Nexus: Take this child and SCHIPP it

Recent debate over whether to expand the State Children’s Health Insurance Program shows the dysfunction of our Congress. The debate isn’t over the merits of the program, but rather over how much to expand the program. With the number of uninsured in this country rising to 47 million, SCHIP expansion would seem to be something that Congress could reach a compromise on, and at least make some incremental progress, but partisan politics stands in the way.

The Bush administration has argued that SCHIP is a good program that should be modestly expanded so that more families under 200% of poverty could be covered. They have also claimed that Democratic bills would raise the limit to 400% of poverty. In fact, the 400% figure was proposed by New York’s SCHIP program, but was rejected. The Democrats would like to see the cap increased but have indicated that they would accept a 300% of poverty level cap.

The poverty level for a family of 4 is $20,650. At 300% of poverty level a family of four earning less than $62,000 would qualify for assistance. An uninsured family with a $62,000 income would have a difficult time affording the health care needs of a very ill child and would not qualify for any other medical assistance. It does not seem unreasonable to provide healthcare coverage for the children of such a family.

The administration has also claimed that expansion of SCHIP is a step on the road to socialized medicine. SCHIP is funded by both state and federal funds, and is administered by the states under broad federal guidelines in partnership with private insurance companies and health care providers. Public/private partnerships are not socialism—at least not when it pertains to privatization of Department of Defense or State Department activities—only health care.

Many bloggers have made the claim that the expansion taxes the poor to benefit the rich. They cite figures showing that the lower one’s income the more likely one is to smoke. Therefore any increase in the income cap for SCHIP funded by a tobacco tax hurts the poor and benefits the wealthy. They fail to mention that 60% of smokers exceed 200% of poverty, and that second hand smoke is a significant contributing factor to children’s health problems. Higher tobacco costs can also be a deterrent to smoking.

Hard-line Republican arguments against SCHIP do not hold much credibility, but they appeal to an angry conservative base that feels the administration and Congress have not held to fiscally conservative values.

On the other hand there are moderate Republicans who would vote for SCHIP expansion given a few compromises. Republicans are looking for provisions that would eliminate incentives to drop existing private insurance plans, deny the SCHIP to illegal immigrants and hold down the income cap. Health and Human Services Secretary Mike Leavitt has indicated that 300% is not out of the question.

So why are Democrats so unwilling to work out a compromise? The issues raised by the Republicans with exception of the illegal immigrant issue are not so tough that a reasonable compromise can’t be achieved. But hard-line Democrats would rather hang on to what they see as a political advantage than expand SCHIP. With election season around the corner,

Democrats would like nothing more than to point to “the stingy Republicans” who wouldn’t even fund health care for poor children than settle for incremental expansion of a proven program that benefits millions of children. For them SCHIP can wait.

Of course we have differences in Congress, but when we have a program that both parties agree works, and when we have more and more uninsured children, we need the political gamesmanship to end, and the art of effective policy making to begin.

To contact Michael directly at mmelon15@hotmail.com. Previous Nexus articles can be read at www.fargonexus.blogspot.com.

Nexus: Why isn't coal cool?

When George W. Bush first ran for president he promised to invest $2 billion over a ten year period in clean-burning coal technology. Our National Energy Policy and his budget requests to Congress show that, in this instance at least, he is true to his word. Bush’s Clean Coal Power Initiative has partnered with industry to work on the development of new clean-burn technologies that, if successful, could supply the United States with affordable electricity for generations. Coal is the most abundant of fossil fuels, and supplies more than 50% of US electricity demands. It is also the dirtiest fuel.

Critics argue that coal will never be clean enough to supply the bulk of the nation’s energy needs without causing serious environmental damage.

The recent investment in clean-burn technology follows earlier research in the 1980s and 1990s that focused on acid rain. More recent concerns over coal are focused on particulates, mercury, and greenhouse gases such as carbon dioxide. Particulates from the combustion of fossil fuels are associated with the nation’s upswing in respiratory ailments. Mercury is toxic and accumulates in the cells of living animals, and greenhouse gases are what most scientists say is the cause of global climate change.

Clean-burn technologies include coal washing, which removes unwanted minerals before burning, wet scrubbing, which removes sulfur from the flue gas, and gasification where steam, oxygen and coal are combined in a process that breaks carbon molecules apart. The gas is used to power a gas turbine and then burned to power a steam turbine, producing more energy per ton of coal.

An important component of clean coal technology is carbon sequestration, the capture and storage of carbon to mitigate its effect on the atmosphere. Technologies are being developed to remove carbon dioxide from flue gas and using it for commercial purposes. The Great Plains Synfuels plant sends 5000 per day to Canada where it is used in oil extraction. Other technologies are being developed to capture carbon before combustion. Carbon that is not used commercially is stored underground in depleted oil fields or in oceanic deep-water saline aquifers. Carbon stored in this way is absorbed by coal seams that have been deemed to be nonviable for mining.

Environmentalists argue that efforts should be focused on other alternatives that do not increase the production of greenhouse gases and do not require the high costs of sequestration. The World Coal Institute agrees that the sequestration of carbon from coal combustion is not economically viable without government subsidies.

Others argue that tax breaks and subsidies given to energy companies to develop clean coal technology hurts taxpayers, and that energy companies who have been seeing record profits should pay for the research themselves.

Supporters of alternative energy research and development generally fall into two categories—those who are most concerned with the environment and those who are most concerned with national security being threatened by dependence on foreign sources of energy. Frequently, these two camps are closely aligned. In this case they are not. Those of us who align themselves closely with both camps are experiencing a bit of cognizant dissonance on this issue. But let’s examine a few more facts.

Coal is the most abundant source of energy in the United States. The International Energy Agency says that there was an increase in coal consumption of 43% from 2000 to 2002, and that consumption continues to increase.

Energy costs are skyrocketing and are affecting the well being of working families. Energy from coal is our least expensive (partly because of exemptions from clean air standards for old coal burning plants won by the coal industry).

The idea that the US is somehow going to reduce coal emissions by using less coal is obviously a pipe dream. It is clear that the US and the rest of the world will be using more coal. It is also clear that coal combustion has choked the environment, and there is no guarantee that clean-burn technology will reverse that. However, it is also clear that without clean-burn technology any increase in coal consumption will have detrimental effects on the environment.

In regards to fossil fuels the United States has two primary concerns—supply and the effects of emissions. Supply affects our economy and our national security. Emissions affect the future of the planet. None of these can be ignored. The US needs to proceed with development of clean burn technology, but in no way should clean burn coal technology be considered a long-term solution to our energy needs. At best it is an interim solution on the road to alternative technologies that would eliminate the use of fossil fuels altogether.

Contact Michael directly at mmelon15@hotmail.com. The views of the commentary writer do not necessarily reflect the views of management or the publisher.

The Nexus: Is hemp marijuana?

Industrial hemp is not marijuana. The people of North Dakota know it. According to an interview with Republican state representative David Monson of Osnabrook, conducted by Mari Kane and published in the 2002/2003 Hemp Report (published by VoteHemp.org), 80% of North Dakotans are in favor of industrial hemp production in North Dakota. Unfortunately, Congress and the Drug Enforcement Agency (DEA) don’t seem to know the difference between the two crops.

North Dakota passed the nation’s first hemp legislation in 1997, commissioning research into the feasibility of hemp production in the state. After receiving the report, which according to a letter from NDSU to the DEA, “found that industrial hemp is a viable alternative rotation crop, and that cultivation of industrial hemp would create significant economic and business opportunities for the state’s farmers,” both houses voted in significant bipartisan majorities to go forward with plans to allow hemp production in North Dakota. Hemp was taken off the noxious weed list and declared a crop. NDSU was granted the right to pursue a license to grow hemp. Pursuant to the legislation NDSU is responsible for the “development and dissemination of technology important to the production and utilization of food, feed, fiber and fuel from crop and livestock enterprises.”

All this has been stalled by the DEA. The DEA is responsible for reviewing applications for growing hemp under the Controlled Substance Act, despite the fact that industrial hemp is non-psychoactive with less than .3% THC (the component of marijuana that makes you high). The DEA has ignored NDSU’s application for eight years. Representative Monson and Wayne Hauge have had applications ignored by the agency as well.

In April the North Dakota legislature passed a bill that eliminated the requirement to obtain a federal permit to grow hemp, but the Justice Department could still prosecute under the Controlled Substances Act. Monson and Hauge are suing the DEA for the right to grow hemp in accordance with North Dakota law.

According to one Associated Press story, the DEA’s legal argument is that “its policies can only be reviewed by an appeals court,” and that “federal law does not distinguish between industrial hemp and its cousin, marijuana.”

DEA spokesman Garrison Courtney says, “The law is the law. To get hemp you have to grow marijuana…that’s something Congress put together, and really, the beef should be with them and not us.”

This is the crux of the problem. We have a crop that was once a mainstay of American agriculture that is bred to be high in fibrous and woody material, seed production, oil and nutrition, with only negligible THC content controlled by the DEA instead of the United States Department of Agriculture (USDA) and state departments of agriculture. The DEA’s objective, in regards to hemp, should be limited to the elimination of the production and consumption of the cousin crop, which is bred to be high in THC with large flowering tops and minimal characteristics of industrial hemp. The two are not the same.

So what could be the internal rationale of the people in Congress, the DEA and others in the Justice Department for obstructing hemp production in accordance with North Dakota law? Could it be that they believe that allowing states to determine hemp production is a back door way of legalizing marijuana, as many believe that medical marijuana legislation is? That may account for support from neo-hippies with flowerpots under their beds. Clearly, it is not the intention of the North Dakota legislature, NDSU or North Dakota’s farmers to legalize marijuana through hemp legislation. It is their intention to reclaim a crop that could bring economic benefits to the state.

Perhaps they think that marijuana growers will surreptitiously grow their cash crop interspersed with industrial hemp in hopes of avoiding detection of their illegal activities. This defies logic. Legal or not, marijuana growers are engaged in an agricultural business enterprise that demands sound production techniques if maximum profit is to be realized. Planting a crop that is bred to be one thing interspersed with a crop that was bred to have the opposite characteristics—and with which it is capable of interbreeding—would seem to spell financial suicide.

Maybe the agencies and Congress are subject to inertia and just don’t want to change policies, a poor argument for obstructing a state’s economic development plans in accordance with its own laws.

Or maybe they are in bed with competitive interest groups like oil companies, synthetics manufacturers, and logging companies. I don’t think the agencies would do something like that, but Congress—no they wouldn’t do that, would they? Maybe they’re just high.

To comment on this article visit www.FMBizJournal.com or contact Michael directly at mmelon15@hotmail.com.
Definition of Industrial Hemp
Hemp has a well-established meaning in the international community, referring to non-psychoactive cannabis varieties. Regulations in the European Union and Canada conservatively mandate less than .2% and .3% THC in the flowers, respectively. In contrast, marijuana varieties generally contain between 3% and 15% THC in their flowers. Because of their minimal THC content, flowers and leaves from hemp have absolutely no value as a psychoactive recreational drug.

Uses of Industrial Hemp
Industrial uses for hemp are varied. The entire plant is usable. The fibrous portion of the stalks is used to produce textiles used in the garment industry and other items like rope, twine, netting, canvas and carpeting. More technological uses include geo-textiles, bio-composites, and compression molding. Most European cars contain bio-composites containing hemp.

The woody portion of the stalks is used to produce building materials like insulation and fiberboard, industrial products like animal bedding, mulch and boiler fuel, and paper products, reducing the reliance on trees. Perhaps most importantly to North Dakota, the stalks can be used to produce ethanol.

The nut portion of the seeds is used to produce food products like bread, granola, cereal and protein powder as well as seed cake and protein rich flour. The oil pressed from the seeds is used for food products like salad oil, food supplements and margarine, as well as body care products like soap, shampoos and cosmetics. The oil can also be used for paints, solvents, lubricants and coatings.

Global Economic Impact
- food
- body care
- paper
- fuel
- paint & plastic
- textile fiber
- concrete & building supplies
- replacing wood for many products
- rotation crop and soil rejuvenator
- eliminates need for pesticides

Source: VoteHemp.org

Nexus: Is grass the fuel of the future?

Research begun in 2000 by the USDA-Agricultural Research Service (ARS), the Department of Energy, NDSU Central Grasslands Research Center in Streeter and the University of Nebraska is showing that switchgrass may become a viable bio-energy crop for northern plains states.

Switchgrass can be used to produce ethanol or it can be burned to produce electricity.

According to the study, if a field produces two plants per square foot the first year, in future years the field will be able to produce adequate amounts of bio-energy. First year costs ranged from $50 to $150 per ton according to a 2003 NDSU extension news release. According to a June 2007 statement the breakeven point is $53 per ton.

After the first year no tillage or planting is required.

Mark Leibig and Holly Johnson, soil scientists at the ARS Northern Great Plains Research Laboratory in Mandan have reported that switchgrass is superior at carbon sequestration than other crops like corn or wheat. Switchgrass roots grow as long as eight feet, enabling it to store carbon lower in the soil than other crops with roots typically half that long. This improves the soil and decreases the greenhouse effect.

David Archer, an agricultural economist at the lab says switchgrass is not yet economically feasible. At the same time, the conversion of switchgrass to ethanol is becoming more efficient and fuel prices are likely to continue to rise.

Sen. Kent Conrad (D—ND) has been promoting ethanol as a significant part of the nation’s energy strategy. He has proposed a goal of 30 billion gallons of ethanol per year by 2025. Conrad’s proposal has been incorporated into the upcoming energy bill.

Agriculture Commissioner Roger Johnson favors government incentives for switchgrass production.

It seems clear that ethanol from switchgrass is in our future.

However, providing incentives for the production of ethanol is only part of the equation. We need to improve our delivery of ethanol to the public if we are to reach the goal proposed by Conrad.

At an ethanol summit in Fargo on November 27, 2006 Senator Byron Dorgan (D—ND) stated there were fewer than 30 E85 pumps in the state. Many people avoid E85 because of reduced miles per gallon and poor cold weather starts. But a 10% blend will not achieve the goal.

If E85 doesn’t sell and the typical 10% blend is not enough what is the solution? Some stations in South Dakota have had success promoting ethanol sales by installing blender pumps.

Stations can install blender pumps that allow the consumer to blend the ethanol and gasoline to whatever proportion they choose. These pumps cost about $15,000 each and may be cost prohibitive to some dealers.

Without providing incentives or mandates for local dealers to install the pumps it is unlikely that ethanol consumption goals will be achieved. Which is more appropriate, mandates or incentives, or some combination remains to be seen, but without this end of the equation, ethanol from switchgrass or any other bio-energy crop doesn’t add up.

To comment on this article visit www.FMBizJournal.com or contact Michael directly at mmelon15@hotmail.com.

Will Turkeys Save Our Energy Crisis?

Benson, MN - Some day you may be reading The Business Journal by light created from electricity generated by burning turkey waste. Folks in Benson, MN are today.

A $200 million dollar waste incinerator has come on line that is providing 50,000 Minnesota homes with electricity. The plant provides nothing new in the mechanics of power production. The incinerator fires a steam generator that creates electricity the old fashioned way—what’s new is the fuel. The Benson, MN plant is the first in the country (the 4th in the world) to burn animal waste to produce electricity. The plant will burn used turkey litter (wood chips with turkey droppings).

Fibrominn has built the plant with the cooperation of the city of Benson and the state of Minnesota. A citizen’s advisory committee provides oversight.

Area turkey farmers are selling their turkey waste to the plant for 3 to 7 dollars a ton, providing additional income for the farmers. Minnesota is the largest turkey producer in the nation, so it is fitting that this test project occurs in the state.

Critics, like David Morris of the Institute for Self Reliance, argue that the waste is more valuable as fertilizer, and that the incinerator is not environmentally friendly. Animal rights activists are arguing that the conditions under which turkeys are raised is inhumane.

Turkey waste is an excellent organic fertilizer. But do we need an institute or a government entity telling us how it is of greater economic value? Shouldn’t the market determine where the best value lies? If it is more valuable as fertilizer, fertilizer consumers will pay more. Conversely, if it is more valuable as fuel, the plant will pay the highest premium. Minnesota’s turkey farmers should have the benefit of that market competition.

Claims that the incinerator is a polluter are offset by information from Fibrominn stating that the plant is cleaner burning than some of the new clean-burning coal technology. Certainly there is no such thing as an emissions-free incinerator, but if we are to meet future energy demands we need to consider all possibilities including all forms of cleaner burning incineration plants. State, local and federal government has the power to impose emissions requirements.

The animal rights activists’ claims are spurious. No one is raising turkeys for the purpose of creating electricity. The electricity is a by-product of agricultural production. Opening or closing turkey waste incinerators will have no impact on the numbers of turkeys raised in captivity, or on the conditions under which they are raised. Their beef is with agricultural producers, not the power producers, and they can have that fight.

What none of the critics are addressing in their criticisms is the issue of foreign energy independence. We all know that America’s dependence on foreign supplies of energy has led to entangling alliances and wars, as well as economic insecurity and volatility in the energy sector. Most US electricity is produced by burning natural gas of which we are a net importer.

We need to address our energy dependence while being mindful of the environmental implications. Finding the right balance may be difficult, but Minnesota has an opportunity to lead the way. Others are already beginning to follow. The California legislature has recently approved plans for the development of a chicken waste burning plant. Let’s do it, but do it right.

The Nexus: Ethanol is here and the time is now

The idea that ethanol will play a role in the nation’s energy future and in North Dakota’s economic future is a given. But the magnitude of these roles remains uncertain. North Dakota should poise itself to take full advantage of its ethanol potential.

In a recent interview with The Business Journal, Senator Byron Dorgan (D—ND) stated, “North Dakota has all the elements for ethanol production, especially cellulosic…ethanol is a big part of America’s energy future.” North Dakota must be prepared to take full advantage of this potential while safeguarding environmental interests and ensuring that the local economy benefits from the production of ethanol rather than Wall Street business interests.

Arguments against the economic viability of ethanol are dissipating as oil prices reach record highs and technological advances make ethanol production more efficient.

Critics of ethanol like David Pimentel (Cornell) and Tad Patzek (University of California—Berkeley) have argued that, once all the inputs are considered, ethanol consumes more energy to produce than it contains. According to a 2005 study by Pimentel and Patzek, published in Natural Resources Research, ethanol has a net energy balance of a negative 29%, and a negative 20% when adjusted for the values of by products such as biochemicals.

David Morris, vice president of the Institute for Local Self-Reliance (ILSR) in Minneapolis and Washington DC, argues that Pimentel and Patzek’s methodology is flawed. In a report titled The Carbohydrate Economy, Biofuels and the Net Energy Debate published by the ILSR, Morris contends that many of the inputs in the Pimentel/Patzek study were overvalued, that industry production projections were based on past industry wide averages using old technology rather than the current state of the art facilities that are being built, and that not all the benefits of ethanol are considered.

While this debate over the net energy balance of ethanol may rage on, some things should be apparent to all of us. The price of oil is reaching new highs; our dependence of foreign oil threatens national and economic security; and our farmers could benefit from additional markets. While there is no chance that ethanol could be the answer to all of our energy needs, there is no doubt that the tipping point is here. Ethanol is viable.

Dorgan claims, “Ethanol will make a positive contribution to the state’s economy—but how much is uncertain. Ethanol [production] is not a big job generator, but ethanol can mean additional markets for family farms.”

The federal government’s role in promoting ethanol is through tax credits, renewable fuel standards and production goals. Without these incentives the ethanol industry would not have been able to outgrow its infancy to its current state of toddlerhood (where it is just beginning to walk on its own). North Dakota needs to be prepared before it is off and running.

Dorgan expressed disappointment at what had been done on the state level to promote ethanol—or put more succinctly—what had not been done. “There is no renewable fuel standard from the state—they should.” Dorgan went on to say that the state should provide “encouragements”. He believes the state should consider legislation patterned after the Missouri statute.

Missouri Revised Statutes: Chapter 142 Motor Fuel Tax—Section 142.028 provides a monthly grant to ethanol producers based on estimated fuel production for the upcoming calendar year. Most important is a provision that requires that the principal place of production and corporate business be in state, and that ownership is at least “51% agricultural producers actively engaged in agricultural production.”

Such a provision helps to ensure majority ownership by producers. This is key if the local economy is to reap maximum benefit and maintain local control of a regionally important industry rather than surrendering stewardship of that industry to Wall Street private equity firms.

The importance of shifting our economy and infrastructure away from oil and toward alternative and renewable energy sources has never been more apparent. A 2004 study cited by Pimentel and Patzek predicted that 2007 would be the peak year for oil consumption, and that supply would be extremely limited thereafter. That time is here, and war in Iraq, a looming stand-off with Iran, instability in the Middle East and strained relations with many of our oil producing trading partners make it clear that any reduction in our dependence in foreign oil is in our best interest—both in terms of security and economic well-being.

Ethanol is only a part of the solution to our energy dependence, but a significant part. North Dakota must be prepared to make a major contribution to the nation’s and region’s energy future—and to expect fair return.

To contact or comment on this article, visit www.FMBizJournal.com or contact Michael direct at mmelon15@hotmail.com.

Discussion Topic: Universal Living Wage—Good for the Economy?

The recent stalemate in Congress over a raise in the minimum wage tied to a further reduction in the estate tax illustrates the two schools of thought that dominate American views of the economy. One says that for the economy to thrive, costs—especially taxes and labor—must be as low as possible so that corporations can reinvest and create jobs. The other says that money (in the form of targeted progressive tax policy or higher wages) placed in the hands of the middle and lower classes creates a larger marketplace for goods and services and less demand for government subsidies for low-income workers—thus stimulating the economy.

To be sure, there is merit in both schools. The trick is to find the right balance between stimulating the economy from the top down and from the bottom up. If labor is starved for decent wages and benefits, workers drop out of the marketplace. They don’t earn enough to consume the products they produce. Alternatively, if business is starved for capital it cannot make the investments necessary to create jobs or increase productivity. Each needs to get their fair share of the economic pie.

The trend is clearly that the corporate slice is getting bigger while labor’s slice is diminishing. United for a Fair Economy in conjunction with the Institute for Policy Studies reports that if the minimum wage had increased at the same rate as CEO pay since 1990, the minimum wage would be $23.03. But it hasn’t changed from $5.15 in the last nine years. The gap between the wealthy and the working class is definitely widening.

The universal living wage is a formula to determine what the minimum wage should be by locale based on HUD fair market rents. The concept is simple. A worker works 40 hours per week and spends no more than 30% of his or her income on housing. The minimum wage is indexed to the fair market rents set annually for each municipality by HUD. Thus the minimum wage would be higher in a city with high housing costs like San Francisco than in a city with more reasonable housing costs like Fargo.

The idea is that workers paying no more than thirty percent of their income for housing expenses are not going to be dependent on housing subsidies and other assistance, easing the burden on local, state and federal government programs as well as faith-based and other nonprofit programs, while providing workers with enough income to become vital participants in the marketplace—stimulating economic growth and raising the living standards of the working class.

Critics argue that any floor on wages is inflationary and hinders job creation. Many advocate the Earned Income Tax Credit (EITC) as the best way to redistribute wealth to the working class. Without doubt, the EITC has been a successful way of providing aid to low-income working families, but a once a year tax refund is no substitute for a decent weekly paycheck. While there is evidence to support the inflationary and job suppression claims, and economist Joseph Stiglitz shares the viewpoint, there is also evidence that disputes the claims.

Alan Krueger, a Princeton economist, testifying before the California legislature stated, “The bulk of the research, including the most credible studies show that moderate minimum wage increases have no detectable effect on employment.”

While the US Congress has been unable to pass a minimum wage increase, much less debate a living wage, several states and municipalities have taken the lead and passed increases in the wage floor. Baltimore, Tucson, San Diego, San Francisco, Denver, Chicago, Ypsilanti MI, and Moorhead MN are among the communities that have established minimum wage or living wage policies independent of the federal minimum wage.

Minnesota is one of the states with a minimum wage above the federal level. Minnesota’s minimum wage is $6.15 for businesses grossing over $625,000 per year. Businesses grossing less than $625,000 who wish to be competitive in the job market undoubtedly feel pressure to pay the $6.15 rate.

According to Moorhead city manager, Bruce Messelt, Moorhead’s policy is that any business receiving economic support from the city in the form of sales or property tax relief is required to pay a minimum wage of $7.75. Moorhead also tracks the average wages paid by businesses receiving economic support from the city. The current average is $12.38. Businesses can argue for an exception in the case of certain part-time positions. The wage requirement does not necessarily extend to all businesses that contract with the city. A business that merely sells pencils (or other goods) to the city is not required to pay the $7.75 rate. In addition, the city of Moorhead pays all of its workers (including part-time) a minimum of $9.00 per hour.

Messelt says Moorhead “has no evidence either way” on how the wage floor has affected employment rates in Moorhead. An argument could be easily made that if the average wage is $12.38 that a $7.75 wage floor would have a minimal effect if any.

However, Messelt says that the wage has been an issue with some businesses seeking economic support. The city’s position has been that it must take the lead on this issue and provide a living wage for its workers and require the same for employees of businesses receiving economic support.

Undoubtedly, this policy is not without spillover effects. Other businesses are likely to pay similar wages in order to be competitive when seeking employees.

Some major corporations have taken a lead on this issue as well. Security giant Pinkerton’s Inc., a $2.5 billion company with 125,000 employees, committed to a living wage in 2001. The company believes that a living wage attracts better quality employees, decreases turnover, lowers training costs and promotes morale and loyalty among its employees.

Costco is another company committed to paying its employees a living wage. Costco CEO Jim Sinegal says, “I don’t see what’s wrong with an employee earning enough to be able to buy a house or having a health plan for the family.”

Clearly there is a need for a living wage, or at least an increase in the minimum wage. Exceptions can be made for certain types of positions or circumstances. Many communities and businesses are recognizing a living wage as a sound business practice and viable government policy. Since the living wage is unique to each community, it makes sense for each community to formulate its own policies in keeping with its distinct character and economic goals—a federal mandate is probably not desirable. The days of substandard wages that require workers to be subsidized by local, state and federal government to make ends meet is no longer acceptable.

Next month we will explore the issue of homelessness as the nation prepares to observe National Hunger and Homeless Awareness Week from November 13—20.

Please email your thoughts, comments, questions or criticisms to me at mmelon15@hotmail.com.

Nexus—When Business, Politics and Social Issues Meet Area Businesses Can Impact Homelessness

Homelessness is a significant problem in Fargo/Moorhead that directly affects the lives of hundreds of area residents and indirectly affects the entire community. National Hunger and Homeless Awareness Week is November 12 through 18 and the Fargo Moorhead Coalition for the Homeless, along with MSUM and most of the area’s service agencies that work with the homeless have a full week of activities planned to help illuminate the obstacles faced by people who are homeless and to raise funds for the agencies that strive to help victims of homelessness overcome these obstacles.

There is much that government does to combat homelessness, and there is a movement across the nation to get business more involved in the problem. Before looking at what local business and government are doing in our area and what still needs to be done, it is helpful to take a closer look at the local implications of the problem.

According to the Wilder survey conducted in 2003, there are approximately 400 homeless people in Fargo/Moorhead on any given night. Sixty percent are in Fargo. Of these 400, there are 126 men, 87 women and 79 children who are in emergency shelters. The remaining 69 men, 17 women and 15 children are unsheltered. As disturbing as these statistics are—especially those concerning children—they may not represent the entire picture. According to Cheri Rasmussen, director of Youthworks, the number of homeless youth may be much greater. Although she does not have numbers specific to Fargo, she points out that in 2004 and 2005 Youthworks had nearly 7,000 contacts with homeless and at-risk youth in Fargo/Moorhead and Bismarck/Mandan, the two communities where Youthworks offers services to homeless youth. It is difficult to track how many of these are duplications, but her numbers suggest that the problem is larger than what has been identified.

Rasmussen emphasizes, “[These youth] have had to flee from unlivable situations.” She points out “[unaccompanied] youth cannot stay in the shelters, so they are literally on the street.” Such dire conditions inspire creativity in our homeless children. Rasmussen says, “They are pretty ingenious about couch hopping.” I operate the Clay Wilkin Homeless Prevention and Assistance Program and can attest to her contentions. I have had at least one client that made a temporary home of an MSUM computer lab. The point is that homeless youth are usually on the run, are mistrustful of authority, and are not likely to turn up in shelters unless their entire family is homeless—making it difficult to accurately count their numbers.

Many of our homeless are chemically dependant, mentally ill, physically or developmentally disabled, or a combination of any of the above. Those who have multiple diagnoses are more likely to be chronically or long term homeless.

A disproportionate number are veterans or people of color or single mothers.

Government at the local, state and federal levels is heavily invested in the issue of homelessness. Housing and Urban Development (HUD) funds many programs to combat homelessness through a process called the continuum of care that is designed to move people from homelessness to transitional housing to permanent housing (supported or non-supported) The goal is for this process to be seamless—which it is not. Lack of funding for services and a shortage of low-income housing units create gaps and bottlenecks in the system where people either fall through the cracks or get jammed up in the system and fail to progress.

At the state level, government funds programs designed to house the homeless and to prevent at-risk families from becoming homeless. Such programs, like the Family Homeless Prevention and Assistance Program (FHPAP) that I operate (as an employee of Lakes and Prairies Community Action Partnership) in Clay and Wilkin counties are also under-funded and under-staffed. Many of these programs meet only a small percentage of the identified need.

On the local level, many communities are devising (under federal urging) 10-year plans to end chronic homelessness. Fargo recently unveiled its 10-year plan and United States Interagency Council on Homelessness (USICH) executive director, Philip Mangano, came from Washington DC to participate in the press conference. Moorhead is moving in the same direction. Mangano characterized the plan as “very smart and very sophisticated,” drawing on proven practices from around the nation. Mangano emphasized the need for business to be involved in the homeless problem. “We need business not just for their dollars, but for their mindset. When service providers look at homelessness they look at how to service the problem—when business looks at a problem like homelessness they look at how to solve the problem.”

Fargo’s ten-year plan provides opportunities for the FM business community to become involved. The plan calls for “185 private sector housing units to be made available to long-term homeless tenants with landlord risk mitigation techniques in place, including Indemnification Fund.” 12 new safe haven units and 30 new supportive housing units are needed. Landlords and developers alike have a role to play in ending tong-term homelessness.

The plan also calls for outreach to the homeless to be more effective. One problem is that services are disjointed and not seamless and need to be better connected. Toward this goal the plan recommends the adoption of Project Homeless Connect (PHC) as a best practices standard. PHC began in San Francisco under Mayor Gavin Newsome as a one stop event to connect homeless residents with services. The event is sponsored by the business community and services are delivered by area service agencies. The result has been that not only are the homeless connected with services, but the agencies become better connected with each other, and the business community becomes connected to the problem as well. To date, 32 communities (including Duluth and Minneapolis/St. Paul) across the nation have adopted PHC. Both Mayor Walaker and Mayor Voxland have made a commitment with the Fargo Moorhead Coalition for Homeless Persons to implement PHC in the FM area.

Another way in which local business is addressing homelessness is by partnering with service providers. Dave Anderson of The Downtown Community Partnership is working with Carol Kulesza of the Fargo Moorhead Coalition for the Homeless to establish sponsorships of agencies by businesses during Hunger and Homeless Awareness Week. Participating businesses will “adopt” an agency of their choice and devise a fund raising promotion during the week with the agency (and their homeless clients) being the beneficiaries of the promotion.

So we see many ways in which business and government can work together to combat homelessness, but why should they? Compassion should be an adequate answer, but if businesses responded to every request for help out of compassion, many would soon find themselves out of business. Economics is a better reason. Philip Mangano describes a study done in San Diego where researchers tracked the services used by one homeless man, “million dollar Murray.” Over time, “Murray” consumed a million dollars in emergency services, and was in no better condition than he was originally. San Diego could have bought “Murray” a home and provided a servant for less cost. On the other hand, when “Murray” was placed into a housing first program, where “Murray’s” housing needs were addressed first, “Murray” was better able to address his obstacles (chemical dependency, mental illness etc.) He consumed fewer services and eventually became a productive member of society—a considerable savings over seemingly endless emergency room visits, police calls, emergency shelters and food pantries.

Gary Groberg, director of Churches United for the Homeless, agrees. He points out that six of the ten new tenants in the Clay County Housing and Redevelopment Authority’s new supportive housing units are already employed. These are people with disabilities who have been long-term homeless. Groberg reports, “The change occurs when there is good support. People take ownership of their lives and their problems.”

Please email your thoughts, comments, questions or criticisms to Michael at mmelon15@hotmail.com

Nexus: What is the Role of Business in Higher Education?

The relationship between government, business and higher education is one that receives little public scrutiny, yet is vitally important to our economy and to the nature of our society. Our system of higher education both reflects and shapes who we are as a people and as economic and political actors in the world arena. The future of American political and economic leadership is correlated to the future of the American system of higher education.

For this reason, it is important to develop an understanding of the relationship between business and one of the largest responsibilities of government—education. Corporate America is heavily involved in shaping our educational systems, particularly higher education. There are three basic ways in which business does this—influencing the budget, shaping curriculum and funding research.

There is enough of a natural tension that exists between business “interests” and the “public good” responsibilities of government that these interactions can be difficult. There are however, more common interests shared by the two, and cooperation is essential to maintaining healthy local, national and world economies.

For example, business interests were influential in shaping North Dakota’s proposed higher education budget for the next biennium. Don Morton of Microsoft (formerly from NDSU), Dennis Hill (North Dakota Association of Rural Electric Cooperatives), and Daryl Splichal (MDU Resources Group) advocated in favor of the Board of Higher Education’s request for a budget increase of $63 million.

Their point is that North Dakota institutions of higher education had been promised and deserve more funding because of their leadership in training and retraining North Dakota’s work force. According to Morton, “The university system has…contributed to economic growth within our state, and the percentage of commitment to higher ed has fallen. We just feel very strongly that the state has not lived up to its end of the deal.”

Here the interests of the state and the private sector align—a strong, well-educated workforce and citizenry. However, business has an interest in reducing tax rates in order to increase their bottom lines and constantly lobbies for such reductions. Increased spending on education and tax reduction are not usually consistent goals. This sort of cognizant dissonance creates a conundrum for legislators.

When business helps to shape curriculum there is more consistency to the approach taken by business. Chuck Chadwick, the Foundation Director at Minnesota State Community & Technical College (MSCTC), describes the advisory committee system that they use as vital to equipping their students with “real world, hands-on career training…and qualifications needed by employers.”

MSCTC invites area businesses that commonly hire MSCTC graduates to participate on advisory committees where they go through the curriculum, discuss new techniques and skills and then vote on the curriculum. “This allows us to stay ahead of the curve,” Chadwick states. Participating businesses include RDO, Case and many others.

The funding of research is more nuanced. Companies like Monsanto fund research into genetically modified organisms (GMOs) and other types of crop production. Pharmaceutical companies fund research into developing new drug therapies. Other corporations fund research in physics, astronomy or whatever advances their business interests. While these interests may coincide with the public good—cancer research for example—others are more controversial. GMOs are a great example.

While some argue that GMOs represent the public good in that they intend to produce disease and drought resistant crops, others claim that they represent a threat to other crops or are unmarketable because of restrictions by other countries. Here the alignment between the public interest and corporate interest is not so clear.

The same could be said for research into pharmaceuticals. Vaccines address the public good but how about drugs for erectile dysfunction? Is grandpa’s happy weekend a matter of public interest?

Of course, all research has a spillover effect. One piece of knowledge leads to another, and in this respect all corporately funded research can be argued to be in the public good; however this must be weighed against potential public harm (what if the GMO opponents are right?).

This tension between public and corporate interest manifests itself in other ways as well. Traditionally, universities have been considered bastions of impartiality when it comes to scientific research. Their quest was pure—the search for knowledge. Government funding facilitates this image. The concept is that government is not out for profit but for enhancing the public well-being, while business is concerned only with the bottom line. Therefore government-funded research has more credibility than corporate-funded research.

This argument seems too simplistic. Recent complaints by government scientists that political pressure has been used to alter scientific reporting certainly refute the quest for pure knowledge argument. And it ignores the fact that government, in practice, is less responsive than it is in theory, and that business is responsive to the good of its consumers (generally the public) and not just its stockholders. When that interest is ignored there is a high price to pay (remember Vioxx).

The point is that when evaluating research conducted at a university it is important to consider who funded the research, why they funded it and whose interests they are serving. Corporate and government cooperation in the funding of research is essential, but as consumers of that research we must do our due diligence.

Please email thoughts, comments or criticisms to Michael at mmelon15@hotmail.com.

Nexus: Privatization, IAP and the Walter Reed Disgrace

One of the first things President Bush did when assuming office was to call for the outsourcing of 425,000 federal jobs through a competitive bid process delineated by the Office of Management and Budget (OMB) Circular A-76. Two years later former Secretary of Defense Rumsfeld called for 320,000 jobs in support of the military to be privatized through the same process. While this is a perfect example of a way in which business and government cooperate to address something that is of concern to all of us, the cost of running government and the military, the OMB Circular A-76 process appears to be accountable for the horrible conditions at Walter Reed Army Hospital. Logistics contractor IAP World Wide Services (known for botched ice delivery in the aftermath of Katrina) is at the center of the controversy, and now appears to be making misleading statements to Congress.

According to an Associated Press report “documents from the investigative and auditing arm of Congress map a trail of bid, rebid, protests and appeals between 2003, when Walter Reed was first selected for outsourcing, and 2006, when a five year, $120 million contract was finally awarded.” Further delays caused by Congress and the Pentagon stalled off implementation of the contract by IAP until February 4, 2007 when they began operations at Walter Reed.

The bid process calls for outside contractors to compete with internal service providers for government service contracts. The process allows for a period of protracted bids and rebids coupled with protests and appeals. The idea seems to be that such a process will drive prices to rock bottom.

President of the American Federation of Government Employees, John Gage, believes the Pentagon deliberately protracted the process as IAP aggressively pursued the contract. “They were moving, come hell or high water, to contract these jobs out.”

Meanwhile, federal workers left Walter Reed in droves while the controversy over the contract raged on. The departure of workers concerned over the future of their jobs became so serious that a Walter Reed commander warned of potential mission failure in the fall of 2006. The delays continued.

Bottom fishing for the lowest price while a key medical facility like Walter Reed is in danger of mission failure is like undergoing a four-year search for the cheapest oncologist when one has a cancer diagnosis with a probability of only 6 months to live. Worse yet, in this case the government workers who were already on the job claimed they could complete the work at the lowest cost.

While the maintenance provided by IAP cannot be held accountable for the deteriorating conditions at Walter Reed (they have only been at the job since Feb. 04, 2007), the process by which they got the job is clearly implicated. Still some individuals, like Oversight Committee chair Rep. Henry Waxman (D—CA), blame the performance of IAP for the mess. “They didn’t seem to be doing a very good job even delivering the ice, and from what we see now, they didn’t do a very good job at Walter Reed either.”

One legitimate complaint about IAP’s performance may be that they did not have enough workers on the job, and they may be trying to mislead Congress about it.

According to The State, a South Carolina (where IAP was founded and has corporate offices) news publication, the House Committee on Oversight and Government Reform issued a letter to Walter Reed’s former commander that claims maintenance staff dropped from 300 to 60 while the transfer of duties to IAP was delayed.

On March 7, IAP issued a statement to the press in which they state, “From the first day, IAP has maintained a full complement of employees and subcontractor personnel. On Feb. 4, 2007, 290 IAP and subcontractor personnel began work. Of those 100 personnel were assigned to facility maintenance work.” IAP’s contract calls for them to provide other services in addition to maintenance.

Days later, IAP chairman David Myers sent a letter to key members of Congress where he points out that IAP had 290 personnel on site Feb. 4. The letter fails to mention that only 100 were assigned to maintenance—down by two hundred from the number previously assigned to maintenance cited by the House Committee on Oversight and Government Reform letter. While not a lie, Myers’ letter appears to skirt the truth.

A privately held New York investment firm, Cerberus Capital Management, headed by former Bush Treasury Secretary Jack Snow owns IAP. IAP’s board of directors consists of executives formerly with Kellogg, Brown and Root (KBR). KBR was once a subsidiary of Halliburton, vice-president Cheney’s former company.

The concept behind privatization is to get maximum efficiency for the lowest possible price. We got neither. It’s time to get it right.

To criticize or inquire further, please contact Michael at mmelon15@hotmail.com.