limited the number of ports that the materials can come in. And the bottom line is that they in effect cut off purchasing sloppy recycling or single-stream recycling. And as a result of that, it really threw US cities for a loop because all of a sudden the market for contaminated recyclables disappeared.

Cities that use single-streams … Excuse me, double stream systems, dual stream systems in which the paper is kept separate from the other recyclables, those materials are cleaner and moving to markets. In fact, the Chinese have not banned US recyclables from the United States, they just banned US recyclables that are contaminated. And what’s happening now is that US firms, Chinese firms mostly and other foreign companies are purchasing facilities in the United States. Some companies, Chinese companies are building their own facilities to process the plastic in the United States into pellets, very clean materials that are what we call furnace ready, meaning the manufacturing company that imports this has the material when it’s ready to go into their manufacturing process.

Orders for plastic pellets from China are soaring and the same thing is happening in paper. Chinese and other foreign investors are building and purchasing US paper mills so that they can collect paper in the United States, the US recycling stream is very, very rich in good materials, and sending over either fiber or finished paper back to China for internal use. At the same time, the Chinese are starting, just starting to recycle from inside their own industry and economy and that is a very slow process. We’ve been following what’s going on in Chinese cities and the recycling programs and composting programs are in their nascent stages.

And what consolidation meant was not increasing the economy of scale of operations but centralizing ownership, and this happened through massive influx of capital to a couple of companies that then started buying successful smaller companies, so that now we have the four companies that dominate the national scene. Probably 50 or 60% of the market for hauling in landfill belongs to four companies. The two biggest ones are Waste Management Inc and Allied. What these companies have done is to convince cities through bargaining, lobbying, all kinds of cajoling to switch from dual stream to single-stream to make it easier for them to collect the materials. And they went this way because US citizens changed the rules for recycling.

Citizens passed laws making recycling mandatory, requiring all kinds of new regulations to support and nurture recycling. And the waste companies immediately had to switch to recycling in order to keep their contracts, and the contracts were important because market share is critical for increasing your profits not necessarily efficiency but increasing profits. And as a result, the concentration of capital allowed the large companies to buy up smaller companies, convince cities to go to single-stream which means a big investment in capital, and then ship the recyclable materials to centralized processing centers called MRFs, material recovery facilities that are far out of town. So the centralization of collection and then large processing plants allowed the industry to dominate recycling. And prior to that point, recycling was seen as an escape valve from the control that these companies had over garbage.

And as a result of that, we have companies in charge of recycling that really don’t like to recycle because they make so little profit. Last few years they’ve actually been losing a little money, whereas on the landfill side, some advisors we talk to, point out that profits at landfill are in the 60-70% range and profits in the recycling area are marginal. And in fact, recycling is a marginal part of these companies businesses, and their interest in recycling is mass throughput not quality, and that’s why we had … the result is single-stream collection, sending materials to concentrated large scale processing plants whose purpose is mass throughput not quality recycling. In that piece I point out that single-stream recycling can be very, very effective and I use to examples one in Boulder, Colorado run by Eco-Cycle, a grassroots company. And the other in Twin Cities, Eureka, another grassroots enterprise.

Those companies operate mass material recovery facilities that maybe … Range of 200-300 tons per day, whereas the large centralized facilities that are located out of town are processing 900-1,000 tons per day. And there was a wonderful example of this a few years ago in Wilmington, Pennsylvania where a private entrepreneur built a composting plant scale to 300 tons per day of separated organics. They were operating well, the owner made the mistake in my opinion of accepting an investment from Waste Management Inc and he proceeded to lose control over the company. As soon as Waste Management Inc got control of the company they scaled up the plant to 600 tons per day to get more materials through to collect more tipping fees. The result was that the system broke down, composting did not work under those conditions, the place started stinking and within six months the place was closed down by the Delaware Department of Natural Resources. And there was no effort to fix the plant, Waste Management Inc just abandoned it.

And it led to a lot of speculation that the investment by Waste Management Inc was done on purpose to shut it down, because Waste Management Inc, when stuff is composted, it’s not landfilled and they lose profits. That is an allegation. That’s logical given what we’ve seen what big waste has done, pushing incineration, pushing single-stream recycling, pushing mega-mass and mega landfills. So the efficiency in recycling and waste management is in decentralization. Localize the system and you save a fortune. I’ll give you another example, this time from DC. Up until about 10 years ago, DC had a very good dual stream recycling system. The materials were collected by unionized crews, they would be delivered to a dual stream processing plant in the city, owned by a minority company with about 20-25 workers. Well, for reasons that have never been explained, the city switched to single-stream which meant that company went out of business.

And instead of sending materials to a facility in DC on North Capitol Street, DC is now sending its materials about 40 miles up the road … 35-40 miles up the road to Elkridge, Maryland where it is being processed. The transportation costs alone up probably about $500,000 a year that are totally unnecessary because you don’t need to ship 25,000, 30,000 tons of recyclables 40 miles when you could process them in town or across the border in Prince George’s County.

And they collect them separately and deliver them directly to end markets or efficient processing centers and they revenue-share with the companies, whereas if you have a large waste company taking your materials, even if you recycle a lot, your price for services from these companies is not going to go down. Whereas if you go to a company like Roadrunner and you’re recycling a lot and you’re getting revenue share, the amount of waste and money that you have to pay to a large hauler is greatly diminished. So the more source separation, the lower the cost and the better the bottom line of these companies.

So what Eureka has done was to establish the escape valve for reasonable prices and good recycling. And one of the comments I’ll make John, you mentioned that separating into six or seven bags is a pain in the neck, if you will but very few communities ask citizens to do that. Most dual stream systems just ask you to keep two separations, paper and all the other mixed materials. And dual stream recycling which I just described takes about two minutes per person per week in a family to participate in, which is not a burden and in fact it’s an educational opportunity for children in the household.

One city, a city of about 75,000 people, Weston, Massachusetts. Since they went to unit pricing 20 years ago they’ve saved $10 million dollars from their budget because of avoided disposal fees at landfills and incineration. So pay as you throw or unit pricing is one thing that is an immediate help. Focusing on compost is another because composting if you do it yourself in your backyard you eliminate 15% of your household waste stream, it never enters the waste stream and of course composting curbside, you need more centralized facilities. We recommend about 200-300 tons per day as a maximum for composting separated organics. And the third thing that’s important is that there needs to be in town or in city processing. None of this shipping recyclables 35 or 40 miles away. There are a number of bad elements in that, I’ll get to that.

But the key is that whether it’s dual stream or single-stream, if it’s scaled properly, if the facility is owned by people who want to recycle, not just divert materials that’s critical, so scale and ownership are important. And then finally quality is important, single-stream materials can be recycled at the proper scale and if you don’t do it at the proper scale, you wind up in the situation that DC is in. Right now DC is sending glass along with other materials in single-stream format, glass is about 20% by weight of the recycled fraction of the city’s materials. So right now DC is sending 20% of its waste … Excuse me, of its recyclables 35 miles away and the system cannot recover glass in a format that can be used by industry. Glass is used by making bottles, sandblasting, cement manufacturing and construction clean fill.

It’s a very value material, it’s homegrown you could recycle it forever but right now DC’s glass for which they pay a lot of money to collect and ship up there cannot be recycled. It has to be used as landfill cover by Waste Management Inc. So the city is paying a lot of money to get the glass up there and get no benefit from glass recycling.

The other important part of recycling and composting for greenhouse gas emissions is the use of compost. There’s a wonderful group of people out in Marin County, I think it’s called the Marin County Compost Project in which they’ve shown that putting significant amounts of compost on arable lands actually reduces greenhouse gases. So these are very important reasons for the economy of cities, but also for cities to reduce their environmental impact on the earth.

In addition to this one company that’s now locating here as I mentioned, there’s another company in Manassas, Virginia, which is about 20-25 five miles away. Obviously the closer the facility is to the city the less expensive it’s going to be. But DC is also setting up a curbside compost program. We have a very active backyard compost program, thanks to new legislation passed this year in 2018, which provides monetary incentives to households that do a compost in their backyards or side yards. And as I mentioned before, it’s very wise of the city to spend 50 bucks per household to get them to do backyard composting. The 50 bucks is for a professional recycling bin, which of course you don’t need, you can build your own. But as I said, for every household that composts in its backyard you have 15% less waste coming out of that household, so a $50 investment to eliminate 15% of the waste forever is quite a bargain.

I would say that the most important thing is in-town processing, create job, proper scale good quality materials. It could be single-stream, it could be dual stream, if the owner and the scale are proper. I must give a shout-out to two of our close allies, Susan Kinsella and [Rich Kirkman 00:32:15] who wrote a piece, which is footnoted in my article on the Guidelines For Sensible Single-stream recycling. It includes compaction ratios, it includes not using cement floors, using sort of astro turf floors, and it also recommends the configuration of equipment at which point in the processing you take out glass. Obviously it’s good to get the glass out as early as possible, as soon as the glass is out it’s not a threat to the other materials. And also glass is the threats of the machinery, glass shards get involved, they get stuck in the oil and gum up the works, if you don’t mind my informal language. It’s in town processing, it’s composting, and it’s unit pricing, I think can get any city to 50% recycling and even more.

The length of contract is very important, and you have to do a balancing. You don’t want to give the company too long on their contract, because you want competition to come in. On the other hand you want the company to have enough security in their contract to make a decent investment and make the system work. So three years seems to be a reasonable length of contract for these recycling and garbage services. And some cities would add a one year option either for the company or for the city to renew.

Well, Recology used to be Sunset Scavengers which was a cooperative of Italian immigrant businesses in the 1930s, it could have gone back to the 20s. And for reasons that have been researched but I’m not quite familiar with the history, in the 1930s, the city charter was rewritten so that Sunset Scavenges had the exclusive right forever to serve the city of San Francisco for garbage and then recycling services. So San Francisco is unique in that it has a forever contract with this one company. Sunset Scavenges eventually evolved into this new company called Recology.

In fact, there was a major article on it couple weeks ago in the Sunday paper here in DC. There’re specialty companies, building deconstruction companies. There’s a wonderful group out in Lane County, Oregon, Eugene, St. Vincent de Paul that specializes in creating jobs for the hard to employ people and giving them the social services, the housing services, the training that are necessary for them to survive to do well in the economy and they’ve created 500, 600 jobs in their system. There’s another classic example in Baltimore, The Second Chance where the city and Second Chance, a nonprofit created some unique contracts giving … Any time a job is open at a Second Chances building materials company, it’s filled by someone on what’s called the Tanf roles, T.A.N.F. I forget what it stands for but it’s basically the welfare roles.

And if these people who are recruited through the system from the city complete a 10 week training program, they are guaranteed a full time job with health insurance and many other services. Well, when we started helping that company in 2003, they had six employees. Now they have 175 and all of those new employees have been recruited from the hard to employ. So as the people at second chance say, we’re not only saving materials and products, we’re saving people which is literally true. And these repair groups St. Vincent de Paul, Second Chance, the National Deconstruction, a nonprofit called the Reuse People they have branches is 16 different cities. These companies not only create good jobs and divert bulky materials from the landfill but they have incredible social impact, particularly E-scrap, electronic scrap reuse.

There’s one company called Recycle Force in Indianapolis, the national recidivism rate is about 75, 76%. In these reuse companies, speaking about Recycle Force, the recidivism rate of their workforce is 25, 26% and that dramatic reduction in people, young men and women going back to prison is an incredible savings in terms of expenses but also reduced crime, reduced hardship from criminal activity et cetera for both the victim and the perpetrator. So the social impact of reuse is dramatic and I always point out that in Eugene, Oregon the cost of living for low income people has gone down about 3% because through their 13 thrift stores, they sell all their refurbished materials, so not only are they creating good jobs for people but they’re providing people with furniture and appliances and clothing et cetera at a very reduced cost.

In fact their policy is, if you can afford it just take it. So these companies have … Reuse companies have a tremendous social as well as economic impact and we recommend that when cities have warehouses, own or control warehouses, that they turn these over to these reuse companies. And this is exactly what happened with the Second Chance, not only does Second Chance have the contract to train workers, it has a contract with the city to go into any school building or public building that’s scheduled to take down and the workers can what’s called cherry picking, pick out the very valuable materials before demolition. The other aspect of their contract is, Second Chance now owns 300,000 square feet of show space and storage space in downtown Baltimore, formerly owned by the city now transferred to Second Chance.

So these folks have worked with the city, the benefits to the city are dramatic and the benefits to the workers and patrons of the company are also dramatic. So I would say setting up a reuse center, a warehouse if available, each reuse business needs 20,000 square feet and will employ about 15 to 20 workers, so one warehouse can become a major reuse center for a city or even a region.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: Pixabay

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

This week, we’re featuring a special episode brought to you by our Local Energy Rules podcast as part of their series on cities transitioning to 100% renewable energy called Voices of 100%. Each episode in the six part series will showcase how city leaders are implementing their renewable energy commitments.

In this episode, host and director of ILSR’s Energy Democracy Initiative, John Farrell, chats with Mayor Dale Ross of Georgetown, Texas. Tune in to hear all about how Georgetown has been getting 100 percent of its electricity from wind and solar power since 2016!

A growing number of cities, big and small, are making commitments to transition to a 100% renewable energy and Voices of a 100% will be highlighting the voices of some of the city leaders that are doing this, to learn how they’re implementing these big renewable energy commitments. First up, we interview Mayor Dale Ross from Georgetown, Texas. I hope you’ll enjoy the conversation. If you want to listen to the rest of the Voices of a 100% series, or check out all of our podcasts, you can go to ILSR.org/podcasts. That’s ILSR.org/podcasts. Thank you so much and enjoy the show.

Across the country more than 50 cities of all sizes have adopted ambitious goals to generate 100% of their electricity from renewable resources, but how do these cities plan to get there? In our new multi part series, Voices of 100%, from the Institute For Local Self-Reliance Local Energy Rules Podcast we’re speaking with local leaders with insights about their cities 100% renewable energy commitments. How their cities plan to achieve their goals, and what these visionaries see as the future of local renewable energy.

At the same time that we were negotiating with wind and solar providers, we were also negotiating with natural gas providers. They would only commit to fixed pricing over seven years, and that didn’t meet our long-term strategy. We wanted 20, 25 year contracts.

Utility department has been talking to the city of Denton, Texas, which is about 110,000 population city north of Dallas. And they will be 100% renewable in 2020. They’re working on that right now. Our guys have been working with them closely and giving them advice and answering their questions and so forth.

Every year, ILSR’s small staff helps hundreds of communities challenge monopoly power directly and rebuild their local economies. So please take a minute, and go to archive.ilsr.org and click on the donate button. And if making a donation isn’t something you can do, please consider helping us in other ways. You can help other folks find this podcast by telling them about it, or by giving it a review on iTunes, Stitcher, or wherever you get your podcasts. The more ratings from listeners like you, the more folks can find this podcast and ILSR’s other podcasts, community broadband bits, and building local power. Thanks again for listening. Now back to the program.

So you’ve obviously had a lot of attention for what you’ve accomplished in Georgetown, articles in the Smithsonian Magazine and news pieces across the country. Are folks every surprised to hear that this kind of push for renewable energy is coming from Texas?

And also, the publicity that we’ve received over the last few years marketing for them the other the, did an analysis for us, and interviews that I’ve done that have created over $20 million in free advertising. Some of the people in Georgetown tell me that they’re doing interviews because more people want to move here, and, like I got into earlier, now we’re the sixth fastest growing city in the country. So some folks are saying, “Hey, we’re growing too fast. Let’s slow down. So quit doing interviews.” But it’s a compelling story. I like telling the story, and I think whatever we can share with other cities, it’ll likely be a better place because if you have more renewable injury, you’re having a lot less hydrocarbons in the air. You can make it better for everybody.

So, again, our strategies always been mitigate, minimize short-term volatility in the pricing market and also mitigate and minimize regulatory and governmental risk. So that is a very compelling argument to go to renewables if you want to have the lowest possible rates on your electricity to the people who elected us to serve their best interests.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: Wikimedia Commons

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

In this episode, Stacy Mitchell, ILSR’s co-director, chats with former Congressional candidate Austin Frerick. During the Obama Administration, Frerick was a young economist at the Treasury Department when he started noticing how consolidated many industries have become. Pouring over the data, he realized that just two companies produce most of our hearing aids, and the same was true for many other goods, from toothpaste to beer.

After Donald Trump took office, Frerick left Treasury and headed back to his home state of Iowa. There, in rural southwest Iowa, he began to notice how concentration was playing out in the real world, not just on a spreadsheet. He saw farmers going into crippling debt because a couple of global giants control the market for corn seed. He saw his mom lose her job at Target because of Amazon’s rising market power. That’s when Frerick decided to do something: At age 28, he launched a campaign for Congress in Iowa’s 3rd Congressional District.

To help us think about these dynamics and how election campaigns that focus on challenging concentrated power might just be the key to fixing our politics, I’ve asked Austin Frerick to join us on the show today.

Austin launched a campaign last year to win the Democratic nomination for Iowa’s 3rd Congressional District. It’s a district that encompasses the city of Des Moines and a large rural swath of southwest Iowa. Austin eventually had to drop out of the race because he spent too much time talking to voters and not enough time fundraising, but before he stepped aside, he built a strong grassroots following and he’d drawn considerable local and national media attention for the anti-monopoly ideas he was talking about on the campaign trail, and the response he was getting from rural voters. Austin is a seventh generation native of Iowa. He’s also an economist and a fellow at the Open Markets Institute. He joins us today from Kansas City where he’s participating in the Annual Conference of the Organization for Competitive Markets.

Austin, welcome to Building Local Power.

So that kind of got me interested in the whole anti-trust and discovering Barry Linn, the folks at Open Markets. But at the same point, a lot of my family voted for Trump. I like to joke when I say I was probably the only person at Treasury to vote for Bernie Sanders in the primaries, because I don’t think people understood. I think there was a misperception in the capital city, just the pain people feel. And so, I had moved back home because after Trump’s election … I was a civil servant. We don’t have any children yet, so I wanted to run for public office because I thought this was an issue no one was talking about.

I was actually looking at a State Senate seat but then a good friend of mine, retired school teacher, decided to run after … He’s really anti-teacher legislation this past session in Iowa. And also, these anti-trust message, a big component of it is federal. It’s kind of one of those things where I want to move home, I love this message, and it was like, “Oh, this is a competitive primary. This is a very competitive seat. The stars kind of aligned” sort of thing. It wasn’t like I woke up one morning, but it all made sense but slowly. It’s also funny to say you launch your congressional campaign based on an academic paper. It’s the nerdiest thing possible. I think it’s kind of funny.

Just seeing you have the world’s best farmland yet the poverty is increasing. You have Red Oak, Iowa which is a town of four or five thousand. Home to senator Joni Ernst. Two out of three kids there are on free or reduced lunch. It’s boils your blood. This system’s broken. You can get a better locally sourced meal in D.C., New York, L.A. than I can at a diner in Iowa.

So, when you thought about being motivated to run on this issue of monopoly and concentration and as you went out and started talking to voters, how did you choose to frame that? How did you actually talk about that, and what kind of response did you get?

And I never said the word anti-trust, but my whole campaign was anti-trust. The examples I would use to suburban Des Moines audiences is very different than a rural community. And I have to learn that. That’s up to me to learn as a politician how to communicate this to you and how it impacts your life, and that just takes practice. There’s times I’ve failed, and you just get back up. You ask people “How can I do this better?” But because of this current model of campaign, a lot of candidates don’t do that. They just fundraise and they essentially rely on D.C. consultants to do a random poll and tell them how to talk.

So, the challenge I had honestly was how do I get to you when people are iglooing. How do I get to your message. For them, the message I found resonating was just hey, I was a Democrat talking, just knowing what corn prices are. Understanding what $7.00 corn, $3.00 corn, talking about their pocketbook with feed costs. You can talk about monopoly, when I say that corn feed tripled in price in ten years, and I promise you didn’t triple as good, A, I’m showing respect to your profession. B, I’m validating your anger.

And so it’s that coupled with, especially in rural communities that sense of self-sufficiency and you can’t feed your own kids really connects well. The loneliness, I mean that’s what farm consolidation does. I don’t think humans really grasp it yet. When you had seven farms living on one street and it becomes one or two, it’s lonely.

There are a lot of social ties that are built that way and they’re kind of weak social ties in the sense that these are people that are more acquaintances sometimes than lose friends or those are more neighbors than close friends and yet those ties are really valuable. I think there’s a way in which that gets overlooked and it’s happening, as you know, across rural America too.

The one thing that gives me hope now is farmer’s markets because that’s kind of filling that void. But no, I totally agree with you. It’s an under-appreciated thing because a lot of those coastal communities, it’s fine. It’s a robust civic society but with the hollowing of local news, you don’t see that. I mean Southwest Iowa, Warren Buffet owns most of the newspapers.

And, I’ve had small town publishers tell me they agree with the Monsanto … I really focused on opposing Bayer-Monsanto’s merger. That’s also one of the largest ad buyers. They’re barely getting by. They’re losing subscribers. They’re losing their advertising base. Why bite the hand that feeds them?

And so, what counts is what can be measured and things that are harder to measure or can’t be measured aren’t on the table, even though those impacts are exactly what we should be considering in the context of a merger. Say if you merged two companies and it has these downstream effects on all these communities and the health of those places, that really matters. It use to be part of how we though about merger review before it was so quantified before kind of the economists, the cult of economics profession sort of came in and redid how we review mergers to make anything that isn’t really a price effect that can be measured not on the table, not part of the analysis.

But he’s saying, “Our next thing we are concerned about is we have a lot of Sudanese moving in, so we have to essentially make sure that we have the resources to have Arabic translators.” You don’t see that in the data. I can sit in my little D.C. cubicle, look at my Excel sheet I wouldn’t know that. But, I think part of the cult of efficiency is just laziness.

I got so much pushback for supporting 5 for 15. I think that’s part of the problem is because the financing, they control it and candidates have to devote a disproportion amount of time because Barbara Barrens can drop a ton of money on you and you have to raise a lot of money to go tit for tat. How do you have a voice in that? I mean then you see candidates who break that mold and it gives you hope this cycle.

The other one is a woman named Deidre DeJear, and she’s this African-American woman running for Secretary of State. She’s one of those people, you know when you meet someone they’re just like they radiate your life?

Just part of what concerns me now is people have nationalized their news intake. They read the New York Times or whatever kind of food public … whatever kind of interest publications. People really are kind of losing touch with what’s going on in their own communities. Local news doesn’t have that money so a lot of people don’t know. So, it’s like finding out, helping those candidates get their message out is so important.

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Every year, ILSR’s small staff helps hundreds of communities challenge monopoly power and rebuild their local economies. So, please take a minute and go to ILSR.org/donate. That’s ILSR.org/donate. And, if making a donation isn’t something you can do, please consider helping us out in other ways. One great thing you can do is tell your friends about this podcast and rate it on

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Just turning back to the anti-monopoly approach, there’s this really interesting quote that I saw from you where you said you can try to organize workers at a slaughterhouse all you want but if that company has 60 percent market share, they can just shut it down. I thought that was interesting because it really spoke to the fact that for a long time the focus for people organizing around worker justice has been how do we reinvigorate Unions, how do we raise the minimum wage, and those things are important but you’re really pointing to the fact that concentrated power, if we don’t confront that, this other stuff may not matter.

I think what you saw happen is a tyrant came along, exploited that anger and just instead of blaming Tyson, he blamed the bottom person. There’s validity to the anger a lot of people feel, it’s just these companies have so much resources and they will crush you. I’ve seen it with tons of sustainable agricultural candidates in Iowa. You have them and their cronies at the Farm Bureau will just dump a lot of money on you. A lot of times I’ve seen Democrats who can’t co-op these. You’re incredibly naïve if you think you can take their money and neuter them in a way. Like no, they are gonna … these will only intensify. So, I think it’s just confronting it head on.

Also, it’s like David versus Goliath. I think candidates anymore, why fundraise all the time to buy media, earn media because it’s so much funner than being in a little box calling people all day for money. It’s fun being out there helping being a part of a fight for 15 protests, being part of a final protest. Get to know those communities but make sure you talk about it on social media. Make sure you tell that local newspaper, all that kind of stuff.

I mean the scary thing about this moment too is how much of the business community is going to ignore the President’s very … I mean I don’t know what words to use to describe what he says because you can’t even attach that. We talked about this once at Treasury and we all … everyone’s kind of like cowers when you say the word but there’s some dancing around fascist lines really close.

I regret not working as hard for 2016 as I did for prior elections and making sure, as October and November comes, telling everyone, every person you know, like “Make sure you vote.” Here’s what I mean. This is why I care about a candidate. Donating to candidates as almost like donating to causes. The candidates you really think … you really connect with their message, give ’em money. Give ’em your time. Have that be your Saturday activity.

I’m also that we can usually, in the darkest moments of our country, we have these great moments really for … it took that gilded age to make that progressive movement. I hope we can see a second gilded age to get to that second progressive movement. So, we are dancing so close to so many lines right now.

One of my favorite works you guys are doing is that North Dakota pharmacy stuff. I had never heard about it until a few months ago. The fact that, was it pharmacy has to at least be 51 percent owned by a pharmacist?

We just see this in so many sectors. Another one that comes to mind is broadband provision. If you push back against Comcast and Time Warner, I mean one of the things you’ll hear from their supporters is the reason that our broadband prices are so high in the U.S. compared to the rest of the world is that we’re a very largely rural country where everything is really spread out and it costs a lot of money to extend these cables and everything to a more spread out kind of population than say in Europe or elsewhere.

And then, what’s so funny and ridiculous about that is that the lowest broadband prices for in this country are actually in rural areas where there are small co-ops and other providers that have built these high speed fiber networks that are better and cheaper than what Comcast and Time Warner are doing in cities. The reason that those companies are so expensive is because they have a monopoly in most places. That’s what’s really going on.

It’s challenging to … I realize in going out and making these kinds of arguments or pointing to this information that people are … it’s hard for them to see it in a way because we’re so steeped in the ideology that bigger is cheaper, and that yeah, we might be nostalgic about the loss of the local business, maybe they’re these sort of touchy feely reasons why we miss them but a hard-nosed kind of analysis is that they really can’t compete. That ideology is so prevalent that even when you present people with that information it doesn’t always really sink in.

I was downtown and I had stumbled upon a men’s store. You don’t see men’s stores anymore. I can probably count on one hand how many are in Iowa. Went in and it was really good customer service, young guy taking over his dad’s business. In my head I was like “Oh, I’m gonna pay way more than anything I would pay at a bigger store. I’m gonna buy a nice pair of socks, that way I can give ’em some business. Feel good about myself.” But, I figured in my head “Oh, I’m paying four or five more dollars.” I went online later to price check. His socks were the same price.

It’s a simple little thing where like in my head I’m thinking I’m paying a price premium, that feel goodness and it’s just not true but it’s so ingrained in us.

So, he ended up writing a completely different story, which was he said, “I’ve been shopping at Amazon on the theory that I’m saving money and it turns out I should have been going to this local hardware store all the time.” It’s again, sort of more of that ways in which we have these blinders on that are really about ideology not about actually seeing what’s right in front of us.

It’s just simple things. But, professional class people, you don’t have a little dinger on you. People screw up. You know, if they’re not feeling good, they might screw around on Buzzfeed for an hour. God, I almost used this term called low-skilled worker. I think that’s one of the most patronizing things in economics. I remember I said that to my mom once. And, my mom use to work at a Starbucks, and it takes a lot of skill to socialize for ten hours, to be on your feet. And, it was just one of those things that came out of my mouth because I was so use to that ecom jargon. You’re like that’s so dehumanizing.

I didn’t mean to go on a rant on that but just the respect of Christmas parties, holiday parties, that sense of … you’re seeing them disappear. You’re seeing that kind of … because a lot of these executives, these consolidated entities don’t even live in the community. They’re not on the same soccer team anymore. They don’t see what it means, what these policies mean for people. I mean you had Quest from Iowa. You had a candy factory close because it was going through a merger ten days before Christmas and fire 250 employees. Why would you do that to a human being, having them lose their job ten days before the holidays? Why not wait until January, February? Where’s that decency?

So, it’s great to have you on the show. I’ve really enjoyed listening to you and hearing more about what you’re talking about in Iowa and what you see as ways to change these things.

But, if you have ten communities trying to do it, they’re going to start being stretched thin. And once you make a crack in them, we win. We’ve all just got to keep taking those hits. You know, speaking truth’s a power because then you get these moments where someone breaks through and then it’s a different game changer.

For the Institute for Local Self-Reliance, I’m Stacy Mitchell. I hope you’ll join us again in two weeks for the next episode of Building Local Power.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: Rural Iowa via Max Pixel

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

In this episode of Building Local Power, host Nick Stumo-Langer sits down with Energy Democracy initiative director John Farrell to discuss John's latest report on solar and storage. … Read More

Host Nick Stumo-Langer is joined by researchers Stacy Mitchell and Olivia LaVecchia to discuss their new guide to policy tools that strengthen independent businesses. … Read More

Amazon recently secured a contract to do business with local governments. The contract has an estimated value of $5.5 billion over a potential 11-year term — but almost no one’s talking about it.

This contract, and Amazon’s growing relationship with the public sector, is the subject of the latest report from the Institute for Local Self-Reliance, Amazon’s Next Frontier: Your City’s Purchasing It’s also what we talk about in this episode of the Building Local Power podcast.

In the episode, ILSR Communications Manager Nick Stumo-Langer, co-director and Community-Scaled Economy initiative director Stacy Mitchell, and Community-Scaled Economy initiative senior researcher Olivia LaVecchia dig into this issue. The group talks about how Amazon’s new contract favors the company at the expense of the public, from its pricing to its terms and conditions. Nick, Stacy, and Olivia also cover how the contract poses broader threats — like Amazon using it to position itself as the gatekeeper through which local businesses have to go to sell to local governments.

There’s good news in this episode though, too, especially for concerned citizens and public officials: Amazon’s push into the public sector offers a way to take action at the local level. In fact, some cities are already pushing back. In addition to the report, we’ve also developed an action sheet that outlines three strategies that everyone can use to take action — along with specific asks to make and resources to use.

This podcast is based on a new report that the Institute for Local Self-Reliance released on July 10th, 2018. We’ve included the report and related resources below:

Finally, in the last section of this podcast, all three participants discuss a recent example of monopoly power. Olivia gives a personal anecdote about airlines (see this explainer for more information), and Nick and Stacy reference these news stories:

Today is a frequent topic. We talk about Amazon a lot on this podcast. You can go back to episode six where we discussed a giant, comprehensive report on Amazon as well as episode 28 of this podcast feed where we talked about Amazon’s acquisition of Whole Foods. But this episode’s a little bit different. We’re going to be talking about some original research that we’ve done into a widely under-reported phenomenon about Amazon’s relationship with local procurement and some of the hidden things that they’re doing in our economy.

Before we get started I will introduce our two guests today. Stacy Mitchell is the frequent host of this very podcast and is the Co-Director of the Institute for Local Self-Reliance and the director of our independent business work. How’s it going, Stacy?

And then when we looked at it we realized that both in the process and in the particulars of how this contract works, it deviates from a lot of the norms that have been set up to protect the public interest in ways that local governments do their spending. Really, it brings up a lot of question about whether this is a good deal for local governments.

I think one more thing to add while we’re at the top of talking about this contract is that, one of the things that’s exciting about it is that is also gives this local level angle on Amazon. I think there is a lot of opportunity here for cities and for public officials to use this contract as a way to take a stand against Amazon.

So already what you’re looking at, you know, right off the bat there is that there are very few companies that can make an offer on that kind of proposal. Very few companies that specialize in all of these product areas, and it was office supplies, school supplies, kitchen equipment, kind of everything you can think of. The tenth category was miscellaneous, and that was everything else.

What we saw when we looked at that is that there were companies that had previously been able to compete for this big stream of public sector spending, and now here, just in how this proposal is written, they’re getting shut out of it.

What we found in talking to people who know a lot about public procurement is that you want to have a competitive bidding process and if you only have one company that effectively is bidding, that’s not really a competitive RFP. This is one of the first signs, right off the bat, that something was fishy and outside of the norm of public procurement with this contract.

That’s the idea behind these joint purchasing contracts. What we found here is something very different. Amazon didn’t actually compete on price to win this contract. Instead of offering a fixed guaranteed price in the contract, what they instead are saying is that they’re offering dynamic pricing. What this means is that when a buyer for a school or city logs on to the site under this contract, they’re going to be paying a fluctuating price. It could be fluctuating day to day, week to week. Amazon says, well, you’re going to get the lowest price because there are lots of sellers on the site and therefore it’s like a market and it’s going to naturally produce the lowest price.

We were a little skeptical of that idea simply for the fact that Amazon charges a fee for sellers to be on it’s site. So they’re getting this extra fee tacked on to the top, so how, given that and given Amazon’s control of the platform, is that really a market? Is that really something that is necessarily going to produce the lowest price. We went and asked a firm called OPSoftware, a guy named Rick Marlette there, he has this firm where his job is to track pricing in the office supply sector. He tracks pricing at Walmart, Staples, Amazon, Amazon Business, lots of independent office supply dealers across the country. He’s doing this on an ongoing basis and he provides this service. If you’re an office supply company, you can get his data and then you’re able to tell if your pricing is competitive. That’s what his company does.

So we said, can you run a pricing analysis for us. He used the actual purchasing history for a California school district over a two week period and found that if they had bought their supplies through this contract, through Amazon, during that two week period, they would have paid about ten to twelve percent more than they did going through their local supplier. So in fact not only does this contract have terms that don’t protect cities, but there is some evidence that in fact it is going to lead to higher prices.

Under this contract, Amazon isn’t actually offering a guaranteed delivery time. In order to get two-day delivery, cities have to sign up for Business Prime, in order to get guaranteed two-day delivery. Depending on how you account for that cost, that’s why we ended up with ten to twelve percent being the additional amount that this school district would have spent.

To your point, you’re absolutely right. I mean, this is a real risk at a time when budgets are being tightened. In fact, cities have less money in part because of Amazon’s impact on local economies. We really have to watch those dollars, and so the notion that this is a company that’s now coming in to siphon off that spending and doing so in a way that doesn’t make the best and most efficient use of those dollars is quite concerning.

In this case, that entity was a school district in Virginia. In this contract, Amazon, instead of how this would usually work, where that school district’s terms and conditions were adopted and then every other local government that signs on did the same thing with their terms and conditions. Instead of that, Amazon got the school district and US Communities to agree to just using Amazon’s regular terms and conditions. Then, also, went through and made a lot of changes to the school district’s terms and conditions as they’re applied in this contract.

As part of this report, through a Freedom of Information Act request, we took a look at a lot of the emails that were exchanged between Amazon and this school district as they were kind of hammering out the details of the contract. There are some pretty amazing emails. There’s one that begins, “Good morning Tony, attached are Amazon’s consolidated red lines to the general terms and conditions.” Then in the attachment you see where Amazon’s team of lawyers went through and crossed things out, made additions, insertions. These additions cover a lot of different things, but one of the notable ones are the changes that Amazon made to Freedom of Information Act requests and the part of the school district’s terms and conditions that say, this is a public record and people can request this information.

In that part of the terms and conditions, Amazon said, when citizens, anyone, any member of the public makes a request for this information, Amazon has the right to get notified before the local government responds and Amazon gave itself the power to intercede. To say, don’t respond, we want this to be exempted or redacted in this way. That’s an example of Amazon stepping in in a way that is really beneficial to Amazon and not to the public, which ties back to a lot of the concerns that we have with this contract in general.

Part of this report is talking about some of the broader implications that this has for Amazon’s market power and the kinds of different industries and sectors they’re getting into. We’re going to talk about that and go a little bit broader after the break.

Thank you so much for tuning into this episode of the Building Local Power Podcast. This is the part of a podcast where you usually hear about a mattress company, issuing spaceship loans for audiobooks or something. But that’s not quite how it works here ILSR. We’re a national organization that supports local economies, which means we don’t accept national advertising. Please consider making a donation to ILSR. Not only does your support underwrite this podcast, but it also helps us produce all the research and resources we make available for free on our website, like the one we’re discussing today. Please take a minute and go to ILSR.org/donate and any amount is welcome and sincerely appreciated. That’s ILSR.org/donate. Thank you so much. And now, back to Stacy and Olivia.

Getting into the way that Amazon is targeting this public sector spending, how does that really impact the relationship that local governments and school districts and other kind of public entities have with their local business community?

Cities often have had relationships with those suppliers for a long time, and what’s happening in the case of this contract is that Amazon is saying to local governments, well you can still buy from those local suppliers because they can become sellers on our platform. In some cases, the office supply dealers are hearing both from Amazon saying, come on and become a seller if you still want to do business with governments. But they’re also hearing from their local governments, why don’t you just join Amazon’s platform and we’ll buy from you that way?

There’s so many problems with this. It means, for a local office supply dealer, that suddenly you’re having to give fifteen percent of your revenue right off the top to Amazon, to one of your biggest competitors. It means that they now control your ability to reach the market. They control how you show up on the platform, the terms by which you can sell things on the platform. They can cut you off at any point. Essentially, you’re at their mercy. This is a problem that we’ve been talking about throughout our work with Amazon, is this notion that this isn’t just a big retailer, this is a company that wants to control the underlying infrastructure of the economy and require all of these other businesses to use their platform in order to reach their customers. Incredibly problematic from a competition standpoint. What we’ve found is that this contract is yet another tool for Amazon to do that, and particularly to use local governments in a way to facilitate that market power even further.

In what way are cities fighting back against this? It seems like this US Communities contract is a really good example of ways that cities are subject to this sort of pressure from Amazon, from a larger contract. But are all cities a part of this US Communities thing? Are there similar things happening? And maybe if they don’t want to be a part of this larger contract, what can they do?

The first is, fifteen hundred local governments around the country have already adopted this contract, and more are signing on. Amazon is out selling this contract, pitching it to local officials. I think the first way that cities can decide not to buy this deal that Amazon is selling is, if they have signed on to the contract, to look at what it’s getting them. One of the public officials we talked to for this report is the Controller of the City of Pittsburgh. Pittsburgh has signed on to the contract and the City Controller who is kind of the watchdog over city finances, not every city has one, just so listeners know what a Controller does. He was looking at this contract and saying, I’m actually developing some doubts around this. Since signing onto the contract, Pittsburgh has started an audit of it’s processes around these group contracts. Certainly other cities that have signed on to this contract can not use it, or put a lot of checks on the way that it does use it.

Another way that cities can go down a different path with their spending is by adopting local purchasing policies. These are tools that we see in cities and other types of local governments around the country that are really about using all of the money that cities and local governments spend also as economic development, and also as a way to grow the local economy with that public spending. One good example here is the city of Phoenix. One of the reasons that Phoenix’s policy stands out is that it’s about kind of small dollar purchases. So purchases that aren’t the kind of big contracts that would go out through an RFP or a bid process, but just the kind of small stuff that city employees might have to buy everyday, and the kind of stuff that is sort of vulnerable to shifting to Amazon. But Amazon has this policy that says, even for those kind of small procurements, it encourages city employees to go through a database of local companies first.

There are a lot of places that have some kind of local purchasing policy, and we have resources on our website that break down what these different policies look like. In particular, this Phoenix policy for small dollar purchases is a really useful one when we’re talking about city spending shifting to Amazon.

That’s another example of how cities can build up the benefits of purchasing locally and then they can also institute checks like this that explicitly call out purchasing on Amazon isn’t in our best interest or the public interest.

But there is a scale to which a community, local government, school district, a university like you said, can really hurt Amazon by coming out against it in this way. I think that that’s a really useful point to maybe give our listeners some hope in saying, if you convince your community to sign onto a local procurement policy, or if you even just give them the options, Amazon does this, XYZ to your tax base and they kill all of these local jobs, and it’s not good for our community, then it’s really useful and tangible way for citizens to kind of get involved and say, we don’t want this giant monopoly monster in our community.

Along with our report, which for a report I think it’s pretty good reading and would urge listeners to check it out, but we also have released an action sheet that breaks down, here are some steps people can take, here are some places to start. That’s up on our website, too.

As we turn to the end of the show, I apologize I’m springing this on the two of you, but I think this will be useful to kind of clarify and bring wider this conversation on monopoly. What is the most galling example of monopoly power that you can think of within the last couple weeks? It could be a piece that you read that was really interesting that kind of brought something to light. It could be certain companies really tone deaf way to announce a new thing in the economy that just was a very blatant demonstration of their monopoly power. What do you think?

Just to tell a little bit of history of what happened in Portland, Maine, a Whole Foods opened probably about eight years or so ago here. When they came in, they knocked out one local public market that sold a lot of local foods, and then they bought the independent natural foods store and closed it when they bought it. When Whole Foods came in, they did a lot around, we’re going to carry all these local suppliers, we’re going to be great for farmers and so on. To some degree, they did, to a certain degree. It was also a little bit of wall paper in that there were ways in which they sort of featured local suppliers but because of the pricing structure, they often priced those products quite high. Higher than they should have been priced, and then sold their 365 Whole Foods brand at a lower price point. There was a way in which they used local suppliers almost as a marketing thing, but what people really ended up buying was Whole Foods’ own brand products.

That was even better than what we’re now seeing with this sort of further monopolization, if I can put it that way in terms of Amazon’s role in the food system which is that they are now offering discounts to Prime members. It’s been uncovered that those discounts are being entirely paid for by suppliers, so there’s this squeeze on suppliers. They’ve also gotten rid of the buyers that worked with local producers, so they’re doing more and more of their sourcing nationally.

It’s really, I think, a good example of something that we’ve talked about before on this show which is that there’s a lot of passion for having a local and regional food system, and sort of reviving our food production locally and a lot of people really want to eat that way and really believe in that as an economic tool. But if we don’t have a retail sector where there’s diversity and where there are lots of locally owned retail stores to sell those products, then we don’t really have a local food system. It really speaks to why consolidation in retail is such a big deal and why we should be concerned about it.

And by the way, for anyone who wants to know more about what Amazon is doing with Whole Foods and suppliers, there’s a great story in the New Food Economy, which is an online magazine about the food system that’s fairly new and really worth checking out if you haven’t.

I’m glad that you had such cogent, amazing answers to this question I just decided to spring on you. Thank you so much to both of you for being here and discussing this new report, this was really fascinating.

Once again, please help us out by rating this podcast and sharing it with your friends on iTunes or wherever you get your podcasts. This show is produced by Lisa Gonzalez and me, Nick Stumo-Langer. Our theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I’m Nick Stumo-Langerer, and I hope you’ll join us again in two weeks for the next episode of Building Local Power.

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Photo Credit: By Álvaro Ibáñez from Madrid, Spain (Amazon España por dentro) [CC BY 2.0 ], via Wikimedia Commons.

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

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Guest host Nick Stumo-Langer and ILSR co-director Stacy Mitchell discuss two recent Supreme Court cases that have vast implications for the state of our economy and the role of the court as a centralized entity in ILSR's decentralized worldview.… Read More