This year’s ballot has been described as “levy-heavy”, but that’s small wonder considering many of the services funded by these levies have faced the dual challenge of reduced funding – brought about by the decline in property values during the Great Recession, along with federal sequestration and state cuts – and increased need for the services they provide.
Issue 1: This is a replacement of the Health and Human Services Levy (which renews periodically), which will increase property taxes by $3.83 per month based (as all calculations in this post are) on a $100,000 home value. Passage of the levy will allow various entities, including MetroHealth, to continue with their work providing services to children, seniors and families – including funding for our region’s only Level One Trauma and Burn Center at MetroHealth, Metro Life Flight and the Neonatal Intensive Care Unit. I urge a YES vote.
Issues 2 – 5 are not revenue related. All concern separation of powers and duties of the Cuyahoga County council and various boards. My main concern with any change to the county charter is that it not grant untoward power to the executive. I feel Ed Fitzgerald has done an excellent job as Executive over the last few years. (Frankly, I wish he was staying here rather than running for governor – but I will vote for him if he’s nominated.) However, and under the truism “Absolute power corrupts absolutely”, I am in favor of policies that promote a healthy tension and balance of power. Thus, I urge a YES vote on all four issues.
Issue 65: This 3.25 mill South Euclid safety forces levy would about $9.58/month, and would expire in 2017.
Our police and fire personnel have been subject to pay freezes and benefit cuts like many other private and public employees. Like any other municipality, South Euclid needs to compete for qualified safety personnel – and in the absence of that, our safety personnel may be enticed to leave for greener pastures.
Critics have said that the safety levy is merely an attempt by South Euclid’s elected leadership to cover their hides for financial decisions made prior to the Great Recession. As proof of their claim, they point to Cedar Center North, which was purchased and demolished by the city in 2007-2008. While there is legitimate criticism of the financing of Cedar Center North, very few right thinking persons would dispute that the new shopping center, even though it has yet to be filled to capacity, is a vast improvement over the dilapidated, embarrassing strip mall that was there before. (Further, the additional revenue the levy would raise is close to the amount that Governor John Kasich’s budget cut from South Euclid’s allocation of state assistance funds.) I think it also says something about the nature of the opposition that they have to go back to events that occurred before the Great Recession to bolster their criticism. The fact is, South Euclid’s leadership – not just elected officials, but employees across the board – made a good faith effort to tighten their belts during the recession. I don’t believe the way to reward them is to hose them on pay and benefits, particularly since many of them live and shop here. Given that the mayor was reelected in 2011 with a whopping 75% of the vote, I believe the people of South Euclid have already voiced their opinion of her leadership. The local and national economy is indisputably in recovery, the improving store occupancy and housing market are proof of that, and I believe the reports of South Euclid’s demise have been greatly exaggerated. If anything, South Euclid is better off than it was two years ago. But that could change, and one of the key indicators of quality of life is public safety. Whatever the issue of South Euclid’s finances, the fact is that without effective and fully staffed safety forces, South Euclid could well fall back into decline. More than any of this year’s ballot issues, I strongly urge a YES vote on Issue 65.
Issue 80: This 10 year 2.7 mill levy will add a grand total of $5 per month to the tax bill of a $100,000 home. It’s surprising such a small levy would garner opposition, but I suspect it’s coming from people with higher valued homes and rental property owners. Critics have said that the Metroparks should operate within their budget and “do more with less”. But the truth is, our Metroparks have been “doing more with less” during the past half-decade – a lot more. Just in the past year, they’ve added the former Acacia Country Club, which was purchased by the Conservation Fund and then turned over to the Metroparks, to their list of reservations. (If the owners of Oakwood Country Club had made the same arrangement, South Euclid and surrounding communities might have been spared a divisive battle.) In addition, the Metroparks this year took control of Euclid Beach, Gordon, and Edgewater Parks from the state of Ohio. (Cleveland ceded control of the parks to the state in 1978, a time when the city was so broke it couldn’t afford proper upkeep.) The state’s long-term neglect of the parks is already in the process of being rectified, as evidenced by the improvements at Edgewater Beach. Whatever the detractors say, the Cleveland Metroparks is one of the few things in Cuyahoga County that has worked consistently well over the generations. The support of the community has been more than earned and that’s why I am recommending a YES vote on Issue 80.
Issue 82: This is a renewal of the .13 mill levy for the Port of Cleveland, which costs property owners about $3.50 per year. For that small amount, the Port Authority will be able to continue their work maintaining and improving our Port, which is one of the main economic drivers in our region. A major problem with the port is that the upper Cuyahoga River has become shallow over the years, forcing ships to run half-empty for fear of dragging their hulls on the riverbed. One project to be undertaken is the dredging of the riverbed which will allow ships to travel the river at capacity.
There is also the continued economic development which will make our lakefront - and by extension our downtown - more attractive.
Generally I don’t comment on elections in other wards or communities. But since South Euclid’s ward 2 councilman, Moe Romeo, is running unopposed, I am going to make an exception and comment on the Ward 4 race: Jane Goodman is seeking reelection against a challenger nobody seems to have heard of: Lintashia Marshall-Wilson. I can think of no city councilor in South Euclid who has been as unfairly maligned as Jane Goodman. Ironically, most of the vitriol directed at her has come from people living outside our community. For all the talk of regionalism, we elect our officials locally and Goodman has acted in the interests of the people of South Euclid. Goodman has served as Executive Director of the Cuyahoga River Community Planning Organization and is a dedicated and knowledgeable environmental advocate. Have you noticed the improvements of the Cuyahoga River and our local watershed? Goodman has had a hand in that. But she also works within the bounds of reality, which means when it came to the development of the former Oakwood Country Club – which was a certainty – she advocated for commercial zoning with LEED construction standards as opposed to residential development. I have discussed the development at Oakwood extensively in my blog and will not delve into it again. But I challenge those who refer to Goodman as a “phony environmentalist” to tabulate their carbon footprints against hers. I’ve no doubt most of them drive less fuel efficient vehicles, maintain toxic lawns, and live in larger homes than she. It is they, who spout Green Party talking points while acting like Tea Party Republicans, who are the hypocrites, not Jane Goodman – and I urge Ward 4 voters to reelect her.
Saturday, October 26, 2013
Wednesday, October 23, 2013
Toward a Holistic Master Plan for South Euclid
I’m on the Citizens’ Steering Committee for South Euclid’s new Master Plan.
For those who don’t know, a Master Plan is a blueprint for managing a community’s growth and change. Until recently, a Master Plan lasted around 30 years before it needed to be replaced. Now, it lasts about a decade or so. Looking over the 1999 Master Plan, it’s easy to see why – it seems as if it was written on a different planet. Among other things, South Euclid’s 1999 master plan called for the construction of a multi-use ten story building on the corner of Mayfield and Green, and the infill of every square inch of undeveloped land – much of it with cluster housing. It also called for the renovation of Cedar Center North, one of the few parts of the 1999 plan to come to fruition. Although the financing of South Euclid’s portion of CCN has been controversial, few would argue with the notion that today’s Cedar Center is a vast improvement over the dilapidated strip that was torn down in 2008. The high volume of traffic generated by the new CCN attests to the project’s success. (Reading the 1999 plan, I was reminded of a city I lived in for nine years: Haverhill, Massachusetts. Ill conceived “urban renewal” begun in the 1960s demolished a good deal of historic architecture, replacing it with such amenities as parking garages.)
Between 2000-2011, South Euclid lost 5.3% of its population. But it’s worth noting that Cleveland Heights and Cuyahoga County, respectively, lost 7.2% and 7.8% of their population during the same period. Population loss has been the plight of the inner ring suburb since the 1980s. In both the amount of loss and overall demographics, South Euclid is in no way exceptional. Much of the population loss is not due to the economic collapse of 2008, but the result of children growing up and moving elsewhere, while the parents remain in place. That’s exactly why the South Euclid-Lyndhurst school district has been closing schools since 1983.
South Euclid’s location as an inner ring suburb is both a challenge and an opportunity. Housing stock is older and tends to be smaller than what some seek today – although increasing energy costs will likely lead to a revival of smaller housing in the coming decades. We’re not an outer ring suburb where everything is spread out and one needs a car to go anywhere. We’re close to everything, except a highway exit. We’re close enough to downtown that one can easily commute there without needing the highway – again with rising fuel costs that will be a big plus before long, as “telecommuting” is not always a viable option.
I believe the 1999 Master Plan was the result of skewed and short-term priorities – and I’ve seen these types priorities at work elsewhere. The insurance company for which I work changed their growth philosophy several years ago. Previously, their strategy was to simply sign up as many new customers as possible. It mattered not that many of those new customers dropped us after one six month policy term – because we received so many new applicants during that time that we could continue to grow. That is, until we reached a saturation point and new growth no longer offset non-renewals. That’s when we realized a longer term strategy was needed: retention. It was also tied into a new philosophy: we don’t just want business, we want good business – which translates into stable, long term customers.
When it comes to retaining and building a residential base, what constitutes “good” business? Mostly, people who plan to set down roots and remain in their homes for the foreseeable future. It is in the community’s best interest to encourage people to own the homes in which they live. Homeowners have incentive to take pride in ownership and maintain their property, while renters have no incentive to do so. While it may smack of social engineering, it is in the best interest of the community as a whole to ensure that landlords – as well as renters – will be accountable for the actions of tenants, who tend to be more transient.
How do you retain the “good” residents who already live here? What people want in their community is pretty straightforward:
Walkability and bikeability: Take a look at the few areas in the city of Cleveland that are thriving – Tremont, Ohio City, Gordon Square, University Circle – and they all have something in common: you don’t need a car to get around – and you’ll see plenty of people walking and biking to their destinations. The main drag in South Euclid is Mayfield Road – which contains five lanes, including a dedicated turn lane. Each of those lanes is presently 13 feet wide. If those lanes were reduced in width to the ODOT required 11 feet, that would free up ten feet of space for dedicated bike lanes and wider sidewalks. Width reduction would also help alleviate the issue of speeding – the speed limit on Mayfield Road is 25mph throughout South Euclid and no one observes it. I would propose that every four lane road in South Euclid – including Green, South Belvoir, and the east side of Warrensville Center Road – be retrofitted in the same manner.
Business and Cultural amenities: Visit the Tremont Art Walk, and you’ll see how culture plays an important part in that area. Or visit Tremont on a non-art walk day, and you’ll witness how the restaurants – some of the finest in Cleveland – drive business. The Mayfield-Green intersection (the geographic center of South Euclid) needs a full service, sit down restaurant – of the so-called “White Tablecloth” model. Even a chain restaurant, such as an Outback Steakhouse, would be preferable to what we have now – which is nothing. Such a restaurant would easily fit into the former Blockbuster Video space. Storefronts along the Mayfield Road corridor, from Warrensville Center Road to Dill Road, need to be renovated. (While South Euclid needs to attract business, the city also needs to enforce building codes. On a personal note, it really annoyed me a few years ago when a city inspector cited my porch as needing tuck pointing, while commercial buildings with much greater visibility are allowed to slide.) While some have pooh-poohed the idea, utilization of the Telling Mansion as a Porcelain Art Museum and cultural arts center could be a great boon to South Euclid’s prestige. The location is flexible enough that it doesn’t have to be dedicated to only one use. As I said at the first TeMPO meeting: Why should University Circle have the monopoly on culture on the East Side? Further, the Mansion should be protected by local ordinance.
Safe neighborhoods and business districts: One cannot totally eliminate crime. But city leadership, the police, and residents must strategize to lower levels of crime. To that end, I support the broken windows approach. Residents must report suspicious activity and annoyances (such as loud parties) and enable police to do their jobs. The placement of CCTV cameras would go a long way to securing marginal areas. Meanwhile, the police must take an active role in prosecuting “victimless” crimes such as vandalism and violation of noise ordinances. Community policing, which has had such success in Springfield, Massachusetts, is an option that should be explored.
Smart residential development and the courage to say “no”: South Euclid’s a high density city: we average 4,795 residents per square mile, as compared to 4,602 for Euclid, 3,162 for Lyndhurst, 2,375 for Richmond Heights (the presence of Cuyahoga County Airport depresses the number for the latter). There’s very little land left for development. I believe we should concentrate on redeveloping and enhancing already developed areas. That means setting aside and protecting undeveloped land BEFORE developers purchase it. I don’t hold anything against developers who want to build new housing – it’s their job. But overdevelopment negatively impacts quality of life, which drives down property values. It’s the job of a Master Plan, backed up by an empowered planning commission, to warn developers that we won’t encourage overdevelopment via the use of tax abatements and other giveaways. Thus, our Planning Commission needs to be strengthened so they can resist the whims of developers and politicians – even well-meaning ones. As a result of the foreclosure crisis, many distressed homes in South Euclid were torn down. Some of those lots were purchased by adjacent homeowners, some are for sale. Housing stock that’s out of repair brings down property values in the surrounding area. Likewise, a McMansion on a street filled with bungalows and small colonials sticks out like a sore thumb – as does a row of cluster houses in the middle of a low density development. Housing design standards, including continuity of homes within neighborhoods, maximum house “footprint” and minimum lot space, need to be codified and City planners must find the courage to say “no”.
Safe schools within a district that performs well academically: It’s a cop out to rationalize that property values in South Euclid are so cheap that one can send their kids to private schools and vote down every school levy that comes along – but that’s exactly what I’ve heard from more than one aspiring politician. The school district, not the city, sets policy in the schools. But the city, by enforcing curfews, and noise & nuisance ordinances, can drive home the point that we expect the best of our young people.
Amenities for all ages: Hand in hand with the above, our youths’ time must be filled with productive and healthy activity. It truly takes a village to raise a child, and the phrase “Idle hands are the devil’s playground” is valid whatever one’s own religious preferences. A few days ago, while riding my bike near my home, I spoke with two young men playing basketball in the street. We commiserated that there was no basketball court nearby – even in Bexley Park. Several years ago, South Euclid, Richmond Heights, and University Heights proposed collaborating with Lyndhurst to expand the Hillcrest YMCA into a recreation center. Lyndhurst, on whose land the Y currently sits, shamefully vetoed the idea. Having lived in Lyndhurst and knowing how many think there, I could not help the thought that they didn’t want a rec center that could be a congregating point for minority youth. While we can’t force Lyndhurst to host a center it doesn’t want, I propose an all-ages recreation center be built within South Euclid – either on the parking lot to the rear of Mayfield-Green shopping center, which is never filled; or at the vacant South Lyn Elementary school. Such a center would be open to members of any community which contributed to its construction and maintenance.
For those on the other end of life, we need housing designed for seniors. Modest work has been done retrofitting homes for energy efficiency and single-story living. But the area needs dedicated housing for seniors. The planned work for the Cleveland Heights portion of Oakwood seems to have stalled. If it doesn’t come to pass, the city needs to explore local alternatives.
A Master Plan is more than a collection of zoning maps and blueprints for proposed structures. It’s a vision for the future, a whole derived from many parts. The 2014 Master Plan is South Euclid’s chance to present its vision for holistic growth and change: a green, walkable, and bikeable community; with a thriving business district; with unique cultural amenities; which values its residents of all ages – a community in which you could live you whole life, and would want to do so.
For those who don’t know, a Master Plan is a blueprint for managing a community’s growth and change. Until recently, a Master Plan lasted around 30 years before it needed to be replaced. Now, it lasts about a decade or so. Looking over the 1999 Master Plan, it’s easy to see why – it seems as if it was written on a different planet. Among other things, South Euclid’s 1999 master plan called for the construction of a multi-use ten story building on the corner of Mayfield and Green, and the infill of every square inch of undeveloped land – much of it with cluster housing. It also called for the renovation of Cedar Center North, one of the few parts of the 1999 plan to come to fruition. Although the financing of South Euclid’s portion of CCN has been controversial, few would argue with the notion that today’s Cedar Center is a vast improvement over the dilapidated strip that was torn down in 2008. The high volume of traffic generated by the new CCN attests to the project’s success. (Reading the 1999 plan, I was reminded of a city I lived in for nine years: Haverhill, Massachusetts. Ill conceived “urban renewal” begun in the 1960s demolished a good deal of historic architecture, replacing it with such amenities as parking garages.)
Between 2000-2011, South Euclid lost 5.3% of its population. But it’s worth noting that Cleveland Heights and Cuyahoga County, respectively, lost 7.2% and 7.8% of their population during the same period. Population loss has been the plight of the inner ring suburb since the 1980s. In both the amount of loss and overall demographics, South Euclid is in no way exceptional. Much of the population loss is not due to the economic collapse of 2008, but the result of children growing up and moving elsewhere, while the parents remain in place. That’s exactly why the South Euclid-Lyndhurst school district has been closing schools since 1983.
South Euclid’s location as an inner ring suburb is both a challenge and an opportunity. Housing stock is older and tends to be smaller than what some seek today – although increasing energy costs will likely lead to a revival of smaller housing in the coming decades. We’re not an outer ring suburb where everything is spread out and one needs a car to go anywhere. We’re close to everything, except a highway exit. We’re close enough to downtown that one can easily commute there without needing the highway – again with rising fuel costs that will be a big plus before long, as “telecommuting” is not always a viable option.
I believe the 1999 Master Plan was the result of skewed and short-term priorities – and I’ve seen these types priorities at work elsewhere. The insurance company for which I work changed their growth philosophy several years ago. Previously, their strategy was to simply sign up as many new customers as possible. It mattered not that many of those new customers dropped us after one six month policy term – because we received so many new applicants during that time that we could continue to grow. That is, until we reached a saturation point and new growth no longer offset non-renewals. That’s when we realized a longer term strategy was needed: retention. It was also tied into a new philosophy: we don’t just want business, we want good business – which translates into stable, long term customers.
When it comes to retaining and building a residential base, what constitutes “good” business? Mostly, people who plan to set down roots and remain in their homes for the foreseeable future. It is in the community’s best interest to encourage people to own the homes in which they live. Homeowners have incentive to take pride in ownership and maintain their property, while renters have no incentive to do so. While it may smack of social engineering, it is in the best interest of the community as a whole to ensure that landlords – as well as renters – will be accountable for the actions of tenants, who tend to be more transient.
How do you retain the “good” residents who already live here? What people want in their community is pretty straightforward:
Walkability and bikeability: Take a look at the few areas in the city of Cleveland that are thriving – Tremont, Ohio City, Gordon Square, University Circle – and they all have something in common: you don’t need a car to get around – and you’ll see plenty of people walking and biking to their destinations. The main drag in South Euclid is Mayfield Road – which contains five lanes, including a dedicated turn lane. Each of those lanes is presently 13 feet wide. If those lanes were reduced in width to the ODOT required 11 feet, that would free up ten feet of space for dedicated bike lanes and wider sidewalks. Width reduction would also help alleviate the issue of speeding – the speed limit on Mayfield Road is 25mph throughout South Euclid and no one observes it. I would propose that every four lane road in South Euclid – including Green, South Belvoir, and the east side of Warrensville Center Road – be retrofitted in the same manner.
Business and Cultural amenities: Visit the Tremont Art Walk, and you’ll see how culture plays an important part in that area. Or visit Tremont on a non-art walk day, and you’ll witness how the restaurants – some of the finest in Cleveland – drive business. The Mayfield-Green intersection (the geographic center of South Euclid) needs a full service, sit down restaurant – of the so-called “White Tablecloth” model. Even a chain restaurant, such as an Outback Steakhouse, would be preferable to what we have now – which is nothing. Such a restaurant would easily fit into the former Blockbuster Video space. Storefronts along the Mayfield Road corridor, from Warrensville Center Road to Dill Road, need to be renovated. (While South Euclid needs to attract business, the city also needs to enforce building codes. On a personal note, it really annoyed me a few years ago when a city inspector cited my porch as needing tuck pointing, while commercial buildings with much greater visibility are allowed to slide.) While some have pooh-poohed the idea, utilization of the Telling Mansion as a Porcelain Art Museum and cultural arts center could be a great boon to South Euclid’s prestige. The location is flexible enough that it doesn’t have to be dedicated to only one use. As I said at the first TeMPO meeting: Why should University Circle have the monopoly on culture on the East Side? Further, the Mansion should be protected by local ordinance.
Safe neighborhoods and business districts: One cannot totally eliminate crime. But city leadership, the police, and residents must strategize to lower levels of crime. To that end, I support the broken windows approach. Residents must report suspicious activity and annoyances (such as loud parties) and enable police to do their jobs. The placement of CCTV cameras would go a long way to securing marginal areas. Meanwhile, the police must take an active role in prosecuting “victimless” crimes such as vandalism and violation of noise ordinances. Community policing, which has had such success in Springfield, Massachusetts, is an option that should be explored.
Smart residential development and the courage to say “no”: South Euclid’s a high density city: we average 4,795 residents per square mile, as compared to 4,602 for Euclid, 3,162 for Lyndhurst, 2,375 for Richmond Heights (the presence of Cuyahoga County Airport depresses the number for the latter). There’s very little land left for development. I believe we should concentrate on redeveloping and enhancing already developed areas. That means setting aside and protecting undeveloped land BEFORE developers purchase it. I don’t hold anything against developers who want to build new housing – it’s their job. But overdevelopment negatively impacts quality of life, which drives down property values. It’s the job of a Master Plan, backed up by an empowered planning commission, to warn developers that we won’t encourage overdevelopment via the use of tax abatements and other giveaways. Thus, our Planning Commission needs to be strengthened so they can resist the whims of developers and politicians – even well-meaning ones. As a result of the foreclosure crisis, many distressed homes in South Euclid were torn down. Some of those lots were purchased by adjacent homeowners, some are for sale. Housing stock that’s out of repair brings down property values in the surrounding area. Likewise, a McMansion on a street filled with bungalows and small colonials sticks out like a sore thumb – as does a row of cluster houses in the middle of a low density development. Housing design standards, including continuity of homes within neighborhoods, maximum house “footprint” and minimum lot space, need to be codified and City planners must find the courage to say “no”.
Safe schools within a district that performs well academically: It’s a cop out to rationalize that property values in South Euclid are so cheap that one can send their kids to private schools and vote down every school levy that comes along – but that’s exactly what I’ve heard from more than one aspiring politician. The school district, not the city, sets policy in the schools. But the city, by enforcing curfews, and noise & nuisance ordinances, can drive home the point that we expect the best of our young people.
Amenities for all ages: Hand in hand with the above, our youths’ time must be filled with productive and healthy activity. It truly takes a village to raise a child, and the phrase “Idle hands are the devil’s playground” is valid whatever one’s own religious preferences. A few days ago, while riding my bike near my home, I spoke with two young men playing basketball in the street. We commiserated that there was no basketball court nearby – even in Bexley Park. Several years ago, South Euclid, Richmond Heights, and University Heights proposed collaborating with Lyndhurst to expand the Hillcrest YMCA into a recreation center. Lyndhurst, on whose land the Y currently sits, shamefully vetoed the idea. Having lived in Lyndhurst and knowing how many think there, I could not help the thought that they didn’t want a rec center that could be a congregating point for minority youth. While we can’t force Lyndhurst to host a center it doesn’t want, I propose an all-ages recreation center be built within South Euclid – either on the parking lot to the rear of Mayfield-Green shopping center, which is never filled; or at the vacant South Lyn Elementary school. Such a center would be open to members of any community which contributed to its construction and maintenance.
For those on the other end of life, we need housing designed for seniors. Modest work has been done retrofitting homes for energy efficiency and single-story living. But the area needs dedicated housing for seniors. The planned work for the Cleveland Heights portion of Oakwood seems to have stalled. If it doesn’t come to pass, the city needs to explore local alternatives.
A Master Plan is more than a collection of zoning maps and blueprints for proposed structures. It’s a vision for the future, a whole derived from many parts. The 2014 Master Plan is South Euclid’s chance to present its vision for holistic growth and change: a green, walkable, and bikeable community; with a thriving business district; with unique cultural amenities; which values its residents of all ages – a community in which you could live you whole life, and would want to do so.
Tuesday, October 15, 2013
Glass-Steagall: Time to bring it back
Recently, I was perusing the monthly issue of the Costco connection. In addition to articles on the newest goodies they sell, the magazine features a monthly discussion topic called “informed debate” - usually on a political issue, with “expert” commentary pro and con, along with comments by Costco customers. The recent issue dealt with whether the U. S. Banking Act of 1933, colloquially known as the Glass-Steagall Act, should be reinstated.
The purpose of that Act, written in the depths of the Great Depression, was to tame the boom/bust cycle to which the American economy had been increasingly subject in the decades following industrialization. It did so by, among other things, prohibiting commercial banks from owning securities brokerages – in other words, it erected a wall between commercial banking (like the kind you use for your checking or passbook savings accounts) and investment banking.
Let’s judge for ourselves the success of the Glass-Steagall Act by looking at some numbers:
A recession or depression is defined as two consecutive quarters in which America’s Gross Domestic Product (GDP) contracts. Contractions in GDP from 1901-1933 ranged from 10% to 32.7%. From the end of World War II to the end of the 20th century, GDP contractions ranged from .6% to 3.2% – an astonishing taming of some previously volatile numbers. Of course, GDP is but one indicator of an economic downturn’s severity. Another, more personal indicator, is unemployment rates. Unemployment levels were not tracked until the Great Depression, so accurate numbers are difficult to come by. But the unemployment rate at the time Franklin Roosevelt took office was at least 25%, and if underemployment is factored in, the combined rate was probably closer to 50%. (Not to mention the millions of Americans working for less money, with no benefits - and in the absence of job stability, afraid to spend the little money they had.) After World War II, unemployment was never higher than the 10.8% in November of 1982. (I have deliberately left out the “fake” February-October 1945 recession that was the result of post-war conversion to a peacetime economy – where GDP contracted by 12.7% but unemployment peaked at only 5.2%.) In short, the Glass-Steagall Act worked.
The most crucial provisions of the Glass-Steagall Act were repealed by the Gramm-Leach-Bliley Act of 1999, passed by the Republican House and Senate, and signed by President Bill Clinton. Even though the G-L-B act would have sustained a presidential veto, I won’t defend Clinton’s signing of the Act (nor will I defend his signing of the Defense of Marriage Act, which would have also sustained a veto – but that’s a subject for another post). The enactment of G-L-B was short sighted, based on the ludicrous assumption that the United States has entered an era in which recessions would be a thing of the past. Yes, there were actually people in the late-1990s who believed there would never be another recession, just as there were those in the early 1990s who referred to the “end of history” following the peaceful conclusion of the Cold War. History’s verdict on their commentary echoes Carl Sagan’s comment that “Intellectual brilliance is no guarantee against being dead wrong”.
Forgotten lessons are often painfully relearned: the March 2001-November 2001 recession, coupled with the September 11 attacks, reminded Americans that we weren’t indestructible. But that small GDP contraction of .3% was peanuts compared to the 4.3% contraction we suffered from December 2007-June 2009. There is a direct cause and effect relationship between the Glass-Steagall Act’s repeal, the slew of toxic investments, and 2007 subprime mortgage crisis - which led to the economic collapse of 2008. The repeal of Glass-Steagall allowed commercial banks to engage in risky investing, including mortgage-backed securities and collateralized debt obligations. This led to the subprime mortgage crisis which led to the collapse of the United States housing bubble. Falling housing-related assets contributed to the global financial crisis, even as oil and food prices soared. That crisis led to the failure or collapse of many of America’s largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Citi Bank and AIG, as well as a crisis in the automobile industry. Many of the aforementioned were deemed “too big to fail” and were bailed out by American taxpayers.
Reading the comments in the Costco Connection by those who came out against reinstatement, I’m compelled to wonder if these people were conscious during the events of 2007-2008. In particular, the idea that reinstating Glass-Steagall would imperil economic growth is absurd, and refuted by the fact that the United States has enjoyed several periods of robust economic growth while the Act was in full force, including the 1960s, the middle 1980s, and the explosive growth in the 1990s – the years immediately preceding the Act’s repeal.
It’s time to reinstate the Glass-Steagall Act. If the present Congress won’t do so, it’s time to elect a new Congress.
The purpose of that Act, written in the depths of the Great Depression, was to tame the boom/bust cycle to which the American economy had been increasingly subject in the decades following industrialization. It did so by, among other things, prohibiting commercial banks from owning securities brokerages – in other words, it erected a wall between commercial banking (like the kind you use for your checking or passbook savings accounts) and investment banking.
Let’s judge for ourselves the success of the Glass-Steagall Act by looking at some numbers:
A recession or depression is defined as two consecutive quarters in which America’s Gross Domestic Product (GDP) contracts. Contractions in GDP from 1901-1933 ranged from 10% to 32.7%. From the end of World War II to the end of the 20th century, GDP contractions ranged from .6% to 3.2% – an astonishing taming of some previously volatile numbers. Of course, GDP is but one indicator of an economic downturn’s severity. Another, more personal indicator, is unemployment rates. Unemployment levels were not tracked until the Great Depression, so accurate numbers are difficult to come by. But the unemployment rate at the time Franklin Roosevelt took office was at least 25%, and if underemployment is factored in, the combined rate was probably closer to 50%. (Not to mention the millions of Americans working for less money, with no benefits - and in the absence of job stability, afraid to spend the little money they had.) After World War II, unemployment was never higher than the 10.8% in November of 1982. (I have deliberately left out the “fake” February-October 1945 recession that was the result of post-war conversion to a peacetime economy – where GDP contracted by 12.7% but unemployment peaked at only 5.2%.) In short, the Glass-Steagall Act worked.
The most crucial provisions of the Glass-Steagall Act were repealed by the Gramm-Leach-Bliley Act of 1999, passed by the Republican House and Senate, and signed by President Bill Clinton. Even though the G-L-B act would have sustained a presidential veto, I won’t defend Clinton’s signing of the Act (nor will I defend his signing of the Defense of Marriage Act, which would have also sustained a veto – but that’s a subject for another post). The enactment of G-L-B was short sighted, based on the ludicrous assumption that the United States has entered an era in which recessions would be a thing of the past. Yes, there were actually people in the late-1990s who believed there would never be another recession, just as there were those in the early 1990s who referred to the “end of history” following the peaceful conclusion of the Cold War. History’s verdict on their commentary echoes Carl Sagan’s comment that “Intellectual brilliance is no guarantee against being dead wrong”.
Forgotten lessons are often painfully relearned: the March 2001-November 2001 recession, coupled with the September 11 attacks, reminded Americans that we weren’t indestructible. But that small GDP contraction of .3% was peanuts compared to the 4.3% contraction we suffered from December 2007-June 2009. There is a direct cause and effect relationship between the Glass-Steagall Act’s repeal, the slew of toxic investments, and 2007 subprime mortgage crisis - which led to the economic collapse of 2008. The repeal of Glass-Steagall allowed commercial banks to engage in risky investing, including mortgage-backed securities and collateralized debt obligations. This led to the subprime mortgage crisis which led to the collapse of the United States housing bubble. Falling housing-related assets contributed to the global financial crisis, even as oil and food prices soared. That crisis led to the failure or collapse of many of America’s largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Citi Bank and AIG, as well as a crisis in the automobile industry. Many of the aforementioned were deemed “too big to fail” and were bailed out by American taxpayers.
Reading the comments in the Costco Connection by those who came out against reinstatement, I’m compelled to wonder if these people were conscious during the events of 2007-2008. In particular, the idea that reinstating Glass-Steagall would imperil economic growth is absurd, and refuted by the fact that the United States has enjoyed several periods of robust economic growth while the Act was in full force, including the 1960s, the middle 1980s, and the explosive growth in the 1990s – the years immediately preceding the Act’s repeal.
It’s time to reinstate the Glass-Steagall Act. If the present Congress won’t do so, it’s time to elect a new Congress.
Monday, October 14, 2013
Wednesday, October 2, 2013
Tuesday, October 1, 2013
THE piano boxed set of 2013
Amazon has just published my review of Sony's 41 CD (Plus 1 DVD) boxed set, Vladimir Horowitz - Live at Carnegie Hall. Click here to read my review.
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